NewsEast & Horn AfricaKenya's devolution revolution

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Posted on Thursday, 19 September 2013 00:00

Kenya's devolution revolution

By Parselelo Kantai in Nairobi

Behind its	lush parks and skyscrapers Nairobi is two-thirds slum. The governor now has $20bn to change that/Photo©Nigel Pavitt/Jai/CorbisThe constitution approved in 2010 created 47 new counties that elected officials at the 4 March national elections. The county governments will have to provide services, but the earning potential from wooing investors will in some cases be life-changing.

 

As some 1,500 besuited international investors and government officials descended on Maanzoni Lodge in May for a two-day festival of PowerPoint briefings and executive networking, casual observers could be forgiven for thinking that an independent state was in the making.

It was certainly a revolution of a kind.

Alfred Mutua, governor of Machakos County – one of 47 new county governments launched in the wake of the elections in March – was the quickest out of the blocks to take his government to the market.

And Mutua's efforts paid off handsomely: Machakos secured KSh56.3bn ($660m) in investment pledges from more than 20 companies.

The projects ranged from a factory to make surgical gloves to waste disposal and paper recycling plants, fruit-juice processors and a company that will manufacture equipment for the disabled.

That is without the multibillion-dollar plans for the Konza Techno City, the so-called Silicon Savannah, which is also going to be set up in Machakos.

There are few natural riches in Machakos County. A sleepy town some 45 minutes south of Nairobi, Machakos was Kenya's first administrative capital in the early colonial era.

After the railway was built in the early 20th century, the epicentre of activity moved to Nairobi.

Although Machakos lacks Nairobi's entrepreneurial zeal, its land is cheaper and more abundant. Mutua is setting a high bar for the other county governors: he is offering low taxes, long leases and some 4,000 acres of land free to businesses wanting to invest.

A second independence

"Everyone is watching what is happening in Machakos. It's very inspiring especially for counties and regions that have been historically neglected," says Leonard Wanyama, a project officer at the Society for International Development.

Since independence in 1963, the economic development of Kenya's ethnically diverse regions has been designed by planners sitting at the Treasury in Nairobi.

And the president in State House had the final say on policy: those regions deemed unimportant or politically hostile were marginalised by central government.

Most Kenyan citizens – the wananchi, or the people – welcomed the new constitution in August 2010 as a second independence.

New constitutional provisions to enshrine the devolution of power would counter the old diktat from the centre.

Each of the 47 counties could now expect a share of the national cake. The Division of Revenue Bill provided some KSh210bn – or 34.5 percent of projected revenue – until 2014 for the 47 counties.

County governments can collect property and entertainment taxes but in return they have to provide core services such as primary healthcare and transport.

Alongside the high expectations for devolution are suspicions that some in President Uhuru Kenyatta's alliance want to hold back this flow of funds to the counties.

In June, President Kenyatta signed a bill on revenue allocation that had not been approved by the Senate, the upper house in Kenya's bicameral parliament that was established to guard county interests.

Kenyatta justified his de­cision by saying that the bill had been validly presented by the Na­tional Assembly, but the move re­inforced suspicions about his gov­ernment's hostility to devolution.

Raila Odinga, former prime minister and leader of the op­position Coalition for Reform and Democracy, stridently guards against any dilution of devolution.

The Senate and the Council of Governors – a bipartisan body that brings together all 47 gov­ernors­ both warn that the fight over revenue allocations is the first attempt by the Treasury and others to reverse devolution and weaken the governors.

Some 50 years ago, the first independent government under Kenyatta's father, President Jomo Kenyatta, simply starved the old regional governments of state funding and reasserted the power of the centralised state.

Different this time

However, governors such as Mutua, alive to these machina­ tions, are seeking independent sources of finance.

Investors are looking intently at the prospects for access to vast mineral, oil and gas deposits. Now they will have to negotiate with the county gov­ ernments.

This time "the devolu­ tionaries" believe they are on the right side of history.

The main beneficiaries of this re­ source boom are likely to be those arid hinterlands far away from what Nairobi policy wonks call the "chlorophyll belt", the narrow strip of well­watered arable lands in southern Kenya navigated by the colonial Kenya­Uganda railway.

When London­listed Tullow Oil announced that it had dis­ covered commercially viable oil deposits in Turkana in northern Kenya, there were fears that the local people would be massively ripped off by speculators from the south as land prices boomed.

Concerns grew when it emerged that central government officials and Nairobi­based lawyers had teamed up with speculators to sell off the Ngamia 1 oil conces­ sion without consulting the local authority in Turkana.

"We are not opposed to the drilling of oil, but we are dismayed that we only came to know about it when [then President Mwai Kibaki] made the disclosure," said then Turkana County Council chairman Eliud Long'acha Kerio.

"We want to know how the min­istries of energy and lands trans­ferred the said land and other parcels from the local residents to strangers. We have been re­ legated to the periphery."

With no clear legal regime for resource sharing – apart from colonial­era mining laws con­ferring ownership to the central government – the emerging re­source nationalism will further complicate politics in the wake of the disputed national elections.

The opposition parties, which backed Odinga in the presiden­tial polls, control more than half of the new county governments and all those in the resource­rich hinterlands and coastal areas.

Bretton woods

"Kenyans are not ready to risk an­ other 50 years in the wilderness of a hijacked devolution project," says Abraham Rugo Muriu of the Institute of Economic Affairs in Nairobi.

Rugo argues that the Pub­ lic Finance Management (PFM) Act, which frames revenue alloc­ation according to International Monetary Fund recommenda­tions on central fiscal controls, will hold back power sharing.

An independent policy ex­ pert agrees: "The PFM wasn't meant to launch devolution. It was meant to stall it. The thinking within Bretton Woods was that a multi­tiered public sector under devolution would complicate policymaking."

But the contest could get more complex still: the counties want more economic and management autonomy, while a coali­tion in Nairobi of Treasury officials are fearful of losing their authority and national politicians try to reassert their policy agenda.

Losing control

"We have a regime that has been run from central government for a very long time. The finance minister has traditionally been one of the most powerful offices in the country. There are fears that if donors or investors were to engage directly with the counties, there would be a real loss of central authority," argues Rugo.

So far, the fights over revenue alloca- tion, he says, have been informed by politics rather than develop- mental priorities.

In Kwale County at the Coast, the new county government wants to bring in an Australian mineral sands developer, Base Titanium. It also has plans to revive old bixa and cashew-nut factories and resuscitate agricultural ventures neglected by central planners.

The $300m Base Titanium mining project is set to start by the end of the year, employing 1,200 locals, and could generate more than $2bn in revenue.

But the company's operations almost stalled last year when the government tried to introduce an amendment stipulating that all new mining companies must cede 35% to local investors. After wideranging protests, the planned law was dropped.

However, that is unlikely to be the last attempt by central government to rein in the counties' bid for more economic and political independence.

This article was first published in the July, 2013 edition of The Africa Report, on sale at newsstands, via our print subscription or our digital edition.



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