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Referendum hijacked, turned into cash cow

Referendum hijacked, turned into cash cow

Kenya: The proposed referendum is now turning into a multi-billion gravy train as those for or against the idea promise billions of tax-payers money to key interest groups.

National Assembly KenyaThe key interest groups- Members of County Assemblies, Governors, Senators and National Assembly members have all moved in for the kill- more perks, car grants, new funds.

The 2,248 MCA’s are at the centre of the gravy train. They have placed demands totaling at least Sh10.5 billion in car grants and construction of offices at the door steps of the government.

In “retaliation” pro-referendum proponents Okoa Maisha have promised the MCA’s a multibillion fund to be hived out of the 45 per cent of the county revenues once the referendum goes through.

The Sh1.6 billion demand by Senators for their county operations is also being discussed alongside the referendum gravy train line.

The MCA’s through their County Assembly’s Forum have suspended any courtship towards them until their 15-member technical committee makes a final decision on the referendum. Consequently, they have told Jubilee, Cord and Council of Governors to cease wooing them.

CAF officials confirmed to the Standard on Sunday that they have been intense pressure from the three groups.

“For now, we are not for or against the referendum but we want to make an informed decision after our 15-member team formed on Tuesday, under the chairmanship of Migori county assembly speaker Gordon Ogola, gives its final recommendations within 30 days. We are not leaving anything to chance,” CAF national Chairman and Speaker of Tana River County Assembly, Dr. Nuh Nassir, told The Standard on Sunday in an interview.

Nuh claimed the only proposal they had made was of Sh2 million car loan to the Salaries and Remuneration Commission which would amount to Sh4.4 billion.

“Some of the offers by CORD, such as formation of Ward Development Funds (WDFs) and already water under the bridge because many counties among them Nairobi have already established them while others are in the process of legislating the same,” Nuh said.

The forum is expected to meet with key members of the defunct Committee of Expert chaired by Nzamba Kitonga this coming week.

They will also hold talks with the CORD and Jubilee leadership, Cord technical committee on referendum headed by lawyer Paul Mwangi, the Constitutional Implementation Commission (CIC), the Council of Governors (CoG) committee on referendum chaired by Meru county Governor Peter Munya and a selected members of the civil society among others.

The current financial year (2014/2015) total budget is Sh1.8 trillion with a deficit of Sh342 billion. Of the Sh1.8 trillion, four key sectors- infrastructure and roads, security, education and public debt have gobbled slightly above a trillion.

Public debt stands at Sh415 billion, Teachers Service Commission and education Sh309 billion, national security Sh173 billion and infrastructure and transport Sh169 billion. Counties have taken Sh226 billion.

The total amount for these functions Sh1.2 trillion is exactly the amount Kenya Revenue is projecting to collect this financial year. The Institute of Economic Affairs has however warned that revenue performance for the 2014/2015 may suffer “economic shocks of insecurity.”

Last year, KRA collected a total of Sh963 billion.

“If you look at the figures, you will appreciate that there is actually no way counties can receive the 45 per cent allocation they are seeking without getting additional functions, especially the most financially burdensome ones like education,” MP Dennis Waweru, a member of the national assembly budget committee told the Standard on Sunday.

He added: “Our republic is right now being held together from the centre. The moment you weaken the national government by starving it of money to fund its core function you are invoking its disintegration. The calculation must be based on function and costing.”

Senator Mutula Kilonzo Junior who sits in the Senate’s budget committee and an Okoa Kenya proponent told Standard on Sunday that 45 per cent allocation ought to have been arrived after costing functions.

“It’s not the percentage that bothers me. Who has costed the functions? How do we know whether 30 per cent will not cover all functions?” he said.

Kilonzo said the billions to induce MCA’s to stop the referendum will be found somehow: “Governments have abused public coffers for eternity now. Budgets are nothing but a general framework to disguise opulence. Do not be misled by the general notion that the country has no money. MCA’s will receive the cash, trust me.”


Senator Mutahi Kagwe however disagreed. He said there is no way the budget can be tinkered at this point to accommodate demands being made. He says the current budget is “quite tight.”

“All the money right now is on specific budget lines. For the counties, the controller of budget and the Commission for Revenue Allocation have already dispensed with them. I don’t know where else they will get the kind of money I am reading in the press.”

He says most provincial and district headquarters in the country have ample working spaces from where MCA’s can set up offices and work.

Kagwe agreed that the referendum has turned into a gravy train yet its “crystal clear” to its movers that it will not happen.

“The person who is going to suffer in all this is the mwananchi. They are now hostages to the brand of politics being practiced. To my mind, if Cord leaders wanted to be relevant, they would have done themselves justice and by extension the country if they focused on issues,” Kagwe added.

Kagwe and Kilonzo however defended the Senate saying it is not part of the gravy train. Kilonzo said the attempts to link Senate demands to the referendum gravy train is a malicious plot by the national assembly.

Senate is one of the supposed beneficiaries of a successful referendum. In their push for the referendum, Council of Governors have said they want enhanced powers for the Senate. The two houses have been engaged in supremacy battles since their inauguration last year.

“Senators have a valid point. I do not think the matter is linked to the referendum because this is a matter they have been raising since last year. It is the same problem we face as women representatives. They represent larger geographical areas than MP’s,” Nyeri Women Represenative and member of national assembly’s budget committee Priscilla Nyokabi said.

According to Nyokabi, the question of raising share of county allocation to a minimum of 40 per cent is ill-informed. She said Jubilee manifesto had promised to hit 40 per cent mark but incrementally.

She cited low absorption capacities, competing national priorities and “unquenchable appetite” for recurrent expenditure as some of the reasons counties should hold on.

“Development projects should be the ones forcing counties to demand more, not recurrent. But as it is, most of the counties have not even spent their development vote, because they have no developments going on,” she said.

According to Jason Lakin, a senior programme officer at International Budget Partnership, where to get the money to pamper MCA’s may not be an issue to government as government’s run programs even on deficit.

Besides, he said, governments plan one thing and end up doing the other by shifting funds. He said slicing the proceeds of the Euro bond may be one of the options of raising the funds to forestall the referendum.

Lakin said the government may be firing on all cylinders to stop the referendum because it stands more to lose with its success than its failure. He said a cost-benefit analysis for both scenarios may have informed the move.

“Based on the proposal at their table, the governors may be getting another 100 billion extra of what they are getting if the referendum pulls through. I would imagine that they have reckoned that it would be much better using less to stop it,” Lakin added.

Lakin who has been tracking Kenya’s budgeting process said in his view there seems to be little basis for the 45 per cent county revenue allocation push.

“If you were to base the 45 per cent on last year collected revenue that would be a crazy amount of money. To base it on the total budget is even crazier. The more realistic approach would be to base it on the 2012/2013 audited accounts,” Lakin added.

He warned of dangers of referendum politics and possibility of people getting different things from what they had originally wanted. ‘It may get messy, I am afraid.”

By Nzau Musau and Stephen Makabila, The Standard

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