Divorce is also an option; Economist David Ndii on the revenue sharing formula

The revenue-sharing formula standoff has brought a standstill at Senate with a different faction of leaders advocating for or against the revenue formula.

Economist David Ndii is the latest to add his voice on for or against the bill. According to the 2010 Constitution of Kenya, budgetary allocations in counties are supposed to be done in accordance with the requirements of Article 216 (1) of the Constitution of Kenya (CoK), on a third basis for equitable sharing of revenue among county governments.

Ndii's argument places the term formula as a misplaced entity that sits nowhere on the revenue sharing articles.
"On the matter of revenue sharing, the CoK 2010 uses the language of “basis” as opposed to “formula.” There is in fact no reference to formula anywhere in the articles on revenue sharing. This is on purpose.”

The Constitution recommendation seeks to address four primary objectives; to enhance service delivery, to promote balanced development, to incentivize counties to optimize capacity to raise revenue and to incentivize prudent use of public resources.

According to Ndii, formulas are problematic and for the same reason, they put the country in a forced jacket that it is forced to live with until the next revision is due.

He also argues that the current standoff that centers on whether to put more weight on population or geography in the formula is misplaced as far as the constitution is concerned.

Principles of Public Finance article 201 (b) states that the public finance system shall promote an equitable society and expenditure shall promote the equitable development of the country including by making special provisions for marginalized groups and areas.

This means that the constitution obliges the state to pursue development convergence across the country.

“To illustrate according to the last DHS survey 2014 the national under-five mortality was 52/1000 lowest in Central at 42/1000 and highest in Nyanza 82/1000, North Eastern was 44/1000 slightly above Central. Nyanza and Central are equally populous. It is evident that neither population nor geography captures the health inequality that needs to be addressed. The correct basis for allocation, in this case, is the resources required to bring Nyanza’s child survival to the national average,” argues Ndii.

He further posits,

“Similarly we know that Northern Kenya is grossly underserved in terms of infrastructure. Marsabit County (66,000 km2, Pop 460,000) is 45 times larger than Kirinyaga (1500Km2, Pop 610,000). What would be the rationale of allocating infrastructure money between Marsabit and Kirinyaga based on population?”

As a way forward, Ndii suggests that a consensus document needs to be tabled by CRA . A document that shows the objectives.

“If we set a maximum child mortality of 40/1000 then it follows that the gap between the baseline and the target should be the basis for revenue allocation,” he says.

“This crisis then provides an opportunity for the Senate to abandon the formula straight jacket. We now have seven years of data on the cost of providing services in different parts of the country. We also have good enough socio-economic data to evaluate progress of the equitable development. The politics of “one man, one shilling” is a complete reversal of this principle. It is an attempt to return the country to the trickle-down paradigm of sessional No. 10 of 1965.” he further argues.

In support of equitable share amongst the counties, Ndii emphasizes that Tyranny of numbers and domination of the weak by the strong and ethnic superiority complexes is not an option.

“The people of Marsabit get nothing for their wind resources, but when it comes to sharing revenue the contribution of the wind resource to the revenue counts for nothing. We have seen the national government rush to Turkana to develop infrastructure to exploit oil but when it comes to revenue allocation the investment the oil has brought into the country counts for nothing.”