Tough balancing act for the new revenue team

The main headache for the incoming team at the Commission on Revenue Allocation (CRA) is crafting a formula for sharing the national cake.

Complaints have emerged in the past on “unfair” sharing of revenue between the national and regional governments.

This onerous task has now been placed squarely on the shoulders of World Bank economist Jane Kiringai, who has been tapped by President Uhuru Kenyatta to replace Mr Micah Cheserem as head of the commission.

The term of the previous commission expired in December last year and late last month, President Kenyatta appointed seven new members to the team for a six-year tenure.

Ahead of the full constitution of the panel, experts have been quick to say that the new team must commit to finding a fair formula in the division of the national cake, a process that has been fraught with allegations of unfairness.

“CRA has been the major institution actively promoting redistribution of resources to historically marginalised areas in the country, and we hope that it will continue to highlight the need for fairness in distribution in ways that promote the welfare of all,” says International Budget Partnership (IBP) Kenya country manager Jason Lakin.

Best possible way

Mr Lakin in an interview said CRA has not always pursued the redistribution of resources in the best possible way, adding that sometimes the commission excessively punish areas with large population and vast needs. 

“We have pointed out in the past that the equal share in the current revenue sharing formula is too high and cannot be justified on grounds of fairness,” said Mr Lakin.

Experts see the lack of adequate data as the Achilles heel in efforts to share resources fairly. 

IBP notes that the commission itself has complained about this problem when developing the first formula, and then again during revisions of the sharing method. 

“However, they (commission) have done almost nothing to address it. I believe the intention of the Constitution was that CRA would do much more to invest in its own technical capacity and to generate data at county and ward level to allow for principle-based distribution of resources, and we hope the next set of commissioners will prioritise this,” said Mr Lakin.

According to legal expert Peter Wanyama, the new commission must provide a credible formula for revenue allocation.

“The commission should develop a satisfying formula for revenue sharing. It should also work closely with the Senate to push through an increased share of the national revenue for counties,” Mr Wanyama said.

“The biggest challenge is to get National Treasury to accept the commissions’ recommendations.”

Persistent rifts

Mr Wanyama further said the team should eliminate persistent rifts between counties and the national government in the disbursement of grants and donor allocations by capturing them in the Division of Revenue Act.

IBP credits the CRA for pushing for the implementation of Section 137 of the PFM Act creating county budget and economic forums. 

However, it says it must tap the help of other players at the grassroots to ensure the sharing of resources meets the needs of Kenyans.

Mr Lakin echoes these sentiments: “The fact that these exist at all in many counties is a tribute to pressure from CRA. 

"But much more needs to be done to ensure that these bodies work effectively and a strong CRA would help ensure that this happens by working with other constituents, such as the civil society, business, professionals and so on,” he argues.

“CRA has done relatively little to contribute to its other mandate on helping counties improve their own revenue collections.” 

Mr Lakin said there is a need for a national debate on the powers of the counties to raise revenue and whether they should be given more muscle to do so.

He noted that there should also be talks on how to improve on existing revenue possibilities without violating the Constitution.

CRA, he added, “has not done much on this and we hope the next commission will take it much further”.

“By targeting, say, the most marginalised wards in the country, the Equalisation Fund could do more to reduce inequality than the current approach,” he said.

Not shared fairly

A section of Kenyans feel that resources have not been shared fairly in Kenya over the last 50 years.

The President’s pick to head the crucial agency is no stranger to debate on the existing inequality.

In a recent blog post, Ms Kiringai hitherto a senior economist based in the World Bank Kenya country office and with a bias for economic analytical work in the areas of macroeconomic policy and economic growth, international trade, public finance and public expenditure management, admitted to the inequalities plaguing Kenya.

“Kenya remains a country of deep geographic inequality. Nairobi and Mombasa, with some 10 per cent of the population, account for about half of the country’s GDP. Kenya’s richest county (Kajiado) has a poverty headcount of 12 per cent, compared to 93 per cent in the poorest one (Turkana),” said Ms Kiringai in a note co-authored by fellow World Bank economist Wolfgang Fengler..

In Nyeri, she added, 20 per cent of children successfully complete secondary education, but in Tana River only 6 per cent do so.

“The contrasts are even more extreme when it comes to health services. In Uasin Gishu, there is one nurse in the public health system for every 1,000 people. In Turkana and Mandera, that same nurse must look after 14,000 people, even though the distances are much greater in these remote regions,” Ms Kiringai said.

“These sharp contrasts can cause tensions, but they also constitute an asset going forward.”

Until Ms Kiringai’s nomination by the head of State, there were fears that the delay in picking the head of the commission could derail the newly constituted team from executing its crucial mandate.

Drafting budget allocations

Former chairman Cheserem had warned that drafting budget allocations for the counties for the 2017/2018 financial year would be hit by the delay.

The other members of the Commission are Edward Akong’o Oyugi, Peter Njeru Gachuba, Kishanto ole Suuji, Irene C. Koech Asienga, Fauza Abdikadir Dahir, Humphrey Wattanga, Peter Kiko Kimuyu and Kamau Thugge.

Deputy Speaker Joyce Laboso has since directed the Finance, Trade and Planning Committee to speed up Ms Kiringai’s vetting.

“Given the critical role played by the CRA within the framework of issues of Division of Revenue, which are currently under consideration within the budget process, it is advisable that the concerned committee expeditiously proceeds to notify the nominee and the public,” said Dr Laboso last week in Parliament.

Ms Kiringai will be vetted by the committee chaired by Ainamoi MP Benjamin Lang’at, seven days after the public is invited to submit memorandums on her suitability for the job.

Dr Laboso said the committee’s report should be tabled by February 15, two weeks from the date her nomination was announced to the National Assembly.

The rest of the team was approved by the House in a special sitting on December 20.

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