Senators Reject Kang’ata Proposal as Revenue Sharing Basis Formula Row Drags On

Senators on Tuesday voted by a majority(25-22) to reject a proposal by Majority Chief Whip, Irungu Kang’ata (Murang’a), to push the implementation of the new revenue sharing formula by Commission on Revenue Allocation (CRA) to 2022-2023.

The senators failed to reach a consensus for a record sixth time, and instead rejected the proposal by Mr. Kang’ata to defer application to 2022-23 financial year. Mr Kang’ata sought to use the deferment of dates to whip support of the bill, which senators strongly rejected as “postponing a problem for two years.”

In a highly charged and emotional debate, the house was divided down the middle in what us seen as the first major challenge for the handshake between President Uhuru Kenyatta and former Prime Minister Raila Odinga.  Both Uhuru and Raila had rallied their troops to support the motion but in a rare occasion, even lieutenants such as Siaya Senator James Orengo, the leader of the minority, defied the call by the bosses.

Orengo went ahead to lecture the president to take lessons from former president Kibaki whom he termed as more accessible. He advised the president “to be more accessible for us to be able to solve these problems” adding that the senate “would not be here if he was more accessible.”

Resource allocation is a sensitive subject with a direct effect to each and every citizen in the country, it influence livelihoods, economics and politics in Kenya. A lot of changes have to be made to the scientific calculations so as to factor in different needs of communities

As per the requirement by article 217 of the constitution, the revenue sharing formula should be reviewed by the senate every five years. The  Commission for Revenue Allocation (CRA) had recommended a radical shift from the current formula to accommodate more parameters in the distribution of the revenue to counties.

The proposal puts the Basic Share Index at 20 percent, health index at 17 percent, county population 18 percent, Poverty at 14 percent, agriculture 10 percent, land area 8 percent, urban households at 5 percent and rural access at 4 percent.

The other parameters were fiscal effort (revenue collection) at two per cent, prudent use of public resources at two percent.

CRA proposed the first basis formula in was passed by the National Assembly on November 27, 2012 which the National Assembly passed. The parameters in sharing used included population 45 percent, poverty gap 20 percent, land area 8 percent, basic equal share 25 percent and fiscal responsibility 2 percent.

The formula was applied for four years- 2013/14, 2014/15, 2015/16 and 2016/17, when the second one was proposed.

The second basis formula was adopted by the parliament on July 6, 2016 and was anchored on the following six parameters; basic equal share 26 percent, population 45 percent, land area 8 percent, poverty 18 percent, fiscal effort 2 percent and development factor 1 percent. The formula was applied for 3 years 2017/18, 2018/19 and 2019/20.

The new formula proposed by CRA and adopted by the Finance and Budget Committee is set to see counties with huge population gain while those with huge land mass and smaller populations lose revenue from 2021/22 financial year. It is a battle of two ideologies, that is One Man, One vote, One shilling versus One man, One Kilometer, One shilling pushed by opposing sides with each pushing own interests.

Contentious issues have emerged, as the bill proposals will see 28 counties gain whole the other 19 lose at least KSh 42 billion. With the formula putting more emphasis on population, counties from the North, Coast and Lower Eastern regions will lose while highly populated counties in Central and Rift Valley, Nairobi and Nyanza stand to gain.

Mandera County tops the counties set to lose revenue, losing Sh2 billion. Wajir, Kwale and Kilifi follow losing Sh1.4 and 1.2 billion respectively.

Gainers include Kiambu with Sh1.3 billion, Nairobi with Sh1.2 billion, Uasin Gishu with Sh983 million. Others include Nandi, Kajiado and Nakuru will gain Sh700 million shillings, Laikipia and Trans Nzoia will gain about Sh600 million.

However, an amendment by Makueni Senator Mutula Kilonzo Junior that seeks to cushion counties from losing any allocation may remedy the situation should senators adopt it. Similar motion by Nairobi Senator Johnson Sakaja is reported to have a support of more than 30 senators, more than what is required for it to sail through.

Further stalemate on the matter will definitely hurt the devolved units as their allocation of Sh316.5 billion cannot be made without CRA formula in place.

While moving the motion, Financial and Budget Committee Charles Kibiru urged the senators to approve the CRA’s recommendations arguing they were arrived at after in-depth consultation with several stakeholders.

“We need to shift our gear from saying who gets what. This county is ours. We should ourselves, as a Senate, tonight question if we want this county to move forward. We have had over 20 simulations in the Committee,” said Kibiru.

Attempts by Orengo and Bungoma Senator Moses Wetang’ula to adjourn the debate on the committee report to another sitting was futile, losing by 40 senators against seven.