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FORMULA FOR SHARING REVENUE AMONG COUNTY GOVERNMENTS 28 TH FEBRUARY 2012 COMMISSION ON REVENUE ALLOCATION.

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Presentation on theme: "FORMULA FOR SHARING REVENUE AMONG COUNTY GOVERNMENTS 28 TH FEBRUARY 2012 COMMISSION ON REVENUE ALLOCATION."— Presentation transcript:

1 FORMULA FOR SHARING REVENUE AMONG COUNTY GOVERNMENTS 28 TH FEBRUARY 2012 COMMISSION ON REVENUE ALLOCATION

2 100% > 15% REVENUE RAISED NATIONALLY 100% COUNTIES SHARE COMMISSION ON REVENUE ALLOCATION < 84.5% NATIONAL SHARE 0.5% EQULIZATION FUND FORMULA SHARING AMONG 47 COUNTY GOVERNMENTS 2

3 1.AS SIMPLE AS POSSIBLE ; 2.BASED ON AVAILABLE OFFICIAL DATA ; 3. HAS INCENTIVES FOR EFFICIENT FISCAL MANAGEMENT; 4.MINIMISE INEQUALITIES AMONG COUNTIES; AND 5.GIVES EFFECT TO THE PROVISIONS OF THE CONSTITUTION 1.AS SIMPLE AS POSSIBLE ; 2.BASED ON AVAILABLE OFFICIAL DATA ; 3. HAS INCENTIVES FOR EFFICIENT FISCAL MANAGEMENT; 4.MINIMISE INEQUALITIES AMONG COUNTIES; AND 5.GIVES EFFECT TO THE PROVISIONS OF THE CONSTITUTION COMMISSION ON REVENUE ALLOCATION 3 ATTRIBUTES OF A GOOD REVENUE SHARING FORMULA

4 1.POPULATION 2.POVERTY INDEX 3. LAND AREA 4.BASIC SHARE 5.FISCAL DISCIPLINE 1.POPULATION 2.POVERTY INDEX 3. LAND AREA 4.BASIC SHARE 5.FISCAL DISCIPLINE COMMISSION ON REVENUE ALLOCATION 4 PARAMETERS CHOSEN

5 COMMISSION ON REVENUE ALLOCATION 5 POPULATION USE OFFICIAL DATA FROM K.N.B.S THE SELECTION IS BASED ON TWO FACTORS:-  COST OF SERVICES DEPEND ON POPULATION SIZE  PROMOTION OF EQUITABLE SOCIETY ON PER CAPITA BASIS

6 COMMISSION ON REVENUE ALLOCATION 6 POVERTY USE OFFICIAL DATA FROM K.N.B.S SELECTION OF POVERTY INDEX IS BASED ON:-  POVERTY COMPONENT TREATS EVERY POOR KENYAN EQUALLY IRRESPECTIVE OF LOCATION

7 COMMISSION ON REVENUE ALLOCATION MAMA EKAI 7

8 COMMISSION ON REVENUE ALLOCATION 8 BASIC EQUAL SHARE EVERY COUNTY HAS FIXED EXPENSES IRRESPECTIVE OF SIZE, POPULATION AND POVERTY LEVELS

9 COMMISSION ON REVENUE ALLOCATION 9 LAND SIZE USE OFFICIAL DATA FROM K.N.B.S COST OF SERVICE DELIVERY DEPENDS ON THE SIZE OF A COUNTY TO ENSURE EQUITY,PLACED MINIMUM AND MAXIMUM CONTRIBUTION TO TOTAL LAND MASS AT 1% AND 10% RESPECTIVELY BINDING INTRODUCES AFFIRMATIVE ACTION IN FAVOUR OF VERY SMALL COUNTIES

10 COMMISSION ON REVENUE ALLOCATION 10 FISCAL DISCIPLINE BUILDS FINANCIAL PERFORMANCE INCENTIVE MECHANISM THAT WILL ENSURE THAT;  FISCAL MANAGEMENT  EXPLOITATION OF REVENUE POTENTIAL INITIAL EQUAL WEIGHT SINCE THERE ARE NO HISTORICAL FISCAL PERFORMANCE EVALUATION MEASURES

11 EQUITABLE SHARE C a = ∑ P i + PV i +A i +BS i +FD i WHERE C a = COUNTY REVENUE SHARE P= COUNTY’s SHARE OF POPULATION COMPONENT PV= COUNTY’s SHARE OF POVERTY COMPONENT A= COUNTY’s SHARE OF LAND AREA COMPONENT BS = COUNTY’S EQUAL SHARE COMPONENT FD = COUNTY’S SHARE OF FISCAL DISCIPLINE COMPONENT COMMISSION ON REVENUE ALLOCATION 11 COUNTY EQUITABLE SHARE FORMULA

12 COMMISSION ON REVENUE ALLOCATION 12 HOW ARE WEIGHTS ASSIGNED? 1.EXTENT THEY GIVE EFFECT TO THE PROVISIONS OF THE CONSTITUTION; 2. SIMULATIONS –RUN SEVERAL SCENARIOS

13 COMMISSION ON REVENUE ALLOCATION 13 SUMMARY PARAMETER% POPULATION60 EQUAL SHARE20 POVERTY12 LAND AREA6 FISCAL DISCIPLINE2 TOTAL100

14 COMMISSION ON REVENUE ALLOCATION 14 PARAMETERS AND WEIGHTS OF THE FORMULA 6% 2%

15 COMMISSION ON REVENUE ALLOCATION 15 CONTACTS We take this opportunity to invite public comments to the above proposed formula using any of the contacts given below: a) b)FacebookCommission on Revenue Allocation d)Websitewww.crakenya.orgwww.crakenya.org

16 COMMISSION ON REVENUE ALLOCATION 16 TELEPHONE CONTACTS Dr. Moses Sichei – Director, Research and Policy – Dr. Dulacha Barako - Advisor, CRA Mr. Stephen Masha - Director, County Fiscal Affairs Mr. George Muruli - Director, Communications

17 COMMISSION ON REVENUE ALLOCATION THANK YOU 17


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