Central Kenya leaders last month claimed that the region contributes 60 per cent to Kenya’s GDP and proposed that county allocation revenue be based on population and contribution to national cake.
They argued that the current formula that factors in landmass and poverty levels has made the national government to neglect the region in allocation of resources.
Currently, the Commission of Revenue Allocation gives counties money on the 45 per cent pro rata basis in terms of the population of each county. Twenty five per cent is shared equally, eight per cent by consideration of landmarks, 20 per cent based on the region’s poverty index and two per cent fiscal responsibility.
“Allocation of funds should not be based on size of the county but on population,’’ the caucus said in a statement read by Mount Kenya Parliamentary chairperson and nominated MP Cecily Mbarire.
And this is not the first time that Central Kenya politicians are pushing this argument.
In 2016, State House Chief of Staff Joseph Kinyua asked CRA to consider the allocation formula that would put into consideration the dense population of Central Kenya.
This followed a meeting of Mt Kenya leaders with President Uhuru Kenyatta on February 12, 2016 at the Sagana State Lodge.
At that time, Central leaders complained that the current formula was “skewed” as it did not consider how much revenue counties were contributing to the exchequer.
In another meeting at State House, Nairobi, in 2015 the leaders told the President then formula allocated relatively more money to less populated areas that generate less revenue.
CRA and the Senate then agreed on a formula whereby the five counties that would collect and declare the highest revenue would be given two per cent of what they collect as a reward.
Although there is no latest data showing how much each of 47 devolved units in Kenya contributes to the national wealth, Mount Kenya leaders who met in Naivasha last week seem to base their argument on a World Bank report released in 2015.
The international lender’s survey, which ranked Kiambu as richest county in Kenya with a GDP per capita of $ 1,785 (Sh178,500), indicated that Nairobi county contributed 12.7 per cent to Kenya’s total GDP, highest among the 47 counties.
According to the survey, Kiambu was the second leading contributor to Kenya’s GDP at 11.1 per cent, followed by Nakuru and Nyeri at 8.5 per cent and 3.9 per cent per cent respectively.
Kilifi, Machakos, Kajiado were tied at position five with 3.8 per cent each, while Meru, Kwale, Kisumu and Laikipia counties were at 3.7 per cent.
But do Mount Kenya counties really contribute 60 per cent to Kenya’s total GDP?
The seven Mount Kenya counties of Kiambu, Murang’a, Nyandarua, Meru, Embu, Nyeri and Kirinyaga need to contribute an average of 8.57 per cent to national GDP to hit 60 per cent claimed by leaders from the region.
According to World Bank figures, however, only Kiambu county meets this threshold at 11.1 per cent, with remaining counties from the region contributing less than eight per cent each.
Even so, the survey indicated that three of the seven counties in the region were among the top five richest counties in Kenya led by Kiambu and Nyeri, which had a GDP per capita of $ 1785 (Sh175,800) and $ 1503 (Sh150,300). Murang’a had $ 1090 (Sh109,000).
The list of the bottom five counties in terms of wealth per capita were Mandera, Bomet, Elgeyo Marakwet, Samburu and West Pokot with a GDP per capita of less than $ 310 (Sh31,000) each.
Kenya’s GDP per capita has since grown from $ 1,107 (Sh110,700) in 2015 to $ 1,169 (Sh116,900) by June 2018.
This is not the first time leaders are challenging revenue allocation to counties.
After the World Bank’s survey, county heads led by Siaya’s Cornel Rasanga demanded that the gross domestic product to be considered in the formula used by the CRA to share cash to the 47 sub-governments.
Rasanga said that CRA should stop factoring county’s contribution to the national GDP and population and instead focus on growth.
World Bank ranked Siaya as the fastest growing county at 11 per cent per year.
Former CRA chairperson Micah Cheserem echoed Rasanga’s sentiments, saying that the current revenue sharing formula is flawed as it does not factor in sub-national GDP figures. Similar views are shared by World Bank.
The commission, as required by law, has invited proposals with a view to readjusting revenue allocations formula. The call was mooted during this year’s devolution conference in Kakamega County in April.
Leaders from arid counties that receive an additional amount for equalisation on the other hand want allocations to be based on poverty levels.
Led by Kilifi boss Amason Kingi, governors from 14 arid and semi-arid counties want CRA to allocate more funds to hardship regions that have historically been marginalised.
In September, Kingi opposed government’s decision to increase marginalised counties from 14 to 34, saying the move will water down main purpose for the Equalisation Fund.
The Parliamentary Budget and Appropriations Committee last month questioned the move to increase counties and the government’s decision to slash the Equalisation Fund to counties from Sh8.6 billion to Sh4.7 billion.
In September, Treasury slashed Sh55.1 billion from national and county governments’ expenditure for the current financial year, in a bold move to reduce spending in the face of dwindling revenue.
The supplementary budget saw the national government budget slashed from Sh3.026 trillion to Sh2.97 trillion while that of counties was chopped from Sh314 billion to Sh304.9 billion.
CRA attributed the cut on fluctuations in revenue collection projection by National Treasury which was initially set at Sh1.7 trillion in June before being cut to Sh1.6 trillion in supplementary budget.
The Constitution provides a 15 per cent minimum equitable share of revenue for counties from the national government.