Kenya Constitution: How We Got Here (Part 2) – The 15% For Devolved Funds


Opposition’s “Okoa Kenya” and the Council of Governors’ “Pesa Mashinani” have both identified the money allocated to the Counties as one of the issues that should be addressed through a referendum to amend the Constitution. Whether the call for more money with the little allocated being plundered is justified is another question all together.

So how did we come up with the “not less than 15 per cent” in the Constitution? And also 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% 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.

According to the Hansard of the talks 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 Council of Governors chairman Issac Ruto, was proposing that the amount be raised to 20 or 25 per cent. Senate Speaker Ekwe Ethuro and Mbita MP Millie Odhiambo were others who supported at least 20 per cent for the devolved funds.

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 your. But if you are including CDF there then we go back to 25 per cent.”

According to the Hansard, Ruto tells 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 enough good 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 going through the Ministry of Local Government; that 5 per cent, the actually amount that reaches down there has been one per cent. So, the Counties have been stuffed.”

The Verbatim Discussion:

William Ruto: Mr. Chairman, Sir, we had agreed that we lock funds for the devolved units in here. I think we need to distinguish because all money will go to the Consolidate Fund which is under Article 237. I think we need to Article 237(5) because we are talking about Consolidated Fund and other public funds.

Chairman (Abdikadir Mohammed): Before, I forget, the reference therefore, is to Article 261 Mr Kenyatta. Thank you, can we make that correct. Article 261 and not Article 264.

William Ruto: I want to propose that we put there No.5 in Article 237 that no less than 20 per cent. What I am saying, Mr. Chairman is that we need to put a global figure that will be devolved funds and then in there the devolved funds now : whatever is going to CDF will go to CDF and whatever will go to these others which will be counties should be in there. So, I want a formulation that captures that.

Chairman (Abdikadir Mohammed): I can see Mheshimiwa DPM wants to consult so let us hear him.

Musalia Mudavadi: Actually I wanted to consult in private.

Chairman (Abdikadir Mohammed): So, you want to consult before you say the word or you want to—

Ekwe Ethuro: Mr. Chairman, Sir, my argument was the one Mr. Samoei has picked. We had agreed that as part of devolution that money must be locked in. So, this is the opportunity and I suggest not less than 20 per cent with a provision that CDF should be raised to five per cent.
William Ruto: 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.

Chairman (Abdikadir Mohammed): NO! No! Let us agree that CDF is part of devolved funds; that whatever figure we agree then it is deducted out of that.

Isaac Ruto: 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 your. But if you are including CDF there then we go back to 25 per cent.

Joseph Nkaisserry: What percentage in terms of resources do you want to go down: Is it 20 or 25. If we are talking about including CDF and LATF then this devolved fund should be 17.5 per cent — so that all devolved funds will be 25 per cent.

William Ruto: I think what we are saying is this: The advise I am getting from the DPm is that currently we have seven and half per cent, five per cent LATF and two point five per cent CDF, I think it is safe for us to say a minimum of 15 per cent so that we are doubling the Fund but here we need to know how parliament is going to work with the Senate in terms the actual percentage so that 15 per cent becomes the minimum.

Chairman (Abdikadir Mohammed): Since consultation seems to have tempered you, could we benefit from the advice so that we also know the reason why you feel.

Uhuru Kenyatta: Can I make a proposal so that we can move forward because the issue to lock the minimum. But we also need to leave room not for the Senate because this is not a Senate issue; this is a national issue. It is the National Assembly that will make the recommendations. So, 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. So, this financial years money will based on the previous audited as presented to Parliament. Then continue to say that Parliament will enact legislation to put this into effect because that is now where you leave the room; you increase if monies are available or we need more.

Chairman (Abdikadir Mohammed): From my understanding of Mheshimiwa DPM, 15 per cent includes CDF and LATF.

Uhuru Kenyatta: The reason we are proposing that way, if we also want to leave flexibility for the National Assembly. We are now picking numbers from the sky— we would now say the National Assembly will now look at this whole thing because things will change from time to time. We maybe lock in 20 per cent and — So, Parliament will then enact legislature to put this clause into effect.

Millie Odhiambo: Mr. Chairman, Sir, what the DPM has said is actually what I was going to add as value. That Parliament shall enact legislation to give effect to this Clause. Save that the only rider, I wanted to say is that if you already have 7.5 per cent going to other devolved funds, we should lock in a minimum of 20 per cent. Then, we put that Parliament shall enact legislation.

Chairman (Abdikadir Mohammed): Let me hear from hon. Karua. It seems Finance Ministers have conspired.

Martha Karua: What we have been checking as lay people is based on the last Budget of Kshs700 billion what would be 15 per cent. 15 per cent would round off to something like Kshs150 billion. There are 50 Counties, even if you are counting equally and it may not be equally some may get slightly more, it is roughly Kshs3 billion. It is not a bad base to begin with remembering that there are works for Central Government. Certain major roads linking all of us, big electric projects, big
water works— All those things when you think of it that way, since this is the minimum, we ough to be able to accept. We are the ones, remember, allocating money in Parliament. So, we can push this upwards if we wish.

William Ruto: 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 going through the Ministry of Local Government; that 5 per cent, the actually amount that reaches down there has been one per
cent. So, the Counties have been stuffed.

 

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