Yatani calls for cash crisis talks with senators and governors

The National Treasury is racing against the clock to save county governments from a financial crisis as the impasse over the proposed revenue-sharing formula persists.

The Cabinet Secretary for National Treasury and Planning Ukur Yatani has convened a crisis meeting tomorrow with Senate leadership, Council of Governors, Controller of Budget and Attorney General in the hope of unlocking the stalemate.

In his letter dated July 30, 2020, Mr Yatani has invited the officials for the virtual meeting that will discuss modalities of releasing the cash for the Financial Year 2020/21 in case the Senate stalemate persists.

“In light of the delays in approval of the County Allocation of Revenue Act, 2020, the National Treasury is calling for a meeting to discuss options of unlocking funds transfer to county governments to ensure smooth delivery of services,” Mr Yatani said in his letter to the leaders seen by the Sunday Nation.

The virtual meeting will be held tomorrow starting from 10am.

Those set to attend the meeting, according to Mr Yatani’s letter, includes Senate Speaker Kenneth Lusaka, Council of Governors (CoG) Chairman Wycliffe Oparanya, CoG Finance Committee chairman Wycliffe Wangamati, Senate Majority Leader Samuel Poghisio and Majority Chief Whip Irungu Kang’ata.

FINANCIAL CRUNCH

Also in the team is Attorney General Kihara Kariuki and Controller of Budget Ms Margaret Nyakang’o. The minority side in the Senate have been left out, according to Mr Yatani’s letter.

Mr Lusaka confirmed the meeting, citing an urgent need to find a solution and save the counties from financial crunch.

“We want to find ways of unlocking the deadlock because counties need to continue with their operations. We are going to discuss how we can deal with the delays in the formula and salvage the counties from a financial crisis before a decision is made on Tuesday,” Mr Lusaka told Sunday Nation.

Mr Kang’ata, the Senate Majority Chief Whip said that they were making every effort to settle the matter.  Speaking in Murangá, Mr Kangáta said President Kenyatta and ODM leader Raila Odinga have taken over the task of winning two more senators to their side to tally at the 24 required to pass the government backed formula to fund counties for the 2020/21 fiscal year.

 The two, he said, “are on a mission to win two missing sheep from the Handshake cooperation politics” ahead of next Tuesday Senate vote for the formula that was postponed last Tuesday for lack of enough support.  He said the bigger burden to pass the formula is on Odinga’s shoulders.

 In a show of rare solidarity and perhaps a thin veiled threat to the Building Bridges Initiative (BBI) and Handshake politics, Kang’ata was flanked by Tangatanga wing of Jubilee MPS led by Kiharu’s Ndindi Nyoro and Mathira’s Rigathi Gachagua.  They were speaking in Kiharu after the burial ceremony of Nyoro’s grandmother on Friday.

And on Saturday,  Mr Kangáta  was still optimistic that the issue will be resolved on Tuesday.

“Counties that have been traditionally marginalised need to be supported. Indeed as a Senate we need to hasten the Equalisation Fund Bill. The third generation formula retains the preference given to those counties. They will enjoy highest per capita share of devolved funds by a very high margin,” Mr Kang’ata said.

DEVOLVE MORE FUNDS

Within the next few months, he noted, “we shall devolve more funds, at least 35 per cent of all revenue collected nationally but we continue to give marginalised counties audience as Kenya belongs to everyone.”

But Laikipia Governor Ndiritu Muriithi said there is already a provision in the law to release the money even as the senate discusses the revenue stalemate.

He added that the delay to disburse funds to counties is National Treasury’s making as there is nothing that currently stops it from doing so.

“The Supreme Court advisory of 2019 held that even where there is no revenue law, the National Assembly shall authorise vote on account of up to 50 per cent of the previous allocation. That should be done. Nevertheless, in the current stalemate, we not only have a division of revenue act, but also the current basis of allocation. That is enough,” added Mr Muriithi.

The proposed crisis meeting will be held on the backdrop of counties that are cash starved staring at a crisis, with operations likely to grind to a halt because National Treasury has yet to disburse funds.

For the sixth time, Jubilee and opposition senators last Tuesday failed to end the stalemate over the blueprint authored by the Commission on Revenue Allocation (CRA), even after extending their sitting well into the night.

The standoff, governors say has hampered services, delayed salaries and is derailing the fight against Covid-19.

This, coupled with the fact that Treasury has not disbursed the June and July allocations, means the devolved units will be in bigger problems if the stalemate drags on.

However, sources within the CoG said they were hopeful that an amicable solution will be found tomorrow.

CONFUSION

Confusion, 2022 politics and the resolve by some senators to defend their counties have led to the failure by the Senate to reach a consensus.

The impasse on the formula has led to a rebellion with President Kenyatta, Mr Odinga and Deputy President William Ruto feeling the heat.

President Kenyatta has been accused of being "opaque" thus a stumbling block in unlocking the deadlock. Senate Minority Leader James Orengo told the Senate that the President "has been inaccessible at the country's hour of need."

Mr Odinga is also under pressure to appease Coast region, his usual voting bloc following their threat to leave the Orange party, even though ODM Secretary General Edwin Sifuna has linked those issuing the threats to DP Ruto’s Tangatanga.

Dr Ruto on the other hand, is on the receiving end for sitting on the fence over the matter.

On Saturday, he called for an amicable solution to the impasse.

Last Tuesday, a proposal to have the third basis formula for allocating funds to county governments deferred for two years failed after senators voted against it. The report of the Finance and Budget Committee that considered the formula as developed by the Commission on Revenue Allocation (CRA) had recommended that the formula, which benefits counties with a large population and disadvantages those with huge land mass and smaller population, be applied from 2021/22 financial year.

An amendment by Senate Majority Chief Whip Irungu Kang’ata was also defeated by senators.

Senate Minority Chief Whip Mutula Kilonzo Jnr told Sunday Nation that the issue that messed the whole process was the denial of funds as demanded by senate in the last two financial years.

“The third generation formula was predicated on shareable revenue of Sh345 billion or more. The minute we allowed the temptation to apply new data, new parameters on a figure that has remained constant for two years, we knowingly entered into a dark and slippery path to divisive and cantankerous debate,” said Mr Kilonzo.

The push for only one method he noted, created clear divisions that were characterised by the voting on Tuesday.

“In the end, we ended with a rainbow alliance - the perceived losers and a few of the gainers. The illusion that gainers would support the proposals without questioning it blinded the proponents. It was made worse by the name dropping. The positions hardened at every adjournment because it appeared someone was pulling a fast one on members,” the Makueni senator said.

Suspicion and mistrust, he added, contributed to the emotional debates witnessed at the chambers.

Jubilee Nominated Senator Isaack Mwaura termed the government’s side as disorganised.

“I think the government side was disorganised and it wasn’t clear to many what the defeat of the amendment meant. Some 2022 politics came to play and some people chose to play national politics and others regional politics,” noted Mr Mwaura.

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Additional reporting by Mwangi Muiruri