Senators and Members of the National Assembly are headed for mediation after the latter rejected an amendment to the Division of Revenue Bill, which would have increased the allocation to counties from Ksh405 billion to Ksh465 billion.

The MPs rejected the Senate amendments on the grounds that the current fiscal space does not allow a review of monies upwards.

Led by the Leader of Majority, Kimani Ichung’wah and Bumula MP Wamboka Wanami, the MPs said increasing the said allocations by a whopping Ksh60 billion would be ‘abnormal’.

The bill’s objective is to provide for the equitable division of revenue raised by the National government among the National and County governments in order to facilitate the proper functioning of governments and to ensure continuity of service delivery to its citizens.

“This bill, as approved by the House, had about Ksh405 billion, but the other House has since amended that and proposed that we increase that to about Ksh465 billion, that is Ksh60 billion above what is agreed. And bearing in mind the fiscal space that we have, it may not be practical to increase by Ksh60 billion. Having considered that, we thought it’s only fair that we reject this amendment by the Senate to allow us to go into early mediation and, therefore, beg to move the House to reject in totality this proposal by the Senate,” Ichung’wah told the National Assembly in a motion that was seconded by Wanami.

According to the Bumula legislator, they had to bear in mind the fiscal space the country is operating in, as it would be abnormal for anyone to think the House should be increasing these allocations.

The decision of the MPs comes after last Wednesday, when senators approved the Ksh465 billion to be disbursed to the 47 devolved units as shareable revenue, enhancing it from the Ksh405 billion approved earlier by the National Assembly.

Pressing obligations  

Senate Finance and Budget Committee Vice Chairperson Tabitha Mutinda, whose committee proposed the enhanced allocation, said the decision was informed by several pressing financial obligations that counties are currently expected to meet.

They include non-discretionary expenditures such as the Ksh4.1 billion for the Housing Levy, Ksh6 billion for contributions to the National Social Security Fund (NSSF), Ksh11.8 billion for County Aggregated Industrial Parks (CAIPs) and Ksh3.23 billion for community health promoters’ payments.

There is also Ksh6.3 billion for Integrated Payroll and Personnel Database (IPPD) annual wage increments and Ksh3.5 billion for doctors’ salary increases under the 2017 Collective Bargaining Agreement and return-to-work agreements as discretionary expenditure.

“These counties are being forced to shoulder non-discretionary expenditures amounting to Ksh34 billion, imposed by national government directives,” Mutinda said.

Senate Majority Leader Aaron Cheruiyot raised concerns about the financial sustainability of county governments, noting that if they were businesses, most would be in distress due to low own-source revenue (OSR).

He also cited low revenue collection caused by ongoing global economic disruptions, including geopolitical shocks, supply chain issues, and rising interest rates in the United States, which have destabilised currency exchange rates and international debt markets.

“About 34 out of 47 counties spend more than 50 per cent of their shareable revenue on recurrent expenditure. Less than 10 counties allocate more than the statutory 25 per cent on actual development,” Cheruiyot observed, citing provisions of the Public Finance Management Act.

The Kericho senator argued that it made no sense to fight for Ksh400 billion or Ksh450 billion for counties when 90 per cent of that money is misappropriated.  

“Why should we send that much if over half of it is used to pay 300,000 to 400,000 people, excluding millions of others?” he posed.

Eddy Oketch (Migori) criticised the continued delays in processing audited financial reports. According to Oketch, despite a High Court ruling that Parliament must consider such reports within three months, two years of audits remain unapproved.

“If the latest audited report was used, counties would receive Ksh470 billion. It is unjust to propose allocations based on outdated financial years when projections show revenue collection at Ksh2.7 trillion,” he said.