Counties’ Sh370bn revenue deal sealed

 Deputy President William Ruto chaired a forum for cooperation between national and county governments yesterday, which approved an equitable share allocation of Sh370 billion to the devolved units — Sh44 billion more than Treasury’s proposal.

The recommendation followed yesterday’s meeting of the Intergovernmental Budget and Economic Council (IBEC), which was also attended by Treasury Cabinet Secretary Ukur Yatani, who had earlier indicated counties would receive Sh326 billion.

In this year’s Budget Policy Statement (BPS) tabled in Parliament, the Treasury has proposed the equitable share for counties be increased moderately by Sh10 billion to Sh326.5 billion.

But senators on Tuesday warned that they will shoot down the Division of Revenue Bill, 2021, unless the funding is increased to Sh370 billion that President Kenyatta had promised last year.

A statement from the Deputy President’s office indicated that following IBEC’s intervention, counties will receive Sh409.88 billion in the next financial year .

The figure comprises  Sh370 billion in equitable share, conditional allocations from the share of national government revenue of Sh7.53 billion and conditional allocations from proceeds of loans and grants from development partners of Sh32.34 billion.

Early disbursement

“The increase in resources will facilitate post-Covid-19 economic recovery in the counties as well as ensure sustained service delivery,” Dr Ruto said.

The Council of Governors Finance Committee Chairman Ndiritu Muriithi welcomed the new allocations. “We hope this leads to timely enactment of the Division of Revenue Bill and early disbursement of money to counties. Last year, differences between governors, the Treasury and Commission for Revenue Allocation led to delays of up to six months, which crippled our operations,” said Mr Muriithi, who is also the Laikipia Governor.

The Sh370 billion was arrived at by adjusting the counties’ 2020/21 financial year allocation of Sh316.5 billion by Sh36.1 billion and converting four existing conditional allocations to county governments into “unconditional grants”.

Counties also have headroom to collectively borrow Sh60 billion. A source told the Nation that the cash was added after the BPS had already been tabled in Parliament and the document may be updated.

Dr Ruto said the growth is derived from anticipated improvement in revenues raised nationally in the 2021/2022 fiscal period when the effects of Covid-19 are expected to ease.

The meeting was also attended by Commission for Revenue Allocation chairperson , Dr Jane Kiringai, Controller of Budget, Dr Margaret Nyakang’o, principal secretaries and county executive committee members.

The Senate approved the third generation for sharing national revenue among county governments on condition that the formula’s implementation would be preceded by a Sh53.5 billion increase in the equitable share.

During debate in the House on Tuesday, the legislators expressed fears that the third generation revenue sharing formula would be breached. 

Revised upwards

“The proposal (of Sh326 billion) is an attempt to circumvent the resolution of this House through the backdoor,” Nairobi Senator Johnson Sakaja warned, promising to ensure that the figure is ‘resoundingly’ rejected by the House when the Bill comes for debate.

Minority Leader Mutula Kilonzo Junior warned the Treasury that insisting on Sh326 billion as the new baseline “is like pushing the camel through the eye of the needle” , saying he would not whip members to pass the Bill “unless the figure is revised upwards”.

“I am not going to whip members to pass Sh326 billion. I will sit here and wait it to fail because the senators will not agree to pass it after the effort they put in last year,” said Mr Kilonzo.