By Javas Bigambo
BACKGROUND
This paper looks at devolution in Kenya and attempts an assessment of how it has been designed, how it shall be implemented and how successful or challenging it promises to be in achieving the intended objective of being an instrument of promoting participation of the people and county governments in decision-making with regard to revenue allocation and appropriate resource distribution.
The paper specifies a working understanding of decentralization (devolution) and attempts to answer questions such as: (i) what are the practical reasons and objectives for devolution? (ii)Through what processes, modalities and mechanisms will revenue be allocated by the Commission for Revenue Allocation and how does such a process facilitate or constrain its implementation and success? (iii)if devolution was intended to promote participation in decision making in county governments, what was introduced in designing decentralized governance, to institutionalize participatory decision making?
The thrust of this paper is an in-depth analysis of the politics of revenue allocation cum resource control. The paper thus takes a cursory look at virtually all previous attempts at arriving at equitable formula.
As a governance tool, decentralization is based on the principle of subsidiarity , which assigns specific functions hitherto conducted by the centre (of an entity) to the lowest feasible subcentres on the periphery. In modern or post-independence Public administration, historically African countries have experienced fused, personalized and at best highly centralized governance systems and practices. In pre-colonial Kenya, paramount chiefs or traditional leaders represented basically all authority. During the colonial and immediate post-colonial periods governance was structured and practiced in a highly centralized manner so as to tighten the grip and control on power, retain loyalty and allegiance from the people.
The quest for Kenya’s new constitutional dispensation lies in the ground between two decades and 2010. That successful quest was the fruition of clarion calls by Civil Society Organizations (CSOs), the academia, lawyers, politicians and change enthusiasts to unshackle Kenya from decades of authoritarian presidency or rule by successive regimes and midwife a new era of responsive leadership, distributive power and devolved governments that would bring resources and leadership closer to the people. Devolution is a multi-dimensional approach that organizes governance and manages state power along multiple lines. It is a new entrant in Kenya’s constitutional lexicon which holds a great promise to the people of Kenya. It defines, distributes and constrains the use of state power along multiple lines by combining both vertical and horizontal dimensions. In essence, devolution forms the foundation for federal systems and structures of government and is founded upon the concept of decentralisation and devolution of power.
It may correspondingly be seen as a system of governance that devolves power from the centre to smaller sub government units at the local level in order to guarantee that all citizens equally enjoy the national cake. It can actually be described as the statutory granting of powers from the central government of a state to government at a sub-national level, such as a regional, local or county level.
The Constitution of Kenya heralds a major shift in the system of government unique to Kenya. One of the major changes introduced by the new constitutional dispensation is a new gov¬ernance style of devolved government that would see the introduction of different admin¬istrative units in a bid to ensure that service delivery is brought closer to the people. The new Constitution creates a new level of Gov¬ernment – counties – to mostly ensure that power is devolved to the people.
It is vital to understand the blueprint of the system of devolved government against the backdrop of the country’s complicated history which will also fundamentally shape the man¬ner in which it is implemented . Kenya’s de¬volution programme has been described as one of the most ambitious in the world, because it is transferring a substantial amount of power and resources to an entirely new level of government. In a turn, Kenya’s eight provinces and over 280 districts will be replaced by forty-seven brand new counties.
After promulgation of the Constitution of Kenya 2010, the government embarked on its implementation as outlined in its Fifth Schedule. A Cabinet Memorandum outlined the responsibilities for ministries as agents in the implementation, with the Office of the Deputy Prime Minister and Ministry for Local Government (ODPM & MoLG) designated the lead government agency on devolution. To fulfill this mandate, the ODPM & MoLG established a multi-sectoral and multidisciplinary Task Force on Devolved Government (TFDG) through Gazette Notice 12876 dated 25th October 2010.
The Case for Devolution in Kenya
One of the perennial problems which has not only defied all past attempts at permanent solution, but has also evoked high emotions on the part of all concerned is the issue of equitable revenue allocation. A devolved system of government involves the constitutional creation of two or more levels of government with assigned functions and resources. The levels of government are co-ordinate, but not subordinate to each other. None of the levels of government is an agent or at the mercies of the other. Each is established and cosseted by the constitution, with the functions and resources to be used for their discharge being set out and defined by the constitution.
The devolved system combines self-governance and shared governance at the local and national levels, respectively. Therefore when Kenya embraced the Constitution in 2010, Kenyans authorized this form of government to enhance resource distribution as a corrective measure for past injustices. These injustices were the offshoot of the centralization of political and economic power that got firmly rooted in Kenya in the period 1960s-1980s. Following constitu¬tional amendments in 1982 that concentrated power in the central government and president still further, the District Focus for Rural Development Program was introduced , as a means of involving lo¬cal people in development and sharing resources more equitably. Ultimately, the programme became a vehicle for presidential politi-cal patronage, undermined the role of local governments, and re¬sulted in little meaningful redistribution of economic development.
The Constitution on County Revenue Allocation
An underlying logic behind decentralization is that it enlarges subnational participation in decision making over interventions, and consequently enhances their local relevance and citizen participation in implementation. That is a fundamental strength entrenched in the Constitution. These measures should then expand the scope for efficiency and cost-effectiveness. The various types of decentralization are historical realities of management generated by theory and practice: the clearer the structure of decentralization, the greater the scope for efficiency.
Decentralization has three fundamental dimensions, which may occur independently or jointly: the administrative, the political and the fiscal . Since the promulgation of the new Constitution, county forums bringing together manifold stakeholders to discuss development and governance issues have been instrumental in demystifying devolved government, and deconstructing it for the greater understanding of all people. Several counties have key national public investments (Maasai Mara – Narok County; The Mombasa Port – Mombasa County; )and discussions on those investments that they will have control over should be held early enough to avert any conflict between national and county governments. In devolved federal units , there are two key principles that guide revenue allocation. The first is the vertical sharing between the federal or inclusive government and the other tiers of governments. The subject of such sharing schemes is the federally collected revenues. This is because the revenues generated within the jurisdictional areas of the units – states and local governments – are not subject to the national sharing formula.
Another principle of revenue transfer which is horizontal revenue sharing arises out of the variations in revenue generation capacities of the component units. Where the revenue raising capacities are low, heavier tax burden is imposed relative to higher revenue raising capacities area. This transfer is called “equalization transfer” . This transfer is necessary because higher taxation will scare away businesses and the economy of the unit will become more depressed. The CRA is yet to find a stable agreeable formula that can guide equitable revenue allocation.
The Constitution provides for a phased transfer of functions from national to county governments within three years after the elections depending on the capacity that the counties have. The Task Force on Devolution also made significant proposals to foster the smooth transitioning from National to county governments. If preceding investments and existing natural resources shall be critical in influencing the capacity levels of the counties and also predetermine the capacity of these counties to raise their own revenue for sustainability, will the skewed development amongst counties result in an initial backlash against the central government when disbursements are made to those with capacity? With the proposed formula for revenue allocation by the Commission for Revenue Allocation how will some counties sustain themselves given that such allocated revenue does not potentially suffice the development needs and gaps, overheads and requisite service delivery? The new Constitution mandates a devolution system that fundamentally differs from the kind of decentralization that has been function in Kenya since the colonial and post- independence period hitherto.
The Commission on Revenue Allocation (CRA) has recommended that county governments should receive an allocation Sh203 billion while Sh407 billions be given to the national government, and the Sh203 billion shall be distributed through a formula it has proposed. According to the formula, 60 percent of the allocation will based on population size, 20 percent on basic equal share, 12 percent on poverty level rate, 6 percent on the size of land and 2 percent on fiscal responsibility exercised by the county. The remaining 20 per cent will be shared equally among the 47 counties.
Going by the proposed formula, top beneficiaries in the allocations include Nairobi Sh11.7 billion, Nakuru Sh6.9billion, Kiambu Sh6.5 billion, Kakamega Sh7.3 billion, Bungoma Sh7.2 billion, Turkana Sh5.7 billion, Kisii Sh5.5 billion, Kisumu Sh4.6 billion, Kilifi and Kisii Sh5.5 billion each, Wajir Sh4.7 billion and Uasin Gishu Sh4.3 billion. Thus, at the tail-end of the disbursements are counties such as Isiolo Sh1.9 billion, Samburu Sh2.2 billion, Taita Taveta and Tharaka Nithi Sh2.3 billion each while Elgeyo Marakwet was allocated Sh2.4 billion, Laikipia and Tana River Sh2.6 billion each. This means Lamu, which is the smallest of the 47 counties in the country, will receive a paltry Sh1.4 billion to run its county business. Additionally, the CRA recommended that the Equalization Fund (0.5 per cent of the national Budget) to be disbursed from the 2013-2014 financial year when county governments will be functioning.
Previous decentralization Efforts (1999-2010)
This decade saw the introduction of devolved (geographically earmarked) funds in an attempt to address spatial inequality. The most no¬table were the Local Authority Transfer Fund, (LATF)-created through the LATF Act No 8 of 1998, the Road Maintenance Levy Fund, (RMLF)created through the Kenya Roads Act, 2007, the Rural Electrification Fund, created through the Energy Act of 2006 and the Constituency Development Fund, created through the CDF Act of 2003. Despite these piecemeal efforts to address inequality in resource distribution, political tensions remained high spilling over into the 2007 election crises and subsequent unrest, which proved to be the tipping point leading to demands for a new Constitution.
Interlinks between the National and the County Governments
Three types of inter-governmental relations involving county and national govern¬ment exist namely: county–municipal; inter-municipal; and national–municipal. Any laws developed will need to give a lot of consideration to the national-mu¬nicipal inter-governmental relations, especially in light of the current relationship between the Ministry of Local Government and the Local Authorities in Kenya.
Laws developed to define the role of local authorities ought to clearly dis¬courage any direct relations between national government and municipali¬ties, in exclusion of Counties. The role of the national government should only be mediatory in the event of disputes between a municipality and its mother County. In addition, explicit laws should be put in place to provide a coordinating mechanism for the national government to relate with munici¬palities, in light of urban areas where national government is a notable land owner with heavy influence through ownership of infrastructure. The law should also provide clarity on how the issue of concurrent jurisdictions be¬tween the county and national government will be handled at a practical level.
Bottlenecks and other considerations
According to the constitution, the devolved units are entitled to 15 percent of national budgetary allocation annually. However revenue has not been defined in the Constitution or the CRA Act, which has now occasioned controversy over the CRA proposed formula for revenue allocation. The Task Force on devolution submitted that the Constituency Development Fund, which constitutes 2.5 per cent of Government’s ordinary revenue, roads levies and the Local Authority Transfer Fund, should all be lumped together and disbursed to the counties.
At present, the devolution structure and resource allocation mechanism remains a highly contested area, especially in Kenya due to lack fairly logical common ground for the distribution. The devolved government structure in the new constitution is a product of highly emotive debates and several attempts at building consensus during the review process. It is expected that the devolved system of government should help to cure various historical injustices in respect to land rights and ownership and skewed resource distribution. Minorities, marginalized groups and communities in Kenya face various challenges.
First, the loss of land rights, historical injustices, includes exploitation of their resources without their participation or benefit. This is illustrated by the numerous court cases involving marginalised communities. Secondly, Kenya for many years has adopted the needs based approach to development, which, in the Kenyan context prioritised key development initiatives on immediate political gains . Consequently minority and marginalised groups were left out. Thirdly, by virtue of their numbers, the minority and marginalized communities and groups are unable to have their representatives win national elective office.
It would thus be proper if the revenue allocation across counties should factor in these critical issues. Such allocations would therefore seem most fair and attract less contestation if attendant issues of poverty index, numerical inferiority, climatic conditions, infrastructure development, economic status and historical injustices are the base alloy for developing the formula as well, for purposes of potentially optimizing development in the various counties.
While the guaranteed and unconditional transfer of 15% of national revenue for county governments is only a minimum, it remains to be seen if it will be adequate given that county governments will perform both decentralised government and typical local government functions. Local government in South Africa accounts for 25-30% of the national revenue but still with this figure, local government authorities are said to be struggling . While due regard must be given to existing local conditions in Kenya that are different from countries such as South Africa, there is need for accurate assessment of revenue needs for county governments in the new constitutional order to make certain that county governments meet the broad objectives of devolved government.
Conclusion
Effective devolution and revenue allocation can and shall enhance self-reliance of the county governments to a greater extent, and public participation in decision making at the county level. The strongest recommendation of this paper is that the 15 percent derivation quota should be tried and be seen to work. However, new thinking in Kenya, as evidenced by the disagreements over CRA’s proposed formula, is that even if revenue allocation is tinkered with to favour the resource-rich counties, the pervasive tradition of kleptocratic political leadership shall noteventually make proper sense of county resources. Integrative mechanisms should be adopted by CRA to ensure reduced or minimal squabbles over the formula, and get to practical ways of equitable revenue allocation.
The writer is a consultant at Interthoughts Consulting and can be reached on: jbigambo@interthoughts.co.ke