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HomeBusinessEconomyThe Senate braces for major clash on new County Revenue Allocation formula

The Senate braces for major clash on new County Revenue Allocation formula

Big headache for legislatures ahead of new County revenue allocation formula debate

A storm is brewing at the Senate as it prepares to reconvene on June 30, 2020 for a special sitting to debate on a proposed new formula for revenue allocation to Counties.

The formula proposed by the Commission for Revenue Allocation (CRA) has been revised to factor in enhanced service delivery, promote balanced development, incentivise counties to optimise capacity to raise revenue and to incentivise prudent use of public resources.

According to the CRA, the proposed framework allocates 65 per cent of the revenue for enhancing delivery of public services, 31 per cent for promotion of balanced development, and 4 percent to incentivise revenue collection and fiscal prudence.

Counties that are expected to benefit highly from the formula change include Nairobi, Nakuru, Kakamega and Bungoma Counties.

The counties expected to receive a lower share of revenue are largely in the Northern and Coastal region. They include Isiolo, Samburu, Lamu, Tana River and Taita Taveta Counties.

Contention is already ensuing among Senators, as counties which are scarcely populated are expected to lose part of their share to counties with bigger populations.

Mandera Senator, Eng. Mohammed Mohamud has told a local daily that he would ask the House to drop the formula, saying Mandera County would lose KSh. 2.3 billion from its previous share of revenue, should the new formula be adopted.

“My proposal is that members should shelve this formula and use the previous one.” said Senator Mohamud.

According to Senator Mohamud who chairs the Senate Finance and Budget Committee, Nairobi will get the lion’s share at Sh15.9 billion, while Turkana will receive Sh10.5 billion.

But his Makueni counterpart, Senator Mutula Kilonzo Junior, whose county is expected to benefit from the proposed formula, said the Bill was contentious and will be upon the whole house to determine what formula should be adopted.

“We have a meeting to determine how to proceed. The proposed formula is very contentious and once applied, over 20 counties will lose the revenue they received in the last financial year.” Said Senator Kilonzo.

The National Treasury has proposed a shareable transfer to Counties of KSh.316.5 billion in the 2020/2021 fiscal year. This denotes an increase of KSh.2.5 billion from the last financial year when counties were allocated KSh. 314 billion.

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