This archive report was first published on 4 August 2020.
Published on August 4, 2020, the revenue sharing impasse in Kenya has been a contentious issue for years. The Commission on Revenue Allocation (CRA) has developed a formula to allocate national revenue to counties, but senators continue to disagree on its implementation.
The CRA's formula has undergone several changes, with the latest version introducing health services, agriculture, and other county services as parameters. However, this has led to concerns that high-population counties will receive more money, while low-population counties will be left behind.
The writer, an associate professor at the University of Nairobi, argues that the obsession with the revenue sharing formula betrays Kenya's narrow-mindedness. He suggests that the focus should be on how revenue is generated and how to support the generators to share more.
History has also played a significant role in the revenue sharing stalemate. The session papers in the past have focused on regions likely to give the highest economic returns, leading to feelings of marginalization among other regions.
The writer proposes a revenue generation formula to derive a revenue-sharing formula, which would provide a more objective approach to revenue allocation. He also suggests introducing a new weight - the number of county residents who actually work - to incentivize economic growth and increase tax revenue.
Ultimately, the writer believes that an economic solution is needed to break the revenue sharing stalemate in the long run. This would involve incentivizing every Kenyan to play their role in economic growth and increasing tax revenue.
