CoG rejected the Commission on Revenue allocation’s Sh407 billion

Council of Governors vice chairman Ahmed Abdullahi (left) with Homa Bay Governor Gladys Wanga (centre) and Kakamega's Fernandes Barasa. The CoG rejected the Commission on Revenue allocation’s Sh407 billion equitable revenue shares for counties for the Financial Year ending June 30, 2024. 

| File | Nation Media Group

Why revenue formula irks rich-populous counties

What you need to know:

  • Based on counties’ spending as a share of their respective populations, counties with small populations are big beneficiaries.
  • Council of Governors chairperson Anne Waiguru had on May 11 protested over the skewed allocation of bursaries.

Residents of five sparsely populated counties should reap the most benefits from devolution as their county governments spend more than double the national average expenditure per person.

County governments collectively spent Sh428.9 billion in the 2022/23 Financial Year, which against a national population of 51.5 million translates to an average of Sh8,324 per person.

Each of the residents in the five counties with the least population was entitled to an amount twice the national average, while those in 21 populous counties had below the national average of Sh8,324.

Based on their respective allocations and populations, the five counties (Lamu, Samburu, Isiolo, Taita Taveta and Tana River) had more than Sh16,000 per resident at their disposal.

Data on spending by the 47 devolved units shows huge differences in counties’ spending, both comprehensively and as compared to their populations, even as the debate on a different formula for division of revenues rages, with the push for adoption of ‘one-man one-vote one-shilling’ formula, mainly from Mt Kenya counties.

In the midst of the debate, the Nation has analysed spending by different counties according to figures from the latest Financial Year by the Controller of Budget (COB) and their respective populations in 2023 as projected by the Kenya National Bureau of Statistics (KNBS).

The data shows that counties with highest spending – looking at the money each county spent in 2022/23 – are Nairobi (Sh33.2 billion), Turkana (Sh14.5 billion), Kakamega (Sh14.1 billion) and Nakuru (Sh13.5 billion).

But based on counties’ spending as a share of their respective populations, counties with small populations are big beneficiaries.

Lamu County has the lowest population among counties, estimated at 167,000 this year. While the county also has the least spending comprehensively (Sh3.5 billion), as compared to its population, the county spent an equivalent of Sh21,026 per resident.

With a population of 348,000, Samburu County also spent an equivalent of Sh18,188 for each of its residents in 2022/23, with Isiolo County, whose comprehensive expenditure was Sh5.5 billion, spending an equivalent of Sh17,373 for each of its 316,000 residents. Taita Taveta and Tana River counties close the list of top five counties that spent beyond Sh15,000 for each of their residents.

According to the KNBS population projections, the five counties have a population of 1.548 million this year, and the COB data shows that, together, they spent Sh27.4 billion. Collectively, their spending translates to between 2.02 and 2.5 times of the national per capita spending by counties, which was Sh8,324 in 2022/23.

The counties are beneficiaries of a formula currently used to share national government revenues among county governments, which takes into consideration various factors, including land area, poverty levels and even population.

But there has been a push by some densely populated counties to have population be the main, if not the only, factor to determine the money a county gets from the national government, a debate that has elicited fury from sparsely populated counties and objection from key institutions such as the Commission on Revenue Allocation (CRA).

Council of Governors chairperson Anne Waiguru had on May 11 protested over the skewed allocation of bursaries.

“The money we are issuing as bursaries is very little for sure, we issue Sh2,000 to Sh3,000 but if you go to other parts of the country, they issue Sh15,000 to Sh20,000. I join other leaders urging that we be added funding, especially for bursaries, even if it will be conditional grants depending on population size. The funds we have are not enough based on the population of our counties because we have many residents. Some counties are able to even offer even full scholarships since they have fewer people and enough funds but when you come to Mt Kenya, the money we get is not commensurate with our population size,” Ms Waiguru said

Kiambu County, with a total expenditure of Sh11.86 billion in 2022/23, had the least spending per resident, the equivalent of Sh4,471 for each of its 2.65 million dwellers. It was followed by Nakuru, whose 2.348 million residents got the equivalent share of Sh5,761, as the county spent a total of Sh13.5 billion, and Kisii County’s 1.345 million residents getting the equivalent of Sh5,931.

“The World Health Organisation estimates the county's population at roughly 3.7 million. However, CRA continues to utilise the 2019 population census report, which puts the county's population at 2.6 million, and the number of people continues to rise due to rapid urbanisation. Despite being a deserving county, Kiambu County has endured the stigma of being a prosperous, developed county that does not merit the correct allocations under the boundaries of poverty, marginalisation, and population parameters,” argues Kiambu Governor Kimani Wamatangi.

With the battle to push for population as the only parameter for division of revenues to counties getting harder, Mr Wamatangi is now making a case before the CRA to consider Kiambu among the Arid and Semi-arid Lands (Asal) counties.

He argues that several parts of the county are affected and “deserve equalisation funds to meet the needs of the habitat.”

“The county currently suffers from the image that it is an affluent county that does not require additional funding to raise the socioeconomic status of its citizens because a small number of wealthy people were used as the indicators in the poverty rate calculation,” Mr Wamatangi says.

In per capita terms, Lamu spends 4.7 times the spending by Kiambu, Samburu (4.07 times), Isiolo (3.9 times) and Taita Taveta (3.8 times).

The CRA currently uses a formula known as the Third Basis- applicable between 2020/21 to 2024/25. The basis apportions revenues based on functions of a county government and the need to ensure that all Kenyans get a decent life, notwithstanding where they are.

“The over-arching objective of the Third Basis recommendation is to ensure equitable sharing of revenue among counties. This is necessary to promote social and economic development and to provide proximate, easily-accessible services throughout Kenya,” the CRA says.

Main factors that determine the amount a county gets in revenues from the national government are basic share (20 percent weight), other county needs (18 percent), health (17 percent), poverty (14 percent) and agriculture (10 percent). This means that counties with heavier needs on these factors get more money than those with lesser needs.

Population is weighted at 18 percent, with parameters such as health, agriculture, urban services, roads and poverty also having some population aspects in them.

In the heat of the ‘one-man one-shilling one vote’ debate, Samburu Governor Jonathan Lelelit argues that it would be inconsiderate of some densely populated counties to defend a formula that only relies on the number of people a county.

“It’s not a good formula because when you rely on population alone in the county division of revenue bill, it means that some small counties with highly developed infrastructure will take all the money,” Mr Lelelit explains.

He adds: “Consider a situation where you have so many people, you have tarmac roads and big, well-equipped hospitals, and then our brothers somewhere have a smaller population and they have nothing. For the unity of our country, for the development of our country, we must have a multi-varied formula that encompasses all aspects.” .

Mr Lelelit says most of the Asal counties have only witnessed practical development just after the onset of devolution: “The current formula works well because there is a shareable revenue, then it brings in other parameters like land and population. The moment you stick to population alone, you are taking this country back to what the colonialists did, it is a colonialist formula and we will not accept it.”

The CRA maintains that the practical way for proper division of revenues to counties is to incorporate multiple factors, including population, economic activity, land area and specific needs assessments.

Most of the Mt Kenya governors who have pitched for the population matrix have argued that with huge populations and relatively lower revenues, densely populated counties are left spending too much on recurrent activities.