Five major towns will need extra funds post-Covid

It is becoming quite clear that the economic, social and long-term fiscal impact of Covid-19 will be more pronounced in the country’s five major urban areas. Their enormous populations, who mostly reside in informal settlements, have borne much of the impact. In all fairness, the unique governance challenges facing Nairobi, Mombasa, Kisumu, Nakuru and Eldoret towns during this pandemic are large and complex.

The restriction on movement, work from home directive and closure of entertainment places has resulted in massive unemployment, business closure and overall decline in economic activities. Much is still unknown at this point on the revenue deficit expected, but this reality calls for a major pivot in our approach to funding counties with large towns to enable them to deliver vital services with decreased revenues.

Of particular concern is the need to allocate resources to address urgent issues such as provision of clean water, sanitation, sewerage services and healthcare. The World Health Organization recommends at least 50 litres of water per person per day in non-emergency situations. The lack of water in low-income areas makes it hard for frequent handwashing to take place

Given the above context, it is fairly obvious that additional investment and funding allocation to these major urban towns is imperative. The socioeconomic and health challenges emanating from the pandemic require huge capital outlay. In light of these circumstances, the national government should strongly consider a special conditional grant to these five urban areas.

The conditional grant will not only play a vital role in providing financial support but equally improve on governance. The grant should be tailored around expansion of the necessary infrastructure for water and sanitation, energy, transportation as well as ensure equal access to essential services and reduce the number of people living in slums.

It is however imperative for these urban counties to develop innovative policy responses to increase their own source revenue. Covid-19 has brought a significant challenge on forecasting revenues for the national and county governments. The pandemic is also expected to have an acute impact on tax revenues.

This means traditional revenue forecast models will not be sufficient. However, with the adoption of scientific models, these urban areas will learn where capacity needs to be built and what systems really work during this period.

The case to increase funding allocation to these urban areas is even more evident during this period when considered from a purely economic perspective. They have become central to the country’s economic growth. During this pandemic, basic sanitation and drainage especially in the slums, is now becoming a fundamental right in sustaining human dignity and preventing the spread of the coronavirus.

Due to the uncertainty of the extent and duration of this crisis, the expected economic impact on the five urban areas cannot be estimated yet. They will need to align their expenditure and determine opportunities to reduce or delay cost. They will need to determine cost reduction strategies and explore revenue enhancement opportunities.

Despite these challenges, this is an opportunity to forge new partnerships. This is where technical support from donors and the private sector is much needed.

It’s expected that the macroeconomic risks brought about by the pandemic could be severe and as the new normal begins to take shape, leadership matters most right now. This moment provides an ample opportunity to address the unique challenges that will be faced by the five counties as they position themselves for economic rebound. 

Lawyer and communication practitioner