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The Commission on Revenue Allocation (CRA) should consider marginalisation when recommending county revenue sharing to avoid dissatisfaction, which can destabilise the country, says Chief Justice Martha Koome.

While swearing in seven new CRA members at the Supreme Court yesterday, Koome intimated that skewed allocation had brewed discontent from a section of county leadership, who felt the allocations were not enough to develop their counties.

“I urge the commission to always bear in mind our history of marginalisation of some areas of this country that has often contributed to dissatisfaction by some of our compatriots with our national building effort, which poses a challenge to national unity and State stability,” she said.

The CRA plays a major role in realising the dream of a fair and just State that is embodied in the Constitution, she said.

The members include Fatuma Gedi, George Midiwo and Wilfred Koitamet Olekina from the Minority Party in the House; and Benedict Mutiso, Jonas Vincent, Isabel Waiyaki and Hadija Nganyi Juma from the Majority Party.

The seven commissioners were approved by the National Assembly last month, after appearing before the House Committee on Finance and National Planning for vetting. They will replace outgoing members whose tenure ended on December 31, 2022.

The CRA’s main role is to make recommendations concerning the basis for equitable sharing of revenue raised by the national government, between the National and County Governments, and among County Governments.

Work is cut out for the new commissioners, who take up their new roles amid a myriad of challenges facing devolved units, which have not been able to adequately tap their own sources of revenues to complement the National Government’s allocation.

This is especially because the current hard economic times and contracted fiscal space do not give much room for increased allocations from nationally raised shareable revenues, which stood at Sh289.6 billion in the first nine months of the 2021/2022 financial year. The current equitable share stands at Sh370 billion.

Huge pending bills

As of March 2022, the Controller of Budget (CoB), Margaret Nyakang’o, said the 47 counties had accumulated pending bills totalling Sh107 billion. This has left contractors and suppliers counting losses.

The devolved units have also been accused of spending more than 35 per cent of their revenues on wages and salaries, contrary to the law. In the Financial Year 2020/2021, Nyakang’o said that only Sh44.3 billion, or 22.8 per cent of Sh212.9 billion disbursed to counties, was spent on development expenditure.

A county OSR revenue potential and Tax Gap report by CRA and the World Bank launched last October indicated that county governments have the potential to collect up to Sh216 billion from their key revenue streams, compared with the current Sh31 billion annually.

In June last year, the CRA and the World Bank partnered in a creditworthiness initiative aimed at enhancing county revenue collection and strengthening financial management. The efforts have since borne fruit, with Laikipia County receiving Cabinet and Parliamentary approval to issue a Sh1.16 billion infrastructure bond, an effort the seven commissioners are expected to build on.

Speaking yesterday, Samuel Nyandemo, who is a senior economics lecturer at the University of Nairobi (UoN), said the county governments will only achieve financial prudence by sealing financial loopholes, going electronic and creating an environment for doing business to enable the collection of more taxes.

“They need specialised centres where businessmen can assemble their merchandise, like local markets with facilities; places they can see that their taxes are properly utilised,’ said Ndemo.