Study finds fault in allocation criteria for CDF

In a study likely to rattle politicians manoeuvering for higher poverty rankings for their areas to attract more money from the Constituency Development Fund, analysts say the entire allocation system is skewed and should be overhauled.

Findings released in December 2007 recommended the use of a region’s (province) incidence of poverty. “This is because it takes into account the trickle- down effects arising to the poor from the rich in any particular constituency,” the study says.\

Two different weights - provincial and constituency levels - should be used. In the arrangement, resources should first be allocated to provinces depending on their poverty incidence indices.

The amount should then be divided among constituencies based on their incidence of poverty. This would ensure provinces and constituencies ranked as poorest receive the biggest allocations.

According to the study by the Institute of Policy Analysis and Research (Ipar), the criteria currently used could further perpetuate inequality among the country’s regions.

Politicians recently forced the Kenya National Bureau of Statistics to shelve statistics that indicated marked improvement in poverty levels in their constituencies for fear that their areas would get less allocation from the CDF.

Surprisingly, the study shows that some constituencies could have been receiving more than their fair share from the fund.

The study recommends that weighting be done at the national and constituency levels.

At the national level, the fund should be desegregated into ‘ring-fenced votes’ earmarked for specific expenditures in line with local level priorities like education, health, water and rural roads in a ratio of 45:20:20:15.

Another set of indices should be developed based on constituency development achievements to determine the amount the area is to receive. These include school enrolment, patient-doctor ratio, distance to water points and road density.

The study says the current allocation criteria fail to take into consideration the social-economic differences across regions that pre-determine economic opportunities and habitation in specific areas.

Even where constituencies are demarcated on the basis of population, the study says, it is often overlooked that most people reside in their work stations where they demand services but come voting time, they troop to their rural constituencies to cast their ballots.

CDF committee chairman Ekwe Ethuro says dividing the funds at provincial level would amount to adding another layer, with the risk that some of the funds would not reach intended beneficiaries. Nevertheless, he agrees the system is flawed and needs to be re-examined.

“The poverty index should be the guide, but other added variables have completely diluted it making equitable distribution impossible,” he said in an interview with the Sunday Nation.

The current criteria for allocating resources is differentiated by a weighted index based on contribution of poverty measure of 1999 and the rural-urban poverty population ratio from the housing and population census of the same year.

According to the CDF Act 2003, the study says, first the budget ceiling for each constituency is provided by dividing 75 per cent of the fund equally to all constituencies.
Secondly, the remaining 25 per cent of the net total CDF is divided by the national poverty index multiplied by the constituency poverty index.

Further, KNBS uses contribution of poverty in addition to another weighting factor that takes into account differences in rural and urban poverty.

Analyst Lineth Oyugi, the author of the Equity in Resource Allocation: The need for alternative constituency development fund allocation criteria, says the problem lies in how the two latter formulas (quarter 25 per cent) are used for they do not result in similar ranking of constituencies in terms of poverty.

As a result of the use of constituency contribution to national poverty instead of constituency incidence of poverty, some constituencies have been receiving more than their due of CDF funds.

This shows that some constituencies with a high incidence of poverty received the same or lower allocations.

For example, Ganze, Kuria and Kitui South constituencies were allocated less funds than they were entitled to.

Ganze, with a poverty incidence of 0.76 per cent received Sh117 million over three years from 2003 to April 2007, compared to Eldoret North that had a poverty incidence of 0.48 per cent and which received Sh137 million over the same period.

Others that received more than their fair share of the fund are Bahari at Sh137.7 million with poverty incidence of 0.57 per cent and Saboti at Sh128.5 million with poverty incidence of 0.42 per cent.

The greatest losers were Isiolo South, Kisumu Town West and East, Ijara, North Horr, Budalangi, Fafi, Makadara, Likoni and Nyeri Town. Others are Moyale, Wundanyi, Lamu East, Machakos Town, Wajir North, Saku, Mogotio, Mwatate, Taveta and Mvita.

Over the three-year period, the constituencies are estimated to have lost more than Sh20 million each.

Ms Oyugi faults the criteria for unfair allocations that do not ensure provinces with the highest contribution to poverty or highest incidence of poverty receive the highest amounts.

The discordance, with the exception of Rift Valley Province with the highest contribution to poverty at 22.1 per cent and that received more relative to other provinces, does not hold for other provinces.

For example, Nyanza Province with a contribution to poverty of 19 per cent was allocated Sh3.61 billion compared to Eastern Province at 18.2 per cent and which received Sh3.92 billion.

North Eastern received Sh1.1 billion with a 3.5 per cent contribution to poverty compared with Nairobi with 6.1 per cent contribution to poverty and received Sh726 million.

Central Province with 7.7 per cent contribution to poverty received Sh2.7 billion compared to Coast Province with 9.5 per cent and which received Sh2.2 billion.

Poor people

The study reveals that aggregate allocations to provinces were more dependent on number of constituencies as opposed to the number of poor people in the region.

Had the allocation of 25 per cent of CDF been based on a poverty incidence index, the study says, it could have increased allocations to North Eastern by Sh131 million, Nairobi by Sh87 million and Coast bySh 68 million.

This increase could have resulted from reduction of Sh124 million in allocations to Rift Valley which received Sh5.2 billion. Western, which received Sh2.7 billion, would have received Sh95 million less.