This archive report was first published on 12 July 2020.
Published on July 12, 2020, a special sitting of the Senate is set to take place tomorrow to vote on the proposed third basis formula for revenue allocation. The formula, proposed by the Commission of Revenue Allocation (CRA), aims to allocate funds to counties based on population, with proponents arguing that this approach will enhance service delivery and promote balanced development.
However, counties with large land masses but sparse populations have opposed the formula, citing potential losses of up to Sh17 billion. Senator Mutula Kilonzo Jrn (Makueni) noted that the proposed formula has caused serious distortions in shareable revenue, ranging from gains of Sh1.8 billion to losses of a similar amount among the counties.
Some senators have proposed that counties losing funds should be cushioned with a 2.5, 5, 7, or 10 per cent reduction in subsequent years. The proposed formula has divided senators, with those from counties with high population supporting it and those from sparsely populated counties opposing it.
According to CRA, the formula seeks to address four primary objectives: enhance service delivery, promote balanced development, incentivise counties to optimise capacity to raise revenue, and incentivise prudent use of public resources. The Commission recommends a phasing-in of the formula to avoid disruption in service delivery and development programmes.
