In April 2016 we will
congregate in the Meru county for the 3rd Devolution
Conference. There we will reflect on what has become of our national experiment
and to what extent we have been true to the ideals of decentralization that saw
us favour it as an appropriate model for advancing our country. On the eve of
the first devolved units, Chrispine Oduor and thought about some of the
challenges that county governments were likely to face. I reflect on some of
them in the upcoming pieces.
An upfront challenge was
on finances, in terms of raising sufficient cash and using it in the right and
accountable way. A key principle in the constitution Art. 175 is that
counties will have a reliable source of revenue. The said resources are to be
used in an accountable way (Art. 201). Counties have at their exposure about
four revenue streams – the equitable share from the national revenue; own
revenues from taxes and fees charged from services rendered; Conditional grants
from the national government for specific services; and borrowing from domestic
and international sources. Certain counties are also likely to benefit from the
national government equalization fund (Art. 204) that is supposed to help bring
services such as infrastructure and electricity to standards enjoyed in other
parts of the country. Own revenue collection was going to be a challenge especially
those with a weak resource base to raise enough revenues that will enable them
perform the devolved functions and deliver services to the citizen was a
concern given the weak performance of Local authorities that preceded them. The
equalization fund was likely to be so thinly spread. One expected that the
county governments would seal the revenue loopholes through automation and
updating of asset rolls.
On use the available
cash would be strained by the wagebill and other overheads. While we expected
counties to ensure better service delivery, the conversation on the controls
for the county wage bill needed to take place. First there was the concern of
balance between state officers (Governor, the CEC members and the CA members)
and public officers (civil servants) pay as this would serve as a motivation
factor and may affect service delivery. Secondly is mechanisms of ensuring that
the wage bill is sustainable but at the same time lucrative enough to attract
highly skilled professionals into those positions. In the event that the wage
bill is uncontrolled then we may end with the current scenario of Las spending
up to 90 per cent of their revenue on salaries and salary areas (part of
debts). The expectation was that the recommendations of the Salaries and
Remuneration Commission would be taken seriously and implemented. In practice
we have seen such recommendations opposed by politicians who instead pushed for
highly unsustainable wages and the attendant allowances. Not to mention the
corruption that comes with it.
The equitable share was
going to be complicated by lack of clarity on the devolved functions and which
of the two governments is supposed to perform which functions. While the
constitution broadly stipulated the functions of either government, the actual
work lay in the unbundling of functions. This is a task that the Transition
Authority (TA) attempted with limited success given what they termed lack of
cooperation from the national government (NG) ministries. Of course it was
expected that some of the NG actors would push back. But why should this be? The
constitution principle provides that finance follows functions, which means
that resources would be allocated to the government performing the function. I
imagine that some NG officials worried that a proper unbundling process would
reveal that some functions were redundant, duplicated or at most delivered at
the county level. This would mean that resources are allocated to the counties
and thus loss of control. I also think that some corrupt tendencies thrive on
confusion as money gets allocated to the same purpose through different
channels. Lastly I have often wondered to what extent the county officials were
interested in the unbundling business. Would it make them more susceptible to
accountability demands by laying bare what they are responsible for and hence
the resources they have allocated to them.
A related matter was on
debt management. County Governments inherited debts and other liabilities,
local authorities and other bodies such as the regional water service boards-
that provide water services in the rural and urban areas- had already incurred.
These boards had been obtaining loans to provide services and county
governments to take up these liabilities. That affected the starting balance
sheet of counties. The expected increase in wage bill would inevitably
lead to more borrowing. This means that the national government will
increasingly commit more resources to service the loans and hence can only
increase county allocations so far up. There is no indication since that the
county governments have been able to address the debt challenge. If anything
some have been considering to borrow much more.
We have observed
numerous debates every year on the amount of the equitable share that should be
allocated to counties. This has been reduced a political fight that is settled
politically as the numbers are not based on some firm functions performance
structure. Internal revenue collection while expanding remains not sufficient.
This partly is due to poor records and corruption. Automation has been slow and
in some places the process objected in courts due to flouting of tendering
processes. To what extent Kenyans are committed to pay taxes and public service
user fees remains to be established, especially in situations where they are
not very satisfied with services rendered. As for wage bill and attendant
allowances is high and unsustainable.
Continued in the
next blog post..
