Commerce

Parliament receives Bill to allocate counties Sh410b

Wednesday, March 10th, 2021 15:41 | By
Parliament. Photo/File

The Division of Revenue Bill 2021 has been tabled in Parliament, a key step towards counties receiving increased allocation in the coming financial year.

The Bill tabled in the National Assembly on Monday estimates that the total shareable revenue for 2021/2022 financial year will be Sh1.8 trillion up from Sh1.6 trillion in the current financial year.

Of this amount, the Bill proposes that Sh1.4 trillion remains with the national government while a total of Sh409.9 billion will go to the devolved units.

Equalisation Fund, the kitty used by the national government to provide basic services such as water, roads and health facility to marginalised areas, was allocated Sh6.8 billion.

The improved allocation to counties comprises Sh370 billion equitable share and Sh39.9 billion in conditional allocations and grants.

In the current financial year (2020/21), counties received a total of Sh369.9 billion comprising Sh316.5 billion equitable share and Sh53.4 billion in conditional allocations and grants.

From the Sh1.4 trillion allocation to national government, Sh7.2 billion will go to the leasing of medical equipment, a controversial programme currently in its seventh year of implementation.

This is Sh1 billion increase from Sh6.2 billion allocated to the programme in 2020/21 financial year.

Another Sh332 million will go towards supplementing the construction of county headquarters in the five counties of Isiolo, Lamu, Nyandarua, Tana River, and Tharaka Nithi.

“This conditional allocation is intended to supplement financing for construction of headquarters by five county governments that did not inherit adequate offices,” the bill reads in part.

This is the fourth year these counties are receiving monies towards the construction with the government giving 70 per cent while the counties contribute the remaining 30 per cent.

Next year’s allocation for the construction of county headquarters is higher compared to the Sh300 million allocated in the current financial year, 2020/2021.

Public debt

In 2021/22 the country expects to spend Sh1.17 trillion in paying public debt and related costs.

This includes the annual debt redemption cost, and interest payments for both local and external debts.

This is a significant increase from Sh829.9 billion allocated in financial year 2020/21.

Additionally the bill proposes to spend Sh514 billion on other national obligations including mandatory pension contributions, financing for constitutional offices and other statutory bodies.

Last year, this was allocated Sh477 billion. On the equitable revenue share to counties in FY2021/22 Budget Appropriation Committee (BAC) approved the total amount at Sh370 billion.

The breakdown of the equitable revenue share as indicated in the 2021 BPS had baseline allocation (Sh316.5 billion), adjustment for revenue growth (Sh36.1 billion), and conversion of four conditional allocations to unconditional allocation (Sh17.4 billion).

The BAC expressed its reservation with the conversion of the road maintenance levy fund as in its view, it’s a violation of the Road Maintenance Levy Fund Act of 1993.

That being the case, according to Genghis Capital, BAC could have put (or in this case, reduced) money where their mouth is as part of its policy recommendation, but it chose the path of least resistance; kicking the can down the road.

To be exact, the draft 2021 Budget Policy Statement had allocated Sh9.9 billion as the 15 per cent share of the Road Maintenance Levy from the national government.

This means that had BAC’s contrarian view prevailed, the equitable share to counties would have been slashed to Sh360.1 billion.

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