FORMULA FOR SHARING REVENUE AMONG COUNTY GOVERNMENTS 28 TH FEBRUARY 2012

1. COMMISSION ON REVENUE ALLOCATION FORMULA FOR SHARING REVENUE AMONG COUNTY GOVERNMENTS28TH FEBRUARY 2012

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

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

4. COMMISSION ON REVENUE ALLOCATION • POPULATION • POVERTY INDEX • LAND AREA • BASIC SHARE • FISCAL DISCIPLINE PARAMETERS CHOSEN 4

5. COMMISSION ON REVENUE ALLOCATION 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 5

6. COMMISSION ON REVENUE ALLOCATION 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 6

7. COMMISSION ON REVENUE ALLOCATION MAMA EKAI 7

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

9. COMMISSION ON REVENUE ALLOCATION 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 9

10. COMMISSION ON REVENUE ALLOCATION 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 10

11. COMMISSION ON REVENUE ALLOCATION COUNTY EQUITABLE SHARE FORMULA • EQUITABLE SHARE Ca= ∑ Pi + PVi +Ai+BSi+FDi • WHERE • Ca = 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 11

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

13. COMMISSION ON REVENUE ALLOCATION SUMMARY 13

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

15. COMMISSION ON REVENUE ALLOCATION CONTACTS We take this opportunity to invite public comments to the above proposed formula using any of the contacts given below: E-mail: info@crakenya.org Facebook Commission on Revenue Allocation Twitter @crakenya Website www.crakenya.org 15

16. COMMISSION ON REVENUE ALLOCATION TELEPHONE CONTACTS Dr. Moses Sichei – Director, Research and Policy – 0715 766 975 Dr. Dulacha Barako - Advisor, CRA - 0715 766 980 Mr. Stephen Masha - Director, County Fiscal Affairs - 0707 091 286 Mr. George Muruli - Director, Communications - 0715 766 334 16

17. COMMISSION ON REVENUE ALLOCATION THANK YOU 17