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Impact of Devolution on Kenya Economic Status

President Uhuru Kenyatta is the first Kenyan president to serve a five year term under the devolved government. His government has been riddled with both the good and the bad. From building of the standard gauge railway to the doctor’s strike, President Uhuru Kenyatta has seen it all. This then begs the question; was devolution beneficiary or detrimental to the prosperity of our country?

The devolved government came into play following the 67% YES vote on 4th August 2010 constitutional referendum. The YES campaign was spearheaded by the then seating President Mwai Kibaki and his co principal Raila Odinga. The opposition constituted of the current Vice president William Rutto and former president Daniel arap Moi.

Kenyans are now feeling the repercussions of the new constitution and many may be wondering why they did not join the No campaign. Analysis of the constitution referendum vote reveals the fallacy in our political decisions as Kenyans. The constitution was voted in based on tribal political affiliations rather than actual economical and democratical benefits.

The first constitutional referendum was held on 21st November 2005 and the No vote won with a 58% lead. The YES vote was led by the then seating President Mwai Kibaki and opposed by Raila Odinga and group. The referendum campaign led to the formation of the Orange Democratic Movement (ODM) which was represented by the orange symbol.

Also Read: The Fallacy of our Democracy

2005 Kenya Constitutional Referendum Vote

Source: Electoral Commission of Kenya

Following the violent 2007 elections and the division of power between Raila Odinga and Mwai Kibaki, Raila Odinga switched sides and supported the YES campaign since he was part of the government. This was the only time after independence that the two major tribes Kikuyu and Luo voted on the same side.  William Rutto led the NO campaign with the support of Kalenjins who were against the new constitution land taxation issues among other matters. Though Rutto lost on the referendum campaign, the campaign gave him significant clout in the Kalenjin voting bloc which aided him during 2012 elections to clench the Vice President seat.

2010 Kenya Constitutional Referendum Vote

Source: Electoral Commission of Kenya

From the above graphs, it can be noted that the majority of the population voted in accordance to their political affiliations rather than relevance of the new constitution to the people of Kenya.

Since the deed is done, let us analyze the impact of devolution on Kenya’s economic status.

We can all agree that devolution has increased the equitable distribution of the national financial cake throughout the country. Marginalized counties can now receive funding for development and financial control is not concentrated in the central government. Although this may seem like a good thing, current economic figures point to devolution being detrimental to the country’s economical status.

Also Read: What Next for Jubilee Government?

Recurring Expenditure vs Development Expenditure

Source: National Treasury

The above graph indicates recurring expenditure versus development expenditure in the Kenya Budget starting from financial year 2009/2010 to financial year 2016/2017. You can notice how the recurrent expenditure shot up from 1 trillion shillings in 2015/2016 financial year to over 1.5 trillion shillings in 2016/2017 financial year. The increase in recurring expenditure arose from the increase in the wage bill of the country. Wage bill constituted up to 30.00% (600 billion shillings) of the total national budget during 2016/2017 financial year. In essence, devolution doubled the national wage expenditure without generating any more significant income.

Development expenditure on the other hand stagnated at 500 billion shillings. This constituted the amount that was to be allocated to national government projects and also county projects.  Most of the county development funds have been misallocated and misused due to lack of policy and structures to manage the funds. The counties cannot make significant development projects to generate income to cover their expenditures.  Development is curtailed further in the counties due to corruption cases. Overstating of contracts and outright mismanagement of funds has riddled many counties. Funds for development are usually the first to be misused because it is very difficult to misappropriate government workers wages.

In conclusion, devolution has worsened Kenya economic status. Counties have high expenditures which they cannot fund from revenue collection and expect national government to foot their bills. Kenya’s economy would be running at a deficit until the devolved government can generate enough revenue to fund their ever increasing expenditure. The most notable economical impact of devolution is devolved corruption. Corruption has been devolved from the national government to the county governments.

Also Read: Why Kenya’s Democracy is a Century Away

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Posted by Timothy II Aperit

True believer in numbers. Statistics never lie. Bsc Financial Engineering MBA Finance ACCA