24 counties to lose billions in new revenue sharing formula

A fresh row is brewing over a new formula for sharing revenue that will see 24 counties lose Sh12.2 billion.

The proposed fourth revenue sharing formula has raised a storm, with Governors and a section of MPs saying 23 devolved units will gain because of the relatively larger landmass.

They say the proposal puts more emphasis on land size over population.

According to the formula, the 24 counties will lose approximately Sh500 million each although Mandera will stand to lose Sh 2.billion per year or Sh10 billion in five years.

The draft prepared by the Commission on Revenue Allocation (CRA) will, if approved, dictate revenue sharing for five years from 2025/2026.

It introduces determining parameters such as poverty weighted at 23 per cent, population 33 per cent and basic share at 26 per cent. Geographical size will account for 10 per cent while roads and economic activities will each be weighed at four per cent.

This, according to the Council of Governors (COG), is a major shift from the third basis as this new model departs from the sector-based parameters.

“This implies a major shift in the data sets used in the various parameters and as a consequence, some counties will lose resources as others gain and for these reasons the COG rejected the draft fourth basis with recommendations,” said COG chairperson, Ann Waiguru.

Source of suspicion

The Kirinyaga Governor said on average Mandera County will lose the highest amount of Sh2.19 billion and Kirinyaga Sh260 million.

“Our recommendations for the proposed formula is that in any case and upon implementation of the new allocation criteria, no county shall receive less than the allocation it received in the financial year 2024/25 based on the equitable share allocation of Sh400,116,788,147 under the Division of Revenue Act, 2024.”

The Governors also want a uniform allocation of Sh1 billion be provided to the counties currently receiving under Sh6 billion for affirmative action.

Governor Fernades Barasa said Kakamega would lose Sh1.2 billion, with the proposal seeking to reduce the Sh13 billion it received in the 2024/2025 to Sh12 billion.

“The principle is and should always be that no county should lose its revenue allocation which is against the spirit of devolution,” he said.

Nyeri Town MP Duncan Maina termed the proposal as harmful, noting that it risks creating suspicion among counties.

“A closer look at the draft basis simulations indicates that only three counties from Mt Kenya region, Embu, Laikipia and Nyandarua, will gain from the proposal. The population parameter has been reduced from 45 to 33 while the household parameter, which was in the third basis revenue sharing formula, has been removed. It goes against President William Ruto’s concept of uniting the country and must be reversed,” he said.

He said a proposal that appreciates less land mass in highly populated areas like Nyeri should be incorporated in the fourth base revenue sharing formula because of the high cost of construction of public utilities such as markets and schools.

“Even as CRA considers land mass as a factor of revenue allocation, which is a gain to most of the counties from arid and semi-arid areas, those other counties with less land mass like in Nyeri where we are forced to build classrooms horizontally because we don’t have vertical space, we should also be factored in the proposal.” Mombasa Governor Abdullswamad Nassir said although his county stood to gain, he was opposed to the proposal, saying he first wanted the CRA to validate the Kenya National Bureau of Statistics data.

“The formula needs to consider the strategic economic growth position of counties to the country and rationalise increased allocations for health, land, water on land and terrestrial and blue economy and coastal communities’ vulnerabilities with climate change,” he said.

This comes against a backdrop of Deputy President Rigathi Gachagua’s proposal of one-man-one-vote-one-shilling formula of resource sharing, which would favour areas with high population as opposed to the land size.

“In matters of revenue sharing, and for the avoidance of doubt I am a believer and a proponent of one-ma-one-vote-one-shilling, resources are about people,” Gachagua said in remarks that may now ignite mixed reactions.

In the new formula, Marsabit, which received 7.8 billion in the last financial year, will be among the highest gainers as the CRA proposes Sh10 billion, gaining close to Sh2 billion.

Losers and winners

Other counties to gain from the proposed model are Turkana (Sh1.3 billion), Kajiado (Sh1 billion), Garissa (Sh950 million), Laikipia (Sh732 million), Elgeyo Marakwet (431 million), Bomet (661 million), Busia (667 million) and Taita Taveta (Sh429 million). 

Some of the losers include Kakamega (Sh1.3 billion), Kilifi (Sh1.1 billion), Kwale (Sh908 million), Bungoma (Sh854 million), Meru (Sh751 million) and Nairobi (Sh688 million).

During the preparation of the third sharing formula for the 2021/22 financial year, there was chaos in the Senate as leaders failed to agree on the proposal, leading to more than 10 sessions as the legislators bickered.

This was after a report of the Finance and Budget Committee considered the CRA formula, which benefited counties with a large population and disadvantaged those with huge land mass and smaller population.

jgachane@standardmedia.co.ke