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Economy

MPs prevent shutdown of counties with cash sharing deal

Senators have agreed on a new formula to guide the sharing of revenue among counties from next year
Senators have agreed on a new formula to guide the sharing of revenue among counties from next year. FILE PHOTO | NMG 

Senators have agreed on a new formula to guide the sharing of revenue among counties from next year, ending the impasse that had blocked the release of funds to the devolved units and saw governors threaten service shutdowns.

The lawmakers last evening unanimously voted to retain the old formula that has been used for the last five years, meaning each of the 47 counties will receive the same amount it did in the year to June.

The Senate had for more than three months failed to resolve the dispute over a formula proposed by the Commission on Revenue Allocation (CRA).

Critics argued the CRA formula took away funds from the less populated and poorer regions while adding those that are economically stronger.

Those who support the amended formula, which is to be applied from next July, say it will ensure a more equitable distribution of budget funds among the counties.

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The deadlock in the Senate meant no cash has been disbursed to local authorities during the current financial year that started July, hitting hard operations of the devolved units and their suppliers.

The deal paves the way for resumption of crucial services like patient admissions and payment of salaries and supplier dues.

“This formula brings to a stop the protracted and noisy debate that has now come to an abrupt end,” Bungoma Senator Moses Wetang’ula, who chaired the special committee formed to negotiate a deal, said.

The governors on Wednesday said they would start shutting down services due to the deadlock.

The deal to end the stand-off was arrived at after the special committee of 12 senators unanimously supported the new formula guarantees that no county will lose its allocation.

The House adopted the committee’s report through a resolution, paving the way for the Treasury to disburse funds to the county governments.

All 41 senators present voted for the resolution.

The devolved units will, however, get at least Sh370 billion as equitable share for the year starting next July after President Uhuru Kenyatta pledged to make available a further Sh53.5 billion above the current allocation.

The pledge to allocate Sh53 billion more allays fears among the less-populated counties in the North, Coast and Lower Eastern regions that they would lose funds.

Under the formula initially proposed by the CRA, Mandera County would have lost the highest amount at Sh2 billion, followed by Wajir, Kwale and Kilifi at Sh1.4 billion and 1.2 billion respectively.

Nairobi City County is the biggest gainer under the new scheme at Sh3.29 billion followed by Nakuru (Sh2.54 billion), Kiambu (Sh2.28 billion) and Turkana (Sh2.06 billion).

Tharaka Nithi will gain the least at Sh289.6 million followed by Nyamira (Sh324.5 million).

The Constitution requires that the formula for sharing revenues between the 47 counties be reviewed every five years.

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