Storm at CRA as officials differ on new revenue sharing formula

A storm is brewing at the Commission on Revenue Allocation (CRA) over the formula to be employed to allocate resources.

Last week, the commission appeared divided amid claims that politicians had infiltrated it with a view to influencing how it will come up with the next revenue allocation formula to favour their regions.

On Wednesday, the commission held a press conference to show unity and to diffuse tension days after legislators from Mt Kenya met in Naivasha demanding that the current formula was skewed against their region.

OPPOSING SIDE

During the media briefing held at the commission’s boardroom, chairperson, Dr Jane Kiringai, sat alongside commissioners Prof Peter Kimuyu, Kishanto olé Suuji, Dr Irene Asienga and vice-chair Humphrey Wattanga while commissioners Prof Edward Oyugi and Peter Gachuba sat on the opposing side away from the cameras.

Commissioners Fouzia Dahir and Dr Kamau Thugge, the PS National Treasury, did not attend the briefing in which Dr Kiringai made it clear that she was the only one mandated to speak on behalf of the commission.

INTERVIEW

“For the avoidance of doubt, be advised that the spokesperson of the commission is the chairperson. Once the commission makes a position on the formula, the chairperson will communicate it,” Dr Kiringai said.

The chairperson’s remarks came amid claims of sharp divisions within the commission.

A day before, commissioner Gachuba had given an interview to the media in which he said that they had arrived at a new formula since the current one was discriminatory.

DISCREPANCY

“The current formula is not working. Someone in Lamu or in the far-flung areas receives an aggregate of Sh38,000 per person while someone in Nairobi or Kiambu receives an average of Sh5,000. This discrepancy is too big and we need to find a way of balancing it out,” Mr Gachuba remarked.

In the Naivasha meeting, the legislators from Mt Kenya made similar claims.

RESOURCES

“The current formula is faulty. Mt Kenya contributes about 60 per cent of our country’s GDP yet only 20 per cent comes to our people. We therefore call upon the Commission of Revenue Allocation, parliament and other relevant agencies to ensure that the region gets its fair share of resources when it comes to development and implementation of the next formula,” Ms Cecily Mbarire, the chairperson of the group, said.

STAKEHOLDERS

Dr Kiringai, however, maintains that the commission has met various stakeholders and it is yet to make a decision on the way forward.

“We are yet to come up with a formula and we have until April next year before we recommend a formula to parliament. We might even decide to maintain the current one,” she told Sunday Nation during an interview in her office.

According to Article 217 of the Constitution of Kenya 2010, CRA is expected to come up with the third basis for revenue sharing for the next five financial years effective from the financial years 2019/20.

POPULATION

The first formula was approved in 2012. It was used to share revenue for the financial years 2013/14, 2014/15, 2015/16 and 2016/17.

The second basis was approved in 2016 and it was used to share revenue in the financial years 2017/18 and 2018/19.

In the first basis in computation of the revenue sharing formula, various parameters were given different percentages namely population (45 percent), Basic Equal Share (25 percent), Poverty (20 percent), Land Area (eight percent) and Fiscal Responsibility (2 percent).

DEVELOPMENT

The second basis included slight changes with basic equal share increasing by one per cent, poverty reduced by two per cent and then a development factor introduced at one per cent.

Since 2013, devolved units have received allocations of more than Sh1.5 trillion.

Counties have received Sh302 billion on account of their level of poverty, Sh707.7 billion on account of population basic, Sh399.3 billion shared as equal share, Sh125.8 billion for land area, Sh31.5 billion for fiscal index and Sh. 6.16 billion for development index.

DISADVANTAGE

The anticipated five-third formula will be used as from 2019-2020 to allocate cash and it’s expected to cater for emerging issues in development.

Dr Kiringai identifies emerging issues like demands for revenue sharing for water resources, forests and urban development especially concerning slums.

In various stakeholder meetings, the Council of Governors has pushed for the national census scheduled for 2019 to provide a basis for a third formula on revenue sharing. The governors also shared a common point against the fiscal responsibility parameter arguing that it disadvantaged them.

PRODUCTIVE

Murang’a Governor Mwangi wa Iria, in a memorandum, has asked CRA to consider revenue sharing for water resources while the county’s senator Irungu Kang’ata wants counties that contribute most to revenue collection to receive higher allocations.

“This revenue sharing formula must give more to the regions that are the most productive and not vice versa. The parameter on population should have a high of as much as 90 per cent in computation of the formula,” Gatundu South MP Moses Kuria says.

ALLOCATION

According to data obtained from the Commission on Revenue Allocation, the top ten most populated counties are Nairobi (3,138,369), Kakamega (1,660,651), Kiambu (1,623,282), Nakuru (1,603,325), Bungoma (1,375,063), Meru (1,356,301), Kisii (1,152,282), Kilifi (1,109,735), Machakos (1,098,584), Mandera (1,025,756) and then Kitui, which has a population of 1,012,709.

Marsabit is the largest county with a land area of 70,961 square kilometres followed by Turkana (68,680 sq km), Wajir (56,686 sq km), Garissa (44,175 sq km), Tana River (38,437 sq km), Kitui (30,497 sq km), Mandera (25,991 sq km), Isiolo (25,336 sq km), Kajiado (21,901 sq km) and the Samburu, which occupies 21,022 square kilometres.

MARGINALISED

The CRA ranks Tana River as the county with the highest poverty gap. Kwale, Mandera, Wajir, Kilifi, Turkana, Marsabit, Isiolo, Garissa, Samburu and Tana River follow.

Data obtained from CRA shows that so far, in terms of equitable share to county governments, Nairobi County has received the highest amounts at Sh79,552m. Next is Turkana (Sh59,830m), Kakamega (Sh53,410m), Mandera (Sh53,202m), Nakuru (Sh48,921m), Kilifi (Sh48.469m), Bungoma (Sh46,832m), Kiambu (Sh46,790m), Kitui (Sh44,420m) and then Wajir county Sh43,427m.

Marginalised areas also benefit from the Equalisation Fund, a national government fund for improving selected basic services in marginalised areas.

MINORITY

Allocations to the Equalisation Fund are based on one-half per cent of approved audited accounts of government revenue. The funding priority sectors for the fund include roads, water, health and electricity.

Under the new criteria, 1,424 sub-locations, the bottom 20 percent where about five million Kenyans live, will benefit from funding from the Equalisation Fund. Also identified are minority communities, the Elmolo, Makonde, Watta and Dorobo-Saleita, which require targeted service provision.

So far, the Equalisation Fund has allocated Sh936 billion.