The last month has seen a flurry of activity around fiscal devolution in Kenya. Unfortunately, the way in which these activities have been carried out suggests that the process is likely to be as opaque and confusing in 2013 as it was in 2012.

On January 9, Kenya’s parliamentarians decided how much money the counties will get to start operations from the date of the elections until the end of this financial year.

The issue was contentious: Treasury initially proposed that counties receive Ksh6.8 billion ($77 million).

The Commission on Revenue Allocation (CRA) cried foul, asserting that this violated the Constitution, and that the counties should receive Ksh30.4 billion ($344 million).

CRA’s logic was that the constitutional minimum is 15 per cent of total revenues per year. The period March through June represents four months, or 1/3 of a year, so counties must receive at least 1/3 of 15 per cent.

Since they calculate that the 15 per cent minimum was equal to 91.2 billion, they take 1/3 of this to arrive at their figure.

The issue was turned over to the Budget Committee of Parliament, which undertook negotiations with Treasury and settled on a new figure, the one agreed on January 9: Ksh9.7 billion. How was that figure arrived at?

The first thing that seems to have happened is that MPs realised Treasury was not using the CRA formula to allocate funds across counties.

Instead, Treasury appears to have invented a new formula for determining how much each county would get.

There may have been a method to Treasury’s madness, but they did not provide any public explanation for what they had done, sowing general confusion.

Just look at the results. While Kakamega would have received twice as much as Baringo under the CRA approach, both would receive the same amount under the Treasury approach.

Turkana would have received more than 8 times as much under the CRA proposal than the Treasury proposal. We know the logic of the CRA formula, whatever its flaws. But what about Treasury’s offer?

Treasury’s approach, though opaque, appears to have been to pick a set of fixed amounts for different types of county. For example, there were 13 counties that were all supposed to receive Ksh144,871,942 in March.

This is odd, because in Treasury’s own estimates of the cost of providing devolved services in different counties, no two counties have the same costs. Why then suddenly assign the same amount of cash to different counties?

The final allocation approved by Parliament follows the CRA’s distribution among counties, but using only 1/3 of the money. This brings us to the second issue: The total amount of funds.

If the final allocation was consistent with the CRA formula, it was much less than CRA recommended. Why did MPs settle for this? Moreover, why Ksh9.7 billion and not, say, Ksh15.1 billion?

Give explanations

The Constitution does not give the CRA the final authority to decide how much counties should receive; that is left to parliament.

However, the Constitution does insist that any proposal that varies from the recommendations of the CRA must be accompanied by an explanation for the deviation.

The Constitution is therefore very clear about the importance of public rationales and debate around these allocations.

In light of this, Treasury fell short in introducing a Bill in parliament without publicising any explanation for why the final transitional allocations are at odds with what would be expected following the CRA recommendation.

Parliament also considered the question of how much each county should get during the 2013-2014 financial year. However, this decision was deferred to the next parliament for debate and approval.

Still, the Bill to set the funding for each county for next year managed to introduce a new and confusing concept known as “special allocations.” The total revenue for counties is Ksh147 billion, but there is an additional Ksh51 billion in “special allocations.”

What are these special allocations for? The Bill says they are to pay for “regional referral hospitals,” a concept which has no definition.

We know about national referral hospitals, and we know about county hospitals, but what is a “regional referral hospital”? It could be a provincial hospital, but there is not one of these in each county, so why give each county money for one?

It could mean county hospitals, but consider that the total cost (recurrent and development) of running all provincial hospitals and district health facilities this year was only Ksh26 billion.

So how can counties now receive over Ksh50 billion to run only regional referral hospitals?

This is a lot of numbers to keep track of. But if the government and parliamentarians would provide clearer explanations for their actions, the figures would be easier to manage.

The Constitution requires greater transparency in financial matters. This means not only publishing figures, but also explanations.

Dr Jason Lakin is a programme officer and research fellow at the International Budget Partnership. [email protected]