How Uhuru convinced ODM that 15% was the right share for counties
The then Finance Minister cautioned against basing revenue share on projected revenues
As the country continues to debate the proposed Constitutional changes as contained in the Building Bridges Report, the proposal to increase the equitable share of revenue to counties has been used to tell Kenyans that more money will be devolved. Whether this will be the case or not remains to be seen though history does not seem to favour future promises.
Currently, the Constitution sets the equitable share at 15 per cent of the revenue in the last audited and approved accounts. According to the Commission on Revenue Allocation; “though the equitable share allocation to county governments has progressively increased over the years in absolute terms (except FY 2020/2021) and is in line with the provisions of Article 203(2), the proportion of county equitable share to ordinary revenue is on a declining trend.”
From 2013 to 2015 the equitable share to counties in relation to the ordinary revenues appeared to go up rising from 20.7 per cent to 22.5 per cent before dropping to 21.4 per cent in the 2016/17 financial year. It rose to 22.1 per cent the following year but has since been on a downward trend falling to 19.8 per cent in the current financial year.
But to understand the role played by the current proponents and opponents of the BBI in shaping the devolution money debate in 2010, on would ask two questions: How did we come up with the “not less than 15 per cent” in the Constitution? and, Why did we base it on the “latest audited and approved accounts”?
According to the Committee of Experts report published on October 10, 2010, “the amount allocated to the county level of government must be at least 15 per cent of the revenue raised by the national government in the previous financial year.” However, their own drafts never indicated this but instead based the 15 per cent on the “latest audited and approved accounts”.
The discussions in Naivasha during the Parliamentary Select Committee on the Constitution Review Process point us to how the then Finance Minister Uhuru Kenyatta managed to convince his colleagues to retain the allocation at 15 per cent. Uhuru also asked MPs not to lock the figure leaving room for flexibility as seen in his Government’s latest allocation of 43 per cent of the 2009/2010 accounts.
At the Great Rift Valley Lodge on January 28, 2010, Uhuru convinced the MPs to retain the proposal by the Committee of Experts. Uhuru and Narc-Kenya leader Martha Karua also led the MPs in adopting the reduction of the Equalisation Fund from one per cent to 0.5 per cent.
The ODM team at the talks, which included Deputy President William Ruto and former Bomet Governor Issac Ruto, was proposing that the amount be raised to 20 or 25 per cent. Former Senate Speaker Ekwe Ethuro and Mbita MP Millie Odhiambo were others who supported at least 20 per cent for the devolved funds. The debate, however, dwelt more on whether CDF would be part of the money that was to be devolved from the National Government to the management by the Counties.
“Mr Chairman, Sir, what I wanted to say is that we should say not less than 20 per cent. You know CDF is not part of these Counties. We get it from the national fund. Anyway, if that is the case, all I would want to do here is, provided that the five per cent for CDF is also locked in here,” William Ruto said.
The then Parliamentary Select Committee on the Constitution chairman Abdikadir Mohammed, however, said that they should agree on that CDF is part of devolved funds and that whatever figure they agree on then it is deducted out of that.
In his contribution, Issac Ruto stated; “They are taking 15 per cent if it is not less than 20. Not less than 20 means you can give us 25 per cent. It depends on you. But if you are including CDF there then we go back to 25 per cent.”
According to the Hansard, Ruto told the meeting that he has received advice from the “DPM” (Uhuru) that the 15 per cent would be doubling the amount that was already going to LATF and CDF. At this point, Abdikadir asked Uhuru to explain the advice which appeared to have “tempered” Ruto.
“If we can agree not less than 15 per cent and we have a clause that goes that: Not less than 15 per cent of revenue collection and to avoid, because that has been one of the big problems, to avoid the problems that we have had with CDF: We say calculated on the basis of the last audited accounts that has been approved by parliament. The big problem here is if we do it on the basis the way we do CDF, we calculated on the basis of Budget; if you do not hit targets and you have already committed the money you end up in a problem. So, want it to be based on the last audited accounts,” Uhuru told his colleagues.
Karua also supported Uhuru’s proposal saying that since Parliament was the one to pass the Division of Revenue Bill, it would be free to push the amount, if need be. She added that the 15 per cent was good enough for Counties as there was a lot of work still to be handled by the National Government.
After the explanations, William Ruto said; “Mr Chairman, Sir, I think I am persuaded to accept 15 per cent. But they are consulting too loudly. 15 per cent is fine but we want to say that this money shall then be going direct to those counties because they have previously been going through the Ministry of Local Government; that 5 per cent, the actual amount that reaches down there has been one per cent. So, the Counties have been stuffed.”