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Ensure equity in county revenue-sharing formula

Wednesday July 15 2020
By EDITORIAL

The impasse over the new formula for sharing out cash to the counties brings to the fore the historical challenge of equity in resource distribution. We return to the topic because it’s pertinent to the survival of counties and the whole philosophy of devolution. The feud has short- and long-term implications.

In the immediate terms, the National Treasury cannot disburse funds to the counties, which is bound to paralyse their operations.

For records, a total of Sh316 billion has been allocated for counties, but cannot be released until the dispute is resolved.

In the long term, the deadlock raises question about fidelity to the constitutional principle of equity, which goes beyond resource allocation and is germane to devolution—a concept that was intended to cure historical injustices where resource allocation was centralised and favoured regions that enjoyed political power.

At the heart of the dispute is a new formula for resource sharing designed by the Commission on Revenue Allocation (CRA), which varies the criteria and puts emphasis on, among others, devolved functions such as health and agriculture, land, poverty levels and what is referred to as “other county services”.

It transpires that these variables favour counties with high population, but disadvantage those with fewer people. Therein lies the contest.

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The first criterion in the new model is valid. It recognises that counties should get commensurate funds for functions they are responsible for such as health and agriculture. Thus, it gives meaning to the principle that, funds follow functions.

Taken in totality, the variables are skewed in favour of counties with high population. Densely populated counties are agriculturally and economically endowed and the converse is true.

So, if adopted, some counties that previously received higher allocations because of the earlier criteria that prioritised economic conditions and poverty levels will lose out.

Those losing out are sparsely populated and low-income counties which, historically, have been marginalised.

This is what is creating a problem. Inadvertently, the new formula is rolling back the gains of devolution as it reintroduces inequalities, exacerbating the old injustices.

The Senate adjourned to allow members time to consult over the matter, strike a balance and avert potential explosion with political ramifications.

Formulas and regulations are operational tools and not an end in themselves, hence should not tie our hands.

The Senate should use the break to examine the contending issues critically and soberly and come up with a decision that not only settles the matter, but also reinforces constitutional principles. The revenue-sharing formula must ensure equity and inclusivity.

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