1. The formula submitted by CRA to the Senate was sound and balanced.
2. It was NOT one man one shilling because if it was, Nairobi would get 6b more and Turkana 4b less.
3. CRA incorporated new more updated data on poverty (i.e used 2015/2016 as opposed 2009 applied previously) and population (used 2019 census). On just these data parameters, some counties lost because their population numbers adjusted downwards or they are thankfully doing better on the poverty index.
4. All three formulas (previous 1st & 2nd and now 3rd generation) contain a parameter for management of public funds that incentivizes revenue collection and fiscal discipline. If you collect revenues at projected levels, you get a pat on the back as additional allocation. If the auditor general shows issues with your use of public funds you are penalized and lose some money. These parameters are self regulating so you do well you gain, you slack, you lose. Counties have gained and lost on these without much drama before.
5. The CRA formula was centered on services to the people. Hence the prioritization of things like health services, education, extension services and public administration. All well balance. They for example used hospital visits on the health parameter coz wherever you choose to go to hospital as a Kenyan you should be served. You should find a doctor and medicine. So counties with higher foot fall get more. The development of health and other infrastructure is catered to as well but as new hospitals are built, those that are running should be able to meet the needs of citizens going there.
Are we still together…. okay… tuendelee
6. When the formula went to Senate, the Senate Finance Committee made some alterations to some percentages here and there which were tolerable but the most radical change that created the drama we have seen was a change to “Land Area” … so that …. instead of it being taken as the total square kilometers of a county, it was re-defined into a “Radius” … I imagine if occupied land. The parameter was also reduced to 5%. This disadvantaged expansive counties e.g in Nothern Kenya while benefiting more population dense Counties. Now, CRA contends that this is problematic coz we don’t have “ujamaa village” types of settlements and people are dispersed across a county.
7. The SAKAJA amendment apparently has the net effect of returning us back to the original CRA formula with a slight adjustment moving an additional 2% to the roads parameter which I find quite in order. BIG BUT! The amendment asserts that this new, data compliant and fiscally sound formula should only be applly to additional allocations to counties. Now this would have the effect of neutralizing data updates and locking fiscal discipline incentives and sanctions to how they were in the previous financial year for a long while!
8. If you lock incentives and sanctions given to a county based on how well they collected revenue or issues with their audits and fiscal discipline, what happens when others do better or worse? CRA contends that these are self regulating and should be allowed to remain so. It would be monumentally unpatriotic to neutralize incentives and sanctions meant to improve fiscal discipline. If you lock allocations to outdated data when we have the 2019 census results showing changes to poverty levels and population numbers, how is that in anybody’s interest?
9. Sakaja’s amendment would have sufficed if it did not contain that “no counties should lose money” principle which I personally find technically irrational coz even by simple application of updated foundational data, there will be changes upwards and downwards.
10. CRA contends that these gains and losses were very much part and parcel of the 2nd revenue allocation formula but perhaps why there wasn’t as much brouhaha is coz the overall allocation to counties was increased significantly by a chunk of billions that helped to level out the shocks. But now with the narrowed revenues and of course economic impact of Covid-19 containment measures, Government cannot afford additional money to counties so there’s no soft landing for those losing out coz of foundational data and/or fiscal incentives and/or sanctions.
I hope this is helpful.