Three years into its implementation, Kenya’s devolution project remains a work in progress. The country appears to be on track to reap the benefits of creating 47 new counties and devolving many of the national government’s powers to them, but not without some growing pains along the way.
When Kenya gained independence in 1963, the first constitution featured a similar sub-national structure, with regions in control of roughly a third of government functions. However, the system was abrogated a year later, as the regional bodies failed to establish themselves in the face of a national government keen to concentrate power. As a result, governments at the sub-national level in Kenya from 1964 onwards were controlled by the central government, instead of elected. A second chance at devolution began in earnest after the 2010 constitution was passed. Kenya’s 2010 constitution mandated the transferring of many state powers to the newly created county governments, as well as sharing at least 15% of financial resources. The idea was to allow more control at local levels, and reduce the centrality of the national government in Nairobi in both the economy and policymaking.
The process has moved quickly in the interim. The World Bank counts Kenya’s devolution as “among the most rapid and ambitious devolution processes going on in the world, with new governance challenges and opportunities as Kenyans build a new level of government from scratch.” As a result, county governments are still in a capacity-building phase — three years after the process began, following the March 2013 local elections — and coordination with the private sector, other counties and the national government is sometimes limited. This is particularly salient in areas such as land acquisition, taxation and permitting.
While counties are beginning to raise their own revenue, typically from levies and fees, the bulk of their funding comes from state transfers, which are set yearly in the budget. About 70% of counties relied on Nairobi for 90% of their revenue or more. Spending what they receive is a challenge, with elements of public financial management not yet in place, including control over expenditures, payment systems and oversight over borrowing from commercial banks.
In the resources sector, for example, a portion of revenues from extraction is allocated by law to counties as well as to local communities, yet it is unclear how local communities are defined in some cases and whether they have the ability to absorb funding and spend it on broad-based development projects. “The issue is how to implement revenue sharing effectively to ensure that it fosters tangible development outcomes,’’ reported the Kenya Institute for Public Policy Research and Analysis’ annual economic review for 2016.
The unconditional transfers of funds, known as the “equitable share”, is challenging in part due to differing interpretations over how to ensure counties do indeed receive their due allocation. Analysis from the International Budget Partnership, an NGO that focuses on governance issues related to budgeting, found that funding for counties is growing, but at a slower rate than funding for the national government. A new state agency, the Commission on Revenue Allocation (CRA), was formed as a part of the devolution process mandated in the 2010 constitution, and is responsible with ensuring a fair share between the two levels of government.
The CRA recommended a 15% increase in the current budget against the 7.9% actual figure, for example. One result of this is a proposed amendment to the Constitution that would make Nairobi an administrative territory of the national government, rather than a county to which funds and responsibilities are to be devolved.
The two most important factors in determining the actual amount of funds each county receives are population and the current poverty index figure of each county. A benefit of this approach is that it is simple and transparent, according to the US-based think tank Brookings Institute. However, the downside of this option is that it may leave some counties ill prepared to actually deliver critical services. The Brookings Institute found that “there is a need to go beyond the generalised approach and instead focus more specifically on the cost of delivering specific services that are under the management of the county governments.” Such a shift would require line-item budgeting for specific services provided by the counties. Another option is to base sharing on the cost of services, as counties vary widely in size, terrain and population.
The separation of powers between the two levels of government has left state affairs such as foreign policy, security and the judiciary to the national government. The counties will have partial or full control in areas such as cultural affairs; planning and development; trade and investment; education; transport; public works; fire-fighting and disaster response; agriculture; and animal control. In education, for example, the counties are charged with pre-primary and vocational training, while the national government continues to oversee primary, secondary and university policies (see Education chapter).
In areas where there may be future conflicts, control defaults to the national government, according to the constitution. The state also has the authority to unilaterally transfer powers to the counties. Oversight of the devolution process and of the counties more broadly falls to the Senate, the upper house of the bicameral legislature. While the constitution calls the two levels of government distinct and independent, it also explicitly delegates supervision of the counties to the Senate.
The question of checks and balances between the two levels of government is a strength of the new system, particularly insofar as it leads to stronger governance. Kenya is aiming to ensure that its decentralisation process avoids the problems faced by similar initiatives in Asia and Africa. For example, according to a World Bank report on devolution, in Indonesia and Nigeria, where local governments were given expanded powers in recent decades, sub-national governance has often been weaker than at the national level, a result in part due to insufficient staffing and training. Kenya is aiming to sidestep these challenges by ensuring transparency of payrolls and procurement procedures, as well as by maintaining robust oversight. Even in situations where revenue is raised, there are difficulties in ensuring that counties have mechanisms in place to handle the funds.
In the future there will be more clarity over how counties can raise funds, as legal precedents reduce ambiguity and overlap between local and national administrations is resolved. Solutions are emerging: an example comes from the Kenya Electricity Generating Company, which in 2015 signed a memorandum of understanding with Meru County, located in central Kenya, in which the latter would provide land for a wind farm — part of a joint venture that gives the county equity in a project in return for the land.