Stalemate as governors reject proposed revenue formula

A standoff has hit the development of the fourth revenue-sharing formula among counties after governors rejected a proposal by the CRA.

In the move that threatens to derail the approval of the new formula by Parliament, the Council of Governors have asked the Commission on Revenue Allocation to revise the draft proposal.

The Star has established that there is a split among the governors with those whose counties are ‘gaining’ funds in the formula supporting it while those ‘losing’ opposing it.

However, CRA has not made public the proposed formula.

“We met as governors with CRA but we could not agree even among ourselves because each governor was pulling the string towards their end,” Busia Governor Paul Otuoma.

CRA confirmed meeting the county bosses to discuss the formula but failed to agree.

Instead, CRA chairperson Mary Chebukati said the commission has retreated to further engage the stakeholders.

“The commission consulted with all relevant stakeholders, including governors through their regional blocs, on the formula earlier this year."

"After incorporating their feedback, the CRA invited the governors on August 5, 2024, to review the draft formula,” Chebukati said.

“Additional input was provided, and the commission will continue engaging with stakeholders, including Parliament, to finalise the formula for revenue sharing among county governments from FY 2025-26 onwards,” she added.

The CoG also confirmed the meeting and insisted on the need for fairness in revenue allocation in the next formula.  

“There is a need to ensure fairness and equity for the sustainable development of all county governments in fulfilment of the objects of devolution,” CoG said.

The governors’ decision has thrown CRA back to the drawing board, threatening to delay the submission of the proposed formula to the Senate for consideration.

The Senate is expected to approve the new formula by December.

The new framework will dictate revenue sharing among the counties for five years, from 2025-26 to 2029-30.

Development of the previous formulae was emotive, both in the Senate and in the political arena.

Already, politicians have clashed over the next formula.

Deputy President Rigathi Gachagua triggered the storm with a call for a revenue-sharing formula largely pegged on population, popularly known as one-man, one-vote, one-shilling.

“In matters of revenue sharing, and for the avoidance of doubt, I am a believer and a proponent of one-man, one-vote, one-shilling because resources are about people," he said

However, leaders from regions with relatively small populations, but with vast landmass, have dismissed the call.

Instead, they are pushing for the one-man one-coin one-kilometre formula that puts more weight on the land mass.

“The one-man, one-shilling, one-vote formula, championed by some leaders, is a fundamentally flawed stance that underscores a deep-seated and insatiable greed,” Mandera Senator Ali Roba said.

The approval of the current (third) formula was preceded by chaos and standoffs in the Senate with senators whose counties were set to lose cash opposing it.

Ten consecutive sittings failed to strike a deal on the formula.

It took the intervention of former President Uhuru Kenyatta to increase the allocation to counties from Sh316 billion to Sh370 billion to ensure no county ‘lost funds’ in the final formula.

In the current formula, the population is weighted at 20 per cent compared to the land size index which is at eight per cent.

Other parameters are; basic share (20 per cent), health (17 per cent), poverty level (14 per cent), agriculture (10 per cent), land size (eight per cent), roads (eight per cent) and urban index (five per cent).

In the second-generation formula, the population was weighted at 45 per cent, the basic share at 26 per cent and the poverty level at 16 per cent.

Others are land area at eight per cent, fiscal responsibility at two per cent and development index at one per cent.

In the first framework, there were five parameters, with the population given the heaviest weight.

The population was weighted at 45 per cent, equitable share at 25 per cent, poverty level at 20 per cent, land area at eight per cent and fiscal effort at two per cent.

Article 217 of the constitution says the revenue-sharing formula be reviewed every five years.

However, the Sixth Schedule of the constitution further provides that the first and second determinations of the basis of the division of revenue among the counties be made at three-year intervals.

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