This archive report was first published on 23 May 2020.
On May 23, 2020, the Supreme Court made two landmark decisions that will shape the future of Kenya's devolved government system. The first decision, made in 2013, reworked the infrastructure for the division of revenue between the national and county governments to include the Senate. Prior to this decision, the National Assembly had interpreted the Constitution to exclude the Senate from this process.
The Supreme Court held that the Senate has a crucial role in the division of revenue process, as it exists solely to look out for the interests of county governments. However, the National Assembly has continued to ramrod its decisions on the Division of Revenue Bill, ignoring the views of the Senate. This has been made easier by the design of the Public Finance chapter, which allows the Treasury to present the budget estimates for the national government without reference to the division of revenue process.
Unfortunately, this has led to a situation where county governments are left without money in the event of an impasse between the two Houses. Article 224 of the Constitution requires that counties base their budgets on the Division of Revenue Act. If the Division of Revenue Act is not passed by the end of the financial year, counties cannot prepare their budgets and therefore cannot appropriate and spend in the new financial year.
However, the Supreme Court's recent decision has changed all that. The court held that the passage of the budget estimates of the national government and subsequent appropriation prior to the division of revenue is unconstitutional. This means that failure to pass the Division of Revenue Bill in time prejudices the national government and the county governments equally, creating a power balance and an important incentive for early settlement on the quantum of monies due to each level of government.
The court also determined that the current situation where county governments are left without money in the event of an impasse contradicts the spirit of the Constitution. Consequently, the court decided that if the Division of Revenue Bill is not passed before the end of the financial year, counties would be entitled to an allocation from the Consolidated Fund amounting to 50 per cent of the revenue allocation of the previous year.
These two decisions regularise what were unfortunate lacunas and contradictions in the Constitution and affirm the Supreme Court as a progressive interpreter of the Constitution. However, it remains to be seen whether the government will comply with the court's decisions, which ultimately benefit Kenyans.
