The Council of Governors is demanding Ksh.425 billion in Counties’ equitable share for the FY 2023/24, up from the current Ksh.370 billion, to ensure the smooth running of operations and enhanced service delivery in Counties.
“While we are alive to the current economic situation in the country we propose that Counties be allocated ksh.425 billion to enable them effectively execute their functions and resolve the challenges affecting devolved units”, noted the COG Chair H.E. Anne Waiguru, during the 19th Ordinary Session of the Intergovernmental Budget and Economic Council (IBEC) held on Thursday, 26th January 2023 at the Kenya School of Government.
The meeting chaired by the Deputy President H.E. Rigathi Gachagua brought together representatives from the National Treasury, the Commission on Revenue Allocation, the Office of the Controller of Budget (CoB), and the Judicial Service Commission among others. Top on the agenda was: the division of revenue between National and County Governments for the FY 23/24; the status of Counties’ pending bills; own source revenue collection in Counties; the reconversion of the road maintenance levy fund and funding for vocational training institutions; conditional grants; funding of national government UHC workers in Counties considering lapsing of contracts in the current FY; Counties wage bill; the 2023 Budget Policy Statement(BPS) and the Medium-term Debt Strategy Paper.
Speaking to the press after the meeting H.E. Rigathi Gachugua noted that the parties had not reached a final agreement on the equitable share of the revenue for Counties adding that a committee had been established to advise on the amount of revenue to be allocated to Counties. The Committee comprised members from the COG, CRA, and National Treasury.
This comes even as the Chair of COG Finance and Economic Affairs committee H.E. Fernandes Barasa protested the Ksh.380 billion allocated to Counties by the National Treasury in its Budget Policy Statement. CRA has proposed an allocation of Ksh.407 billion in equitable share.
“The revenue in the 2023 BPS is projected to grow by 17% (Ksh.374 billion). The 47 Counties are set to receive a paltry Ksh.10 billion increment of revenue despite being the entities that spearhead the execution of devolved functions. As a Council, we ask that resources follow functions”, noted H.E. Fernandes Barasa while addressing members of the press.
Out of the Ksh.3.641 trillion National Budget for FY 23/24, Counties will receive Ksh.380 billion which represents 10.4% of the National Budget. The health sector, one of the fully devolved functions, is set to receive Ksh.148.293 billion, an increase of Ksh.25.774 billion from the previous Ksh.122.519 billion in FY 22/23. Similarly, the environment, water, and natural resources sector will receive Ksh.122.877 billion, an increase of Ksh.15.699 billion from the previous Ksh.107.178 billion in FY 22/23.
Controller of Budget Margaret Nyakang’o in her report cited low own-source revenue collection, diversion of funds for payment of pending bills to other activities, delays by the National Treasury in the disbursement of funds to Counties and approval of supplementary budgets as some of the main reasons for accumulation of Counties’ pending bills.
So far, 27 Counties have received their November 2022 allocations. 20 Counties are owed Ksh.14.66 billion for November allocations while all Counties are yet to receive their December 2022 and January 2023 allocations amounting to Ksh.29.6 billion and Ksh.31.45 billion respectively. The total outstanding balance amounts to Ksh.75.71 billion.
In line with the resolutions arising from the IBEC meeting held on 26th January 2023, the Council led by the Vice Chair H.E. Ahmed Abdullahi on Wednesday, 1st February 2023 held extensive discussions with the CRA and National Treasury on the division of revenue for the 22/23 FY at Movenpick hotel in Westlands. Due to the stalemate arising from this meeting, the COG later met with Deputy President H.E Rigathi Gachagua at Harambee Annex for an extraordinary session of IBEC to further discuss the matter. Consultations on the division of sharable revenue will continue as we await the tabling of the Division of Revenue Bill in Parliament.