NAIROBI, Kenya, Nov 4 – The Council of Governors (CoG) has restated its position for increased revenue allocation for the 2021/22 financial year to support economic recovery in counties.
In a statement issued on Thursday, the Council said recommendation made by the Commission on Revenue Allocation (CRA) to cap counties’ allocation at Sh370 billion would hamper economic recovery at the grassroots.
“In the wake of the COVID-19 Pandemic which slowed down the economic growth in the Country, County Governments have remained to be the key drivers of economic recovery,” CoG’s Finance, Planning, and Economic Affairs Committee Chairperson Ndiritu Muriithi said.
The Council emphasized on increased funding to counties in line with recommendation of the yet-to-be-adopted Constitution of Kenya Amendment Bill (2020) which proposed to review the minimum allocation to counties from 15 per cent to 35 per cent of national revenues.
“As such, the Council of Governors emphasizes an upward increase of the County Equitable Share to Sh751.45 billion,” Muriithi said.
“We note that the recommendation on National Shareable revenue is based on a projected revenue increase of Sh366.4 billion above the FY2021/22, which was Sh1.776 trillion. We note that this increase has been allocated to the National Government only,” he added.
The Council noted that while counties were ready to review their budgets to accommodate resultant budget cuts as a result of CRA’s recommendation, the national debt and 2022 general elections should not be used to stifle counties.
“In line with the stipulated reasons given by the Commission for the recommendation, Counties are amenable to restructure their expenditures in order to stimulate economic growth,” Governor Muriithi sated.
CRA announced the cap for the 2021/2022 financial year on Tuesday declining CoG’s request to increase the county revenue allocation by an additional Sh381.5 billion.
CRA Chairperson Jane Kiringai cited national debt, drought and the upcoming general elections among reasons the commission was unable to review allocation.
CRA raised an alarm over the inclination towards borrowing by the national government pointing out that the current trajectory is not sustainable.
Kiringai asserted that with a revenue projection of Sh2,142 billion for the financial year 2022/2023 and cognizant of the fact that a majority of the times the government has fell short of its revenue collection target, there was indeed no room for increase.
“The fiscal headroom to allocate either level of government more revenue was not possible. The projected revenue increase is estimated at Sh366.4 billion which is the error margin of unmet revenue target,” she said.
The commission proposed to allocate the national government Sh1,765.2 billion. The Equalization Fund was capped Sh6.8 billion.
