Counties getting 40 percent would do more harm than good
30 July 2014, 21:44
Nairobi - Counties have been introduced to Kenyans through the constitution and they were meant to bring government closer to the people.
Thus far, they have been partially successful. Shortcomings have however been very evident when it comes to expenditure.
Office of Auditor General has reverberated that the county governments have not been very prudent in the manner of spending.
A huge chunk of finances were diverted to recurrent expenditure mainly foreign travels, never-ending conferences and countless seating allowances.
With the main agenda behind calls for a referendum pegged on allocating 40 percent of national revenue to counties, questions are being raised on the rationality of the whole idea. Spending habits in the counties are wanting and adding more funds to their wallets would make them more spoilt a lot.
Leaving the government with 60 percent of national revenue is suicidal in every sense.
Development of national infrastructure requires huge amounts of funds, apportioning 60 percent between the large wage bill and development expenditure might leave the government in a precarious position and it might be forced to source for additional funds.
Sourcing for additional funds can either be internally or externally.
Already the national government has issued a sovereign bond in the international market famously known as the Euro Bond.
Albeit its huge success, the government cannot go about issuing every now and then because is supposed to check its debt levels so as to cushion the public against any risks of defaulting.
The other option would be for the government to raise taxes so as to acquire the needed funds however, with the already high cost of living, the government might lose popularity and consequently fail to be re-elected.
Taxes will also make investors, local and foreign, scared of entry into the market. The ones already operating in Kenya might close shop in search of greener pastures. This might have a spiraling effect that may include loss of jobs; reduced revenue collected by the tax agency and reduced business activities.
Government could also source from local banks and financial institutions. It has been a common activity whenever the government wants to acquire funds to finance its budget.
Nevertheless, the effect of local borrowing is that interest rates sky rocket due to the huge demand of funds by government, the interest rates are usually pushed to the ceiling and this is not favorable to the business community and individuals who wish to invest in the country.
High interest rates also contribute to defaulting by customers.
Looking at all the possible outcomes of increasing the allocation of national revenue to county governments it is clear that the push is not beneficial to either the common man or government.
Laws need to be passed in the Senate that will guide and compel the counties to spend monies in a prudent manner before adding them more funds.
It should be mandatory that a certain percent be utilized in development and only a fraction on recurrent expenditure. This should be followed by regular audits which are professionally referred to as interim audits.
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