Counties to lose Sh8 billion in new CRA revenue formula

Some 31 counties could lose at least Sh7.74 billion in revenue if Parliament approves the Commission on Revenue Allocation proposal.

This loss is based on the current allocation of Sh387.42 billion, however, the amount that the devolved units potentially stand to lose could be greater if Parliament endorses the formula and fails to raise the allocation to a specified limit.

According to CRA, none of the 47 devolved units will lose revenue if Parliament gives them a minimum of Sh417.42 billion.

“In implementing the Fourth Basis, a cushioning and stabilisation factor has been built in the framework to ensure no county government gets less than what they were allocated in the financial year 2024-25,” said CRA chairperson Mary Chebukati in a report to the Senate.

However, the National Treasury has proposed an allocation of Sh405 billion, indicating many counties may lose revenue if the formula is approved.

The revelations follow an analysis by the Senate Finance and Budget Committee on the proposed formula by the CRA.

The review shows that Nairobi, Nakuru, Turkana, Kakamega and Kilifi are the biggest losers in the proposal that has triggered uproar among the devolution players.

Nairobi’s losses amount to Sh611 million – from the current Sh20.17 billion to Sh19.56 billion, with Nakuru’s share falling by Sh414 million – from Sh13.66 billion to Sh13.25 billion.

Turkana will lose Sh400 million, Kakamega will forgo Sh393 million, Kilifi will lose Sh369 million and Mandera will lose Sh354 million.

According to the formula, which will determine how counties share revenue from 2025-26, CRA has assigned the population the biggest weight at 42 per cent.

In the current formula, the population weighs 18 per cent. But was weighted at 45 per cent in the first and second-generation formulae. Geographical size has been given a weight of nine per cent from the current eight.

Equal share has been given a weight of 22 per cent from the current 20 while the weight for the poverty index has been retained at 14 per cent.

“To facilitate service delivery, the recommendation provides for an equal minimum allocation across all counties, using population and geographical size of a county as the key transfer parameters,” Wanyonyi said in a report to the Senate.

CRA has introduced the income distance index and assigned it a weight of 13 per cent.

“To address economic disparities and promote development, the framework uses income distance and poverty parameters as measures of inequality among county governments. The new framework will dictate revenue sharing among the counties for five years, from 2025-26 to 2029- 30,” the report said.

Kitui will lose Sh330 million, Machakos (Sh291 million), Kisii (Sh282 million), Narok (Sh280 million), Kwale (Sh261 million), Makueni (Sh257 million) and Uasin Gishu (Sh257 million). Kisumu will lose Sh255 million, Bungoma (Sh250 million), Homa Bay (Sh248 million), Meru (Sh242 million), Mombasa (Sh239 million, Trans Nzoia (Sh228 million), Murang’a (Sh225 million) and Nandi (Sh223 million).

Others are Nyeri (Sh198 million), Busia (Sh189 million), Migori (Sh183 million), Nyandarua (Sh180 million), Kirinyaga (Sh165 million), Embu (Sh157 million), Kiambu (Sh140 million), West Pokot (Sh48 million), Bomet (Sh28 million) and Baringo (Sh15 million).

However, the report shows that 16 counties would gain significantly in the proposed formula with Marsabit and Garissa getting more than Sh1 billion more each.

Garissa will gain Sh1.82 billion in revenue, followed by Marsabit with Sh1.53 billion. Isiolo, Kajiado, Wajir and Lamu will gain Sh869 million, Sh720 million, Sh569 million and Sh398 million.

Other gainers are Kericho (Sh365 million), Vihiga (Sh347 million), Samburu (Sh723 million), Tharaka Nithi (Sh267 million), Taita Taveta (Sh235 million) and Laikipia (Sh218 million).

Others are Elgeyo Marakwet (Sh161 million), Siaya (Sh141 million), Nyamira (Sh102 million) and Tana River (Sh74 million).

Senators whose counties are set to lose revenue have vowed to fight the proposed formula.

“If you come with formula which is going to reduce money from some devolved units and you deny them the ability to perform their functions, then that is not the formula that should get the support of the Senate,” said Nyamira Senator Okong’o Omogeni.

The lawyer dismissed the formula as unfair, and one that would stifle and prevent counties from optimally performing their functions.

“For example, Wajir, Mandera, Garissa and Marsabit are getting Sh7 billion more. From the total addition of Sh30 billion, Sh7 billion only benefits four counties. I think that is very unfair,” he said.

The senators questioned where and how CRA came up with some parameters for sharing revenue. “I have serious issues with income distance as a parameter. Where has that thing come from?” Kitui Senator Enoch Wambua posed.

“Or is there was a dissenting view of the commission on the presentation? If you come to us in bad faith, then we treat you in bad faith,” he said.

Kirinyaga Senator James Murango warned the commission not to expect senators to support the formula, which is “skewed to disadvantage some counties”.

“Those senators whose countries are losing money, are opposing and those gaining revenue are supporting the formula. And it’s okay,” he said.

Article 217 of the constitution says the revenue-sharing formula should be reviewed every five years.

However, the Sixth Schedule of the constitution further provides that the first and second determinations of the basis of the division of revenue among the counties be made at three-year intervals.