Senate debates division of revenue, media ignores the whole thing, hospitals lose out

Saturday May 31 2014

Jason Lakin

Jason Lakin 

By Jason Lakin

On May 15, Kenya’s Senate passed the single most important piece of legislation affecting counties in 2014. There was little serious media coverage of the Senate’s deliberations or the final outcome of the Division of Revenue debate.

A Google search of “Senate Division of Revenue” revealed endless links from the 2013 Division of Revenue fight, but virtually no references to the 2014 debate.

It is hard to understand how there can be so much high visibility political squabbling over money for counties, and so little interest when the actual Bill is approved by parliament. 

The media blackout, combined with the delay in putting up the Hansard on the Senate website, made it virtually impossible to know what actually happened in the debate.

Thankfully, we now have the Hansard, and can evaluate what occurred. On the fundamental matter of whether the money for counties was adequate, the Senate agreed with the National Assembly to support a figure of just under Ksh227 billion in equitable sharing (the unconditional grant to counties to support their budgets).

Virtually every Senator agreed that this was not enough money, but a proposed amendment by Senator James Orengo to raise the figure to the Commission on Revenue Allocation-supported Ksh279 billion narrowly failed (14 Senators voting against, 13 in favour).

Quite a substantial part of the Senate debate was preoccupied with the issue of the “right” percentage share for counties.

It was finally admitted by Senator Billow Kerrow that the 2013 Division of Revenue Act was wrongly based on the 2010/11 audited revenues, which had not actually been approved by the National Assembly. Thus the use of the 2009/10 figures this year, which has inflated the apparent share of revenues going to counties to 43 per cent.

Almost no one actually questioned the calculations made by the Treasury or the CRA on the fundamentals.

Only Senator Wamatangi pointed out that it is not actually clear why these figures differ (drawing special attention to the wage costs of running counties) and that it is parliament’s job to ask for further information. Yet it does not seem to have done so, or at least that information has not entered the public record.

Why didn’t Senators agree to a higher figure for counties if they all agreed the National Assembly figure was too low?

It appears that, in spite of the fact that the Senate was given a role in this year’s Division of Revenue (unlike last year), they were still largely sidelined in the political negotiations (with Governors) leading to the figure of Ksh227 billion.

Senators seemed unwilling to precipitate a fight with the Assembly and risk further delaying the Bill. They also have little evidence to back their views and no new analysis since last year. 

Senators did make several minor amendments to the Bill. The most important of these concerned the issue of funding for regional hospitals.

To recall, last year, Treasury had proposed a conditional grant of Ksh10 billion to support 11 Level 5 hospitals providing services to multiple counties. The figure was in line with the 2012/13 spending on these facilities.

The National Assembly reduced this to Ksh3.4 billion, raising questions about whether they had sufficient funding. This year, the Assembly eliminated the grant altogether, in spite of a Budget Committee report endorsing its continuation.

The Senate appears not to have wanted to try to restore the grant directly because this too might have sparked conflict with the National Assembly.

Instead, they adopted a curious amendment that states that the national share of revenue must include “adequate financing” for Level 5 hospitals.

It is not clear what this means exactly. In the first place, although Senators spoke of Ksh10 billion in the debate, there is no legal statement anywhere that this sum is what is considered “adequate.” Moreover, since L5s have been transferred to counties, what is the mechanism for moving the funds from national government to L5 facilities if not through a conditional grant?

Finally, since the share of funds going to the two levels remains the same, how is the Senate ensuring that the national allocation includes these funds?

If one assumes (as we always have) that these funds were included in the equitable share and given to all counties, then they have to be removed from the county share and given back to national government.

What the Senate appears to have done is to try to force the national government to allocate additional funds for these hospitals through the Division of Revenue, a decision that can only really be taken by the National Assembly in approving the national budget.

So what will the legal standing of this amendment be? And so it goes, as we continue to play politics with Kenya’s hospitals.

Jason Lakin is senior programme officer and research fellow at the International Budget Partnership/

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