Devolution in Kenya is still in its early stages, and there have been growing pains with complications relating to funding and concerns over governance, but a spate of new initiatives is looking to increase momentum at the county level on both industrial and social development indicators.
Improving local prospects
The Senate, Kenya’s upper legislative house, introduced in May the 2014 County Industrial Development Bill, which is aimed at increasing manufacturing and secondary activity at the county level. The bill supports the establishment of the County Industrial Development Board, whose primary role will be to support local governments in creating and evaluating viable industrial development proposals.
Crucially, the new bill also proposes the establishment of a fund, seeded with capital from donors at the national government, to finance development of industrial activity at the local level, under the discretion of the County Industrial Development Board.
Officials are looking to leverage the role of local governments in improving social development in communities. In June, Anne Waiguru, the cabinet secretary for devolution and planning, announced plans for a new procurement programme that would mandate just under one-third of all tenders at both the national and county levels to be allocated to bidders owned by youth, women and people with disabilities.
Making policy local
The actual process of devolution formally began following the March 2013 elections, three years after the passage of the amended constitution in 2010 that made devolution a legal reality.
Kenya’s newly-formed 47 counties take over from 8 provincial administrations, 175 local authorities, and the roughly 540 various sub-national administrative bodies, according to a World Bank study.
According to the 2010 constitution, the national government and the counties are to be perceived as equal and without any authority over each other. But in practice under the current transition phase, the counties are to an extent under national control and supervision and confusion over the details has already created some disputes. Local governments were given authority over issues such as agriculture, health care and public transport, as well as the ability to raise funds through local taxes. The national government still controls overall economic policy, national security and education.
Funding has been one of the more contentious areas of the devolution process. The bulk of the money for most of the 47 counties comes from direct transfers via the Commission on Revenue Allocation (CRA), a body created by the 2010 constitution to determine the amount of financial transfers to the counties.
While the legislature and National Treasury can lobby to change the allocations, the CRA’s job is to apply a set formula based on population and human development measures to determine how the 47 counties share their budget as well as determine the split between national and devolved governments. According to national government sources, the counties received about 30% of the overall budget over the last 2 years, although the minimum they can be allocated under the existing disbursement formula is 15% with the remaining 84.5% going to the national government and a half a percent going to a fund to aid marginalised areas.
For their inaugural budgeting years, according to the CRA, county budgets totalled KS210bn ($2.4bn), and ranged from the KS2.2bn ($25.1m) planned expenditure of Lamu County to the KS30.3bn ($345.1m) in Kisii. CRA analysis shows that overall 69% of revenue will come from national transfers, and 31% from elsewhere. Eleven counties planned a budget surplus and a further 11 aimed to break even. Eight counties anticipated a budget deficit of more than 20%.
Kenya’s devolution so far has been comparatively smooth but implementing a devolution process – something that involves a substantial overhaul of governing structures at both the local and national level – can be an extremely complex process and the risks are significant. As has been seen in devolution experiences elsewhere, such as Nigeria and Indonesia, the potential for graft and corruption through the creation of new bureaucratic systems is increased, and funding streams may prove erratic in the early days.
“Countries around the world implementing decentralisation reforms have repeatedly found themselves struggling with increased corruption, elite capture, and deterioration in service delivery,” according to a 2011 World Bank report on the topic.
Kenya has not been immune from some of those struggles. Earlier this year, in May 2014, Embu governor Martin Wambora was impeached by the Senate and removed from office over allegations of mismanagement and corruption.
As a result, the government has increasingly sought to tighten oversight over county officials and reduce loopholes. In July, for example, local press stated that Deputy President William Ruto and the council of governors had reached an agreement to issue regulations that limited publicly-funded overseas trips and travel by local officials.
There have been other moves to tighten fiscal behaviour. The Public Finance Management Act of 2012 holds counties to a set of fiscal-responsibility principles, such as allocating a minimum of 30% of spending on development and using debt financing for development only and not for recurring expenditure. In early 2014 a state-wide audit of hiring and wages was ordered, and counties were instructed to put recruitment on hold temporarily.
The process of devolving power from Nairobi to the counties will take some time, as will providing the evidence of any of the broader benefits of Kenya’s newly-formed governance system. However, providing local communities with greater stakes in policy-making and planning will likely provide a significant boost to headline growth and development indicators in the long-term.