Counties need more money and flexibility to pursue development goals

President Mwai Kibaki displays the new Kenyan constitution to the nation after he promulgated and signed it into law at a public function at Uhuru Park, Nairobi. [Reuters]

This week, the country celebrated the 14^th year since promulgation of the Constitution 2010. In the prophecy of the Chicago Law School’s Comparative Constitutions Project, a constitution has a good life for just about 19 years.

Thereafter it may wear out and may no longer support the realities of the social contract aspirations between the citizens and the state.

Yet of all its babies, Kenya’s big picture dividends from the constitutional reform process two decades ago arguably remain the devolution of power to the 47 units, which gave birth to a two-level framework of governance.

But devolution is a complex affair. While it can still be said to have been the turning point in Kenya’s governance model, devolution has proved to be inherently expensive.

It is clear that schedule IV functions assigned to county governments suffer underfunding, and in a sense, grants to observers the impression that counties do not have the right bureaucracy for the complex management and successful execution of those functions.

Others have argued that the national government only reluctantly skinned away some of its powers but ensured that they denied the devolved units the resources they need to properly execute the new responsibilities.

The transfer of new institutions to the counties has not been matched with the requisite redistribution of resources necessary to boost exemplary transformation of the sectors assigned to the counties. The jury is still out.

Look at this country again. Although many regions can take pride in monumental leaps in social and economic development since devolution was born, ranging from infrastructural expansions to basic service provisions in healthcare, early childhood education and even the boost to village economies, the optimism is undercut by signs of regional technical malaise and financial distress in the counties.

Fourteen years into devolution, counties are burdened with varied pending bills, stagnant projects huge ramifications on the private sector. County finances are in a quandary and commendable and innovative experiments such as the regional economic blocs such as the Lake Region Economic Bloc, the North Rift Economic Bloc, Jumuia Ya Kaunti Za Pwani or the Frontier Counties Development Council do not seem liquid either. So where would the money to fund implementation of these development visions come from?

It is not that the country has unlimited resources. Observers are only groaning about the allocation caps to counties. The allocation of the equitable share of the national revenue gobbles up about 15% of the annual national revenue to counties based on annually audited accounts.

There is the problem of shrinking revenue flows into the National Treasury but that aside, the allocation of money to counties has perennially delayed and is often unpredictable. This constitutional cap in county revenues cannot match the functional needs of the counties in terms of the multiple sectors that are devolved.

The fact is that counties are way too starved of financial resources to effectively and efficiently implement their mandates in integrated recurrent and development planning.

Sometimes it appears that the statistical craft in the limitation of county funding was a deliberate minimalist choke in the throat of the counties to remind them of their subservience to the national authority. The government has not been keen on tackling this issue. Counties in this sense appear to be bound to keep tottering on the verge of failure.

Kenya’s 2010 constitution nonetheless also affirmed libertarian values and principles that have fortified the culture of popular representation as well as public participation. If Kenya is a popular democracy, then its commercial aura has also had a tinge of these values. These have been typically the prompters of agitated litigation seeking to affirm the rights.

In the parameters of judicial review, for example, debtors and other grievant (s) of public administration decision-making keep trooping to the courts much more than they did two decades ago.

Suppliers contest decisions of public procurement bodies which in their view go against the law; contractors with pending bills enforce successful litigations with orders of mandamus against county officials, and often, labor unions test compliance with the signed frameworks of the collective bargaining agreements.

This means that judicial officers are drawn more routinely to issues of public governance as well. Some people think this is a judicial overreach.

However, it has also been a test of the legitimacy of the constitutional spaces addressing the character of commercial disputes with public agencies post the 2010 constitution. Judicial response to such issues has been disparate, sometimes with painstaking episodes.

Amidst the cash crunch, in some cases, there have been instances where county fathers and mothers have taken cover to dodge court officials fearing arrest by agents of debtors armed with warrants to enforce relevant writs.

The crisis of pending bills in the counties means that pledges of payment can become a question of the Russian roulette, sometimes unpredictable and suspect.

Corruption and rent-seeking are alleged in the pursuit of county cheques but to think that this is wholly the issue is to ignore the elephant in the room. Counties have very little funding for what they have to do to keep the devolved units running. How do we expect county executives to deliver in such environments?

Counties require more stable funding. The government can use the opportunity afforded to it now in the discussions for policy, legal and constitutional reforms to ensure more flexibility in the county borrowing portfolio while at the same time attending to persistent institutional challenges that still permit pilferages and wastage in public spending.

The constitutional principles and criteria for distribution of resources captured under article 201, 202 and 203 of the constitution is not at fault, but beyond the horizontal distribution formulae, it is time to take care of the intra-county variations.

Nairobi, Mombasa, Kisumu, Nakuru and Eldoret for example, are city counties basically succumbing to the same constitutional criteria each time they are considered for the equitable share of revenue financing. Yet for their historical baggage and plans for future take offs, their modes of funding should be considered differently, with justifiable enhancements.

So long as the system punishes laggards and reward good governance and efficiency, the government should free up new financing models to the counties. The two tiers of government should consider reforms that help county development budgets with longer loan repayment plans than the envisaged short-term borrowing and trade in securities.

Lessons in the last years can sufficiently attest to the fact that what the counties are receiving now cannot take the devolution dream to the next level.

County funds can be strengthened already by rationalizing the national funds dispersed across the countless SME and demographic funds ran by the national government to enable the counties to get shares of these funds to fund their integrated county development plans. And what is more?

A decade and a half since the introduction of devolution in Kenya, it is time the requisite technical financial capacities in the public bureaucracy of the counties was strengthened to get better involved with multilateral loan models and donor financing for larger development goals and sustainable institutionalization.

Conversely, it follows that the monopoly bestowed on the national government with regard to public borrowing should be debated. All economic development is local.

Obviously, the ratio of equitable share of revenue to counties must be reviewed upwards, and even with Article 212 that allows counties to borrow funds on guarantees by the national government, the very loan mandate of the national system should also be grazed a great deal.

The human macro-economic superstructure within county treasuries must also be boosted significantly within the very principle of separate but interdependent devolved governance promised by the Constitution 2010. 

Aluoka is an Advocate and a Policy analyst