Commission proposes increase of county funds by Sh100 billion

The Commission on Revenue Allocation (CRA) has recommended the increase of county allocation by Sh101.1 billion in the financial year 2016/17.

In a report released on Tuesday, the commission recommended that the allocations be increased from Sh276.4 billion in the 2015/16 financial year to Sh377.5 billion in the next financial year.

The increase will include an increase in the current conditional allocations from Sh16.6 billion in the 2015/16 financial year to Sh20.1 billion in the 2016/17 financial year.

Of this, Sh4.1 billion is set to go towards level 5 hospitals in the counties while Sh4.9 billion will go towards offering free maternal health care.

Sh1.3 billion will be set aside for the compensation of user fees foregone,  Sh5.2 billion will go towards leasing medical equipment while Sh4.8 billion will go to the Road Fuel Levy Fund.

In the proposal, CRA recommends the introduction of allocation for conditional grants with an allocation of Sh25.7 billion.

The grant is set to go towards personnel emoluments for devolved staff (Sh5.2 billion), construction of headquarters in five counties (Lamu, Tharaka Nithi, Nyandarua, Tana River and Isiolo) to the tune of Sh4 billion with each county getting Sh800 million, rehabilitation of primary and secondary schools (Sh5 billion), establishment of county emergency Funds (Sh5.2 billion) and the rehabilitation of village polytechnic at a cost of Sh6.3 billion.

Despite releasing the figures, CRA could not divulge how much each county is set to receive since the second formula for sharing revenues, among county governments, had not been approved by the Senate.

The report is in line with Article 205 (1) of the Constitution that mandates CRA to consider provisions of a Bill that has provisions on revenue sharing and make its recommendations to the National Assembly and the Senate.

According to Article 205 (2) of the Constitution: “Any recommendations made by the Commission on Revenue Allocation shall be tabled in Parliament, and each House shall consider the recommendations before voting on the Bill.”

There has been a public outcry from county governments over the amount of money given to the counties with governors launching the Pesa Mashinani referendum drive to push for an increase in the allocations.

The report, signed by the commission chair Micah Cheserem, further shows that Kenya’s Gross Domestic Product (GDP) grew by 5.3 per cent in 2014 compared to 5.7 per cent recorded in 2013 with economic sectors, except hotels and restaurants, realising tremendous growth.

The slow growth in hotels and restaurants could however be attributed to the reduced activities in the tourism which were as a result of cases of insecurity in the county.

The rate of inflation maintained its single digit level rising from 5.7 per cent in 2013 to 6.9 percent in 2014 and eventually dropping to 6.6 per cent during the first quarter of 2015.

During the review period, interest rates remained stable, with the 91-day Treasury bill rate settling at 8.58 per cent in December 2014.

The Kenya Shilling weakened by 0.9 per cent against major world currencies as reflected in the overall Trade Weighted Index, which deteriorated from 107.06 in 2013 to 107.98 in 2014.

The drop was mainly attributed to depreciation of the Kenya Shilling against the currencies of major trading partners.

The currency depreciated against the US dollar to Ksh97.7 in June 2015 from Ksh 87.92 in June 2014, mainly due to the global strengthening of the US Dollar on the international market, and high dollar demand by importers in the domestic market.

Kenya’s public and publicly guaranteed debt rose by Ksh458.9 billion to close at Ksh2.8 billion (52.8 per cent of GDP) in June 2015 from Ksh 2.4 billion (44.2 per cent of GDP) in June 2014.

In its conclusion the commission urged the national government to transfer all the devolved functions still being performed by ministries, departments and agencies before March 2016 in accordance with the Constitution.

The recommendations have been submitted to the Senate, the National Assembly, the National Executive, County Assemblies, and County Executives for deliberation.