Treasury allocates Sh385b to devolved units next year

It is now official: the 47 county governments have been allocated Sh385.4 billion in the next financial year.

However, Parliament still has power to vary the amount, but if National Assembly and Senate pass the recommendation without amendments, the money will be disbursed starting July 1.

Prof Njuguna Ndung’u, the National Treasury Cabinet Secretary has forwarded to the Senate the proposed allocation, which is contained in the draft Division of Revenue Bill and County Allocation of Revenue Bill (CARB) 2023.

This is part of the Budget preparation process that will culminate with him presenting his first ever Budget estimates in Parliament in mid June.

The allocation is about Sh40 billion less than the Sh425 billion that county governments, through the Council of Governors (CoG), had asked for.

However, it is also Sh15 billion more than the Sh370 billion that Treasury had initially insisted on disbursing. Treasury had said the national government was experiencing financial difficulties, making it difficult to meet governors’ demands.

Share of Revenue

“The county governments’ equitable share of revenue raised nationally for the financial year 2023-24 is arrived at by growing the county government’s equitable share for 2022-23 of Sh370 billion by a growth of Sh15 billion and additional Sh0.42 billion as attendant resources for library services,” the Division of Revenue Bill reads in part.

CoG, currently chaired by Kirinyaga Governor Anne Waiguru, differed with the National Treasury and the Commission on Revenue Allocation (CRA) over the amount that should be allocated to the devolved units in the next financial year.

While the Treasury had initially proposed an allocation of Sh370 billion, governors demanded Sh425 billion with CRA recommending Sh407 billion.

The Jane Kiringai-led commission had argued that the Sh407 billion would translate into 23.5 per cent of the most recent audited and approved accounts for the financial year 2019-20. The national government was to retain the rest of the money

“Informed by the performance of revenue, the commission recommends an increment in the allocation to each level of government for the financial year 2023/24. The national government allocation be increased from Sh1.81 trillion to Sh2.2 trillion and county governments’ allocation be increased from Sh370 billion to Sh407 billion,” reads part of CRA recommendations.

Basic share

According to the Commission, the Third Basis for revenue sharing includes basic share (20 per cent), population (18 per cent), health index (17 per cent), poverty head count (14 per cent), agriculture (10 per cent), Land (eight per cent), rural access (eight per cent) and urban services (five per cent) respectively.

The Third Basis for revenue sharing has a baseline allocation to each county equivalent to 50 per cent of a county’s actual allocation for financial year 2019-20, which was Sh316.5 billion.

However, the Treasury’s move to enhance the allocation appears aimed at enticing the county bosses to resolve the crisis.

Out of the total proposed allocation, some Sh158.25 billion will be shared out equally among the 47 counties. The balance — Sh226.75 billion — will subject to a sharing formula.

Big gainers

The formula takes into account various parameters that include population, which will for account 18 per cent, health (10 per cent) and agriculture (five percent). Others are land index (eight per cent), roads (20 per cent,) urban (14 per cent) and poverty (eight per cent) of the basic share.

If Parliament agrees with the Treasury and approves the proposal, Nairobi, Nakuru, Turkana, Kakamega and Kilifi counties will remain the top big gainers.

CRA states that the recommendation has been made against the backdrop of economic recovery from the effects of the Covid-19 pandemic, which is expected to improve revenue performance.

Conditional grants from development partners are earmarked for financing health, agriculture, urban development, water and sanitation, social protection and capacity building.

Nairobi revenue share

According to the proposed allocation, the City County of Nairobi will get Sh20.05 billion, an increase from the current allocation of Sh19.24 billion. It will be followed by Nakuru with Sh13.59 billion, up from the current Sh13.04 billion and Turkana (Sh13.12 billion) up from 12.60 billion.

Currently, the Nairobi County government has put in place a panel to audit payment of pending bills owed to lawyers, which currently stand at Sh21 billion.

As at last week, the  panel had managed to do about 25 per cent of the work, with the remaining work being confirmation of the bills, with most of the claims being hit by slow pace lawyers and legal representatives confirming their bills.

Kakamega and Kilifi will each get Sh12.91 billion and Sh12.11 billion respectively, up from Sh12.38 billion and Sh11.44 billion respectively.

Other counties that will get huge allocations are Kiambu, Mandera, Bungoma, Homa Bay, Mandera and Narok counties.

Kiambu will get Sh12.22 billion, up from Sh11.71 billion while Mandera will receive Sh11.62 billion from Sh11.10 billion. Bungoma is set to get Sh11.10 billion, an increase from Sh10.65 billion.

Wajir is scheduled to get Sh9.86 billion from Sh9.47 billion and Homa Bay Sh8.11 billion from Sh7.80 billion.

Among other big beneficiaries are Mombasa and Kisumu counties, which are set to get Sh7.86 billion and Sh8.57 billion, an increase from Sh7.56 billion and Sh8.02 billion respectively.

Counties with lowest allocations include Lamu, Elgeyo Marakwet and Isiolo.

Lamu will get Sh3.25 billion, an increase from Sh3.10 billion, Elgeyo Marakwet will receive Sh4.80 billion, up from Sh4.60 billion in the current financial year while Isiolo will get Sh4.90 billion, up from Sh4.71 billion.

The total allocation includes Sh425 million for running of libraries.

“Library being a devolved function as provided for under the Fourth Schedule of the Constitution, has been unbundled and attendant resources amounting to Sh425 million identified and proposed to be fully transferred to county governments as part of the equitable share in FY 2023-24,” the Bill states.

However, both Houses of Parliament will make the final decision on the proposed allocation.