The devolution about-turn

The Government is teetering towards debt default, and Devolution is its first casualty

By Shadrack Muyesu

The Senate recently voted against increasing revenue allocation to counties. Coming against a backdrop of the Kenya Kwanza Government’s promise to protect devolution, it is a move that has left a bad taste in the mouths of many Kenyans, most of whom are now convinced that, far from what he has stated in the past, President William Ruto is really after undermining devolution and consolidating power.

At first glance, this seems to be the case, especially when the President’s past relationship with the Constitution of Kenya 2010 is taken into account – he was among the few who opposed its promulgation and spearheaded a resistance against the infamous Building Bridges Initiative, which, inter alia, had proposed to increase allocation to counties to a minimum of 35% of the national revenue. While this did little to salvage his reputation as a non-reformist, his argument then was that increasing allocation did not require a constitutional amendment which fact he would demonstrate when presented with the chance. The opportunity came, and all Kenyans remained with was proof of a man who could do without devolution.

The gravitas of the Senate’s decision cannot be appreciated unless the place of devolution within our constitutional setup is understood correctly. Devolved units in Kenya are not semi-autonomous units where citizens can exercise internal self-Government; rather, they are simply a tool/unit for ensuring that State resources are re-distributed equitably and to the lowest cadres of society throughout the Republic. While the Constitution allows flexibility over the percentage of the national revenue that should be allocated to counties, the progressive Government should do its utmost to ensure that what is shared out is a true reflection of the drafters’ will on the centrality of devolution to our Government system. In other words, devolution is something to be embraced, nurtured, and supported and not an unavoidable nuisance as it seems to be regarded.

Taken in isolation, the Senate’s action leaves much to be desired, but could it be evidence of something more sinister, a dire situation upon which the President’s hand is forced such that we are not so quick to cast him off as a lying non-reformist?

Scarcity, choice, opportunity oost

A couple of weeks ago, the Chairperson of the President’s Council of Economic Advisers, Dr. David Ndii, appeared on television where he made the startling admission that the Government was facing a cash crisis partly due to a culture of wastage which left it with little choice but to make difficult compromises to keep the economy afloat. In a previous tweet, Dr. Ndii had advised Kenyans to choose between delayed salaries and the Government defaulting on its loan payments. 

Ndii would later downplay the situation as merely being a liquidity problem, but the truth of the matter is the Government can longer pay its bills let alone take on some more in the name of increasing allocation to counties. We are officially in the red zone where the government must employ every contingency tool in its arsenal and hope it works. The inevitable consequence of failure would be the country sliding into debt default with devastating consequences in the pocket of every Kenyan.

The government’s every move speaks to this. The National Hospital Insurance Fund recently revised its regulations to have workers earning more than Sh100,000 per month pay more in monthly contributions. The National Social Security Fund followed suit by increasing monthly deductions to about 5.6% of an employee’s monthly salary. Not only that, but the President has also launched an ambitious affordable housing program where Kenyans will now be contributing 3% of their income to the National Housing Fund. While the president sells it as an investment towards home ownership, the truth is that it is yet another means of raising cash that the government urgently needs.

The other arms of Government have also read the memo and are now fully in support of the President’s agenda. As already stated, thanks to the President’s overtures, the Senate has agreed to save money at the expense of devolution. Our hitherto progressive, activist Judiciary has contributed by blurring the boundaries on the right to privacy by allowing Government to monitor and track cell phone use, a move which they say is meant to assist the Government in ridding the market of counterfeit phones: but one which appears to enable Government’s proposal to tax Mpesa disbursements and raise money from the digital space. The Executive, meanwhile, is over-populated with limited characters whose raison d’être is to do politics while the President governs single-handedly.

The delayed disbursement to the counties and Senate’s refusal to increase allocation is simply because there is no money. It’s part of an ill-advised contingency plan aimed at arresting runaway debt which currently stands at Shs9 trillion, Sh1.4 trillion of which is due this year alone. With tax revenue projected at an unlikely target of Sh2.1 trillion, at least 80% of this money is set to go towards paying debt. The outstanding amount is not nearly enough to cover other obligations such as paying salaries, allocating to counties, and other standard operating costs in ministries and departments. With borrowing becoming increasingly tricky and debt-refinancing no longer an option, the government is left with little choice but to employ the measures highlighted above or see the country default on its loan obligations.

With this reality in mind, it is perhaps time to think of alternative ways of financing devolution. One option that has been suggested is to merge counties to reduce staff and come up with financially viable polities. As it is, only the Capital, Nairobi, and perhaps Mombasa counties could be financially independent; the rest remain heavily reliant on the National Government, which leaves them gasping for air whenever there is a problem with the National Government’s finances. Unfortunately, this option remains off the table unless our idea of devolution within the constitution is formally revised.

The first stop, then, should be to minimize wastage. Dr. Ndii isn’t the first high-ranking Government employee to complain about it; at one time, then President Uhuru Kenyatta sparked mixed reactions when he admitted that over Sh2 billion is stolen from the Government every day. His predecessor Mwai Kibaki quantified the loss of at least one-third of the annual budget- a sum which he was resigned to lose, having admitted that few things could be done to save the situation. When hard-pressed to explain what Government was doing to minimise wastage, like Kibaki, Dr. Ndii advised Kenyans to forget about actual numbers, which in his view meant ‘very little’, and focus on the bigger picture, which was that the Ruto-led Government had made significant strides in reducing the budget deficit. That they are all right doesn’t override the fact that this money could be put to better use, including comfortably financing the proposed additional allocation to counties.

Commendably, counties have made strides towards financial independence. A great example has been the formation of regional economic blocs whereby counties sharing historical, political, and economic similarities come together and collaborate towards economic growth through policy harmonization and resource mobilization. Counties could, however, make more use of the tools provided under Article 212 of the Constitution of Kenya and the enabling provisions of the Public Finance Management Act 2012 and the County Governments Act also of 2012 to raise money for their development instead of waiting for money from the National Government that may never come and certainly, not in time.  (

— The writer is the managing partner at SM& M Advocates LLP.