CRA proposes New Formula For Revenue Allocation.

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The disbursement of resources to the counties is likely to come under greater scrutiny after the Commission on Revenue Allocation (CRA) released its draft formula for consultations before it is submitted to the Senate.

The proposed third Revenue Allocation Formula, which has adopted a sector-specific funding approach, will now be subjected to public participation before it goes to the Senate.

The new formula is a departure from the previous two with key attention placed on strengthening the link between the constitutional mandates of the counties and the devolved monies transferred to counties.

In addition, counties will now get an extra kshs 20 for every Kshs 100 they collect as revenue if parliament adopts the proposed new formula released for public participation  by CRA.

 The CRA says the formula will be used to share the Sh 335 billion earmarked for the 47 counties in the 2019/2020 financial year.

According to the law, the revenue-sharing formula should be reviewed every five years, although it was reviewed for the first time three years after the advent of devolution.

Qualitative analysis

According  to CRA’s chairperson  DR. Jane Kiringai the  the money will be shared on the basis of a qualitative analysis of each county’s needs to ensure equity, help the poor ones catch up with the rest, and take into account the outcomes of previous investments. CRA seeks to incentivize counties to reap the rewards of engaging in sound financial management practices regardless of its budget and population size.

 The health sector has been assigned a weight of 15 per cent meaning every kenyan without health insurance has been assigned an equivalent of Ksh 970. The commission combined the uninsured, inpatient and outpatient visit parameters to come up with the index. In the agricultural sector, it arrived at the expenditure needs through the total number of rural households with regard to extension services and food security to determine the proposed 10 per cent weight. This translates to Sh4 for every rural household.

Water has been assigned a weight of three per cent, as have urban services. All other county functions have been assigned 18 per cent. On the promotion of balanced growth, the commission has proposed road network (three), land area (eight per cent) and poverty (15 percent) as the indicators.

CRA will also reward counties for effective revenue collection and prudent management of fiscal resources.

Should the proposal be approved by the Senate, counties will be awarded with Sh20 for every Sh100 collected.To enhance service delivery in the counties, CRA has recommended that equitable share to county governments for the year 2019/2020 be increased from Ksh. 314 Billion to kenya shillings 335 billion.

 

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