Interview: Anne Waiguru
How much scope do counties have for adjusting policy or introducing incentives to attract investment?
ANNE WAIGURU: The overall framework for economic planning is overseen by the national government, as the constitution mandates. This is articulated in Kenya Vision 2030 and implemented through medium-term plans. With this as the overall guiding framework, every county develops its own county integrated development plan. My ministry has developed guidelines for county integrated development plans that help counties through this process. There is a lot of scope for county governments to determine specific investments according to their respective competitive advantages. What the national government does is provide them with guidelines and, most importantly, train them according to their specific needs. In recent months, several counties have held forums to look at different areas in which they could attract investment. Being fairly new to devolution, the transition has not been without challenges, and counties are just settling into their mandates and beginning to understand what their unique advantages are and where they should invest to spur development. We have to remember that counties, like institutions, take on the character of the people leading them, hence some are moving faster than others.
What can be done to encourage cross-county planning and integrated development?
WAIGURU: As mentioned previously, the national government is responsible for planning overall national development. Regarding infrastructure, the constitution clearly distinguishes which functions fall under the national level and which ones fall to the county. For example, energy production, railways, water resource management and highways are national government functions to ensure there is no risk of uncoordinated development. Health care is an example of a devolved function, but referral hospitals belong to the national government. Referral hospitals are equipped to deal with more specialised and advanced health care. However, even though this sector is a devolved function, in line with the need to improve the quality of health care throughout the country, the national government is rolling out a programme to equip county hospitals with specialised equipment through a leasing arrangement that ensures a good number of facilities can undertake basic diagnostics and specialised procedures.
Furthermore, as part of managing intergovernmental relations and coordination, the ministry continues to support other line ministries in undertaking regular intergovernmental sectoral consultative forums where relevant issues can be discussed and a coordinated development approach adopted. Another intergovernmental coordinating mechanism is the Coordinating Summit, which is chaired jointly by the president and the chairperson of the Council of Governors. This is the apex decision-making body on all matters relating to intergovernmental coordination.
What criteria must counties meet for the national government to provide sovereign guarantees?
WAIGURU: The question of subnational borrowing is critical, but we are not there yet. It is important that counties first stabilise and determine their level of revenue before a conversation can even begin on borrowing. As a result, there is a three-year freeze on county borrowing, with two more years to go. At this point in time, counties cannot finance their spending by borrowing directly; they must fund projects from either the shareable revenue allocated to them or their own revenue sources. The reason for this is simple: we have to manage our national debt level, which surpassed 50% of GDP in 2013. We are cautious not to exert fiscal pressure beyond what is considered prudent by both our own standards and that recommended by international institutions. Through the Intergovernmental Budget and Economic Council, discussions are ongoing on the most plausible modalities and appropriate framework for subnational borrowing. Once this is finalised, we will have proper guidelines to make reference to.
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