Political greed sabotages devolution's progress, leaving citizens to pay price

It is unclear why the deputy president was designated as the chair of the Ibec instead of the Cabinet Secretary for the National Treasury and Planning. President William Ruto, while serving as deputy president, skillfully leveraged this role to pull the rug out from under his boss. The failure of Uhuru’s administration to convene the Summit as required is partly responsible for the chaotic evolution of our devolution process.

For example, despite being envisioned as semi-autonomous governments, it is troubling that none of the 47 counties can independently pay their employees' salaries without relying on the equitable share of national revenue—12 years into devolution. According to the Controller of Budget (CoB) report for the first quarter of the 2024/25 fiscal year, out of the Sh55.11 billion disbursed from County Exchequers, 70 per cent was spent on salaries and emoluments, 18 per cent on operations, and a meager 12 per cent on development. Alarmingly, at least 10 counties reported zero expenditure on development.

From a business perspective, it is evident that most counties are not financially viable without the equitable revenue share from the national government. Factoring in unpaid pending bills, many would likely be insolvent. However, this is not to say that counties have achieved nothing over the 12 years of devolution.

For instance, the economic activity in Wajir township has noticeably improved since my first visit. The hospitality sector is thriving, security has significantly improved, there is a considerable stretch of tarmac within the town, and I am informed that farming activities outside the town have increased. These are among the tangible benefits of devolution.

That said, the critical question remains: Is the promise of devolution living up to the expectations envisioned by the drafters of the Constitution?

This question brings us back to the three challenges highlighted by the governors at the Summit. Regarding the transfer of unbundled functions and associated resources, this issue clearly reflects the lack of political goodwill at the national level. In November 2017, the Intergovernmental Relations Technical Committee released a report assessing emerging issues in the transfer of functions to national and county governments.

The report identified five functions exclusively devolved under the Constitution that the national government has refused to relinquish: housing, libraries, museums, roads, water and agriculture. For example, in the ongoing Affordable Housing Programme, all implementing agencies operate at the national level despite the projects being carried out on public land owned by county governments. Contractors are sourced and managed by the national housing department, even though each county has a fully established housing department.

In agriculture, why is the national government spearheading the controversial livestock vaccination programme instead of the relevant county departments?

Extending the debate further, the health sector appears to be the most mismanaged function under devolution. The harsh reality is that while primary healthcare and healthcare workers were devolved to the counties, the billions in resources for health services remained centralised at Afya House.

Under the guise of policy oversight, counties have been subjected to costly and ineffective programmes imposed by the national government. For instance, the Jubilee administration pushed the Managed Equipment Services (MES) programme, which cost counties hundreds of millions of shillings deducted directly from their equitable share of revenue.

A parliamentary investigation later revealed that the MES programme was not only overpriced but also shrouded in opaque contracts. Many of the procured machines remain unused, gathering dust in county stores. While the Ruto administration scrapped MES upon taking office in 2022, reports have since emerged that a similar programme was quietly negotiated with a mysterious supplier under the ongoing Social Health Insurance initiative.

This came to light when Nyeri Governor Mutahi Kahiga publicly protested during a media forum, claiming counties were coerced into signing the contracts. Shortly afterward, the president denied forcing counties to participate but inadvertently confirmed the programme’s existence. A Senate investigation into the initiative has since declared it unconstitutional and a blatant encroachment on devolved functions.

On the issue of auditing and valuing assets previously held by local authorities, the national government prematurely disbanded the Transitional Authority, undermining the process. Ironically, former CoG chairperson, Kirinyaga Governor Anne Waiguru, played a pivotal role in the TA’s dissolution during her tenure as Cabinet Secretary for Devolution.

History, though, has a strange sense of humor. The process of auditing, valuing and transferring assets and liabilities from the defunct local authorities has now gained new urgency for a different reason. The Cabinet has approved and initiated the transition from a cash-based accounting system to an accrual-based system for public financial reporting, effective from the current fiscal year.

A major policy shift under this new reporting framework is the requirement for Ministries, Departments, and Agencies to declare and report assets and liabilities in their balance sheets. Previously, under the cash-based accounting system, government assets and liabilities were listed separately and not appended to financial reports.

The International Public Sector Accounting Standards (Ipsas), which was adopted by the government in the 2015/16 fiscal year, allow only a three-year transition from a cash-based to an accrual-based reporting system under Ipsas 33. To comply with these standards, all assets and liabilities previously held by local authorities must be audited, valued and included in county financial reports by the end of the 2027/28 fiscal year.

From this perspective, and with hindsight, it seems our devolution journey has been marred by individual greed for devolved funds at both levels of government. As a result, citizens remain the victims, deprived of essential services.

Merry Christmas, my dear readers.