Looming clash as CRA ‘favours’ populous counties in new revenue formula

County governments could be headed for a fight with the Commission on Revenue Allocation after it adopted a controversial revenue-sharing formula giving preference to population in what mirrors the divisive one-man-one shilling proposal.

The commission has given more weight to population, despite spirited opposition by leaders from less populous and marginalised counties.

Tana River Senator Danson Mungatana said attempting to push a formula that is largely dependent on population is selfish.

“It is unfortunate because it is an attempt at the continuation of economic segregation of areas in this country that are arid and semi-arid,” he said.

In the formula that now awaits the approval of Parliament, CRA has fronted five parameters, down from the current eight, and varied their weights.

“The framework for sharing revenue among the county governments is based on two objectives: to share revenues equitably to facilitate service delivery and to address economic disparities and promote development among county governments,” CRA chairperson Mary Chebukati said.

According to the formula, which will determine how counties share revenue from the 2025-26 financial year, CRA has assigned the population the biggest weight at 42 per cent.

In the current formula, the population weighs 18 per cent.

Geographical size has been given a weight of nine per cent, up from the current eight.

This means if the allocation to counties remains at Sh387.42 billion, as is in the current financial year, counties with a large landmass such as Turkana, Mandera Wajir and Garissa will lose a substantial chunk of their allocation.

However, CRA in a strategic bid to deal with the backlash proposes that allocation to counties be increased to Sh417.42 billion to ensure that none gets less than what they received in the current financial year.

“In implementing the Fourth Basis, a cushioning and stabilisation factor has been inbuilt in the framework to ensure no county government will get less than what they were allocated in the financial year 2024-25,” Chebukati said.

The statement is an admission that any lower allocation to counties will hit hard the sparsely populated regions. Interestingly, the national government has never allocated counties the amounts proposed by CRA, with the Treasury always advocating for lower figures.

In the current financial year, CRA had proposed an allocation of Sh407 billion but the Executive slashed it to Sh380 billion, before being enhanced by Parliament to Sh387.42 billion.

In the proposed CRA formula, equal share has been given a weight of 22 per cent from the current 20, while the weight for poverty index has been retained at 14 per cent.

“To facilitate service delivery, the recommendation provides for an equal minimum allocation across all counties, using population and geographical size of a county as the key transfer parameters,” Chebukati said.

The CRA has introduced the income distance index and assigned it a weight of 13 per cent.

“To address economic disparities and promote development, the framework uses income distance and poverty parameters as measures of inequality among county governments.” 

The new framework will dictate revenue sharing among the counties for five years, from 2025-26 to 2029-30. 

The move is likely to trigger uproar from leaders of less populous counties that could be disadvantaged by the new framework.

However, an analysis of the allocations determined by the previous formula shows that populous counties are closing in on the less populous counties that have traditionally received more funds than in the new framework.

For instance, Nakuru which received Sh450 million more than Turkana in the current fi nancial and previous financial year will now get Sh470 million more.

Bungoma, which received Sh520 million less than Wajir in the last financial year, has closed the gap to Sh450 million.

“We want the commission to tell us how they came up with the parameters and weight they attached to each of them,” Senate Finance and Budget Committee vice chairperson Tabitha Mutinda said.

A section of leaders from Mt Kenya, led by former Deputy President Rigathi Gachagua, have been pushing for what they termed as a people-leaning formula.

“On matters of revenue-sharing, and for the avoidance of doubt, I am a believer and a proponent of one man, one vote, one shilling because resources are about people,” Gachagua said.

However, leaders from regions with relatively small populations but with vast landmasses severely criticised the move. Instead, they push for the oneman-one-shilling-one-kilometre formula that puts more weight on the landmass.

“The one-man-one-shillingone-vote formula, championed by some leaders, is a fundamentally flawed stance that underscores deep-seated and insatiable greed,” Mandera Senator Ali Roba said.

Speaking to the Star, Mungatana said those hellbent on pegging revenue sharing to the population were introducing a 1965 policy that discriminated against some regions. 

The policy provided for the development of high-potential areas at the expense of low-potential areas like arid and semi-arid areas.

“That sessional paper created a policy of discrimination of arid and semi-arid areas. We cannot allow this to happen,” Mungatana said.

Kitui Senator Enoch Wambua said while population is a crucial factor in resource allocation, it should not be applied to disadvantaged regions that are sparsely populated.

“Kenya is defined by people and its land. Therefore, the population should not be used to disadvantage regions that are sparsely populated,” he said.

Article 217 of the Constitution says the revenue-sharing formula be reviewed every five years.

However, the Sixth Schedule of the Constitution further provides that the first and second determinations of the basis of the division of revenue among the counties be made at three-year intervals.

In the first framework, there were five parameters, with the population given the heaviest weight.

The population was weighted at 45 per cent, equitable share at 25 per cent, poverty level at 20 per cent, land area at eight per cent and fiscal effort at two per cent.

In the second-generation formula, the population was weighted at 45 per cent, bthe asic share at 26 per cent and the poverty level at 16 per cent.

Others factors are land area at eight per cent, fiscal responsibility at two per cent and development index at one per cent.