CRA Chairperson Mary Wanyonyi, Kakamega Governor Fernandes Barasa (left) and his Mombasa counterpart Abdullswamad Sherrif Nassi addressing journalists at a Nairobi hotel on June 18, 2024.
The Commission on Revenue Allocation (CRA) has sided with governors over their refusal to have the counties’ equitable share of revenue slashed by Sh20 billion.
The Commission maintained that allocation to counties for the financial year ending June 2025 should be retained at Sh400.1 billion as approved by Parliament.
The Division of Revenue (Amendment) Bill, 2024 proposes to allocate county governments Sh380 billion for the current fiscal year on account of the revised revenue projections. The amendment seeks to reduce the counties equitable share by Sh20.12 billion.
Appearing before the Senate’s Finance and Budget committee yesterday, CRA chairperson Mary Wanyonyi said the ordinary revenue is projected to increase by Sh379.1 billion and therefore there is no justification to reduce counties’ allocation.
She told the committee chaired by Mandera Senator Ali Roba that despite actual ordinary revenue falling below projections in all the financial years since June 2014, except the one ending June 2021, actual revenue has grown in absolute terms. Accordingly, county allocations have increased annually, save for the financial years 2020/21 and 2022/23 when they were retained as was in the previous year.
“It would not make any sense reducing the counties’ revenue allocation given that in the last allocation, the devolved units received Sh385 billion from the National Treasury,” said Ms Wanyonyi. “It is necessary that both levels of government are adequately financed to perform their functions.”
Ms Wanyonyi argued that national government allocations as a proportion of actual revenue have grown steadily from 79.3 per cent in the year ending June 2014 to 82.7 per cent in the last fiscal year. However, the allocations to the counties have declined from 20.7 per cent to 17.3 per cent over the same period.
“If the actual revenue raised nationally in the financial year falls short of the expected revenue set out in the Schedule, the shortfall shall be borne by the national government,” said the CRA boss.
In their submissions, a total of 14 governors also rejected the reduction, terming it unconstitutional and an attempt to erode devolution gains.
Council of Governors (CoG) Vice-Chairperson and Wajir Governor, Ahmed Abdullahi, said the national government has the window of using loans to plug any revenue shortfall unlike counties.
CoG legal committee chairperson and Makueni Governor Mutula Kilonzo Jr said this is the first time such an amendment is being brought before Parliament, saying agreeing to such a move will reverse gains the Senate has made on matters revenue. He argued that should the Bill pass, Senate would have set a terrible precedence.
