MONDAY, 3RD , AUGUST 2020 PRESS STATEMENT BY THE PASTORALISTS PARLIAMENT GROUP (PPG) ON THE THIRD BASIS REVENUE SHARING FORMULA
Good Morning members of the press.
Today we are gathered here as the leaders representing more than 15 counties in Kenya; The Pastoralist Parliamentary Group (PPG) membership in the 12th Parliament stands at 108 MPs from the National Assembly and the Senate that includes three members from East Africa Legislative Assembly (EALA).
We are here to make a public pronouncement and add our clear voice to the ongoing debate surrounding the Revenue sharing formula among counties that was initiated by the Commission on Revenue Allocation (CRA) and subsequent amendments on its original proposal that has created standoff in the Senate and among national leadership in the better part of last week.
Ladies and Gentlemen of the Press,
First of all, we are taking this opportunity to sincerely thank and congratulate our colleagues in the senate for practicing their legislative duty without fear by rejecting otherwise contentious, skewed and proposed colonial formula in revenue sharing that is meant to target marginalized areas and disadvantage and disenfranchise and further harm deliberately a section of this country. We want to declare our maximum and unparalleled support for the patriotic legislators even as we prepare for the next sitting tomorrow. We also want to appeal to those who voted YES to that formula to look beyond political inclinations and personal gains and consider the impact on more than 19 counties that will lose funds meant for critical needs such as health care, water and access to other basic needs that the rest of Kenyans have been enjoying for many years and continue enjoying up to now.
Ladies and Gentlemen of the press,
This new formula is simply a return to the 1965 sessional paper No.10 which is known to have institutionalized the marginalization. We are here to debunk some of the myth and fallacy surrounding the issue of where ‘’yields’’ come from because our region is one of the biggest contributors to our National Revenue yet are big losers. Our region economy contributes to national Revenue through the Livestock, Tourism, Extractive and Energy sectors to mention but a few that are in the Arid areas.
As you are aware pastoralists from ASAL regions in this country have been excluded from decision making and have being deliberately denied access to key services by the successive Governments, mainly through such inequitable sharing of resources formula until the advent of the 2010 constitution that heralded the devolved system of Governments. It is only since the devolution that we have seen a transformation in many sectors in Arid and semi-Arid counties of this Country in the last few years, thanks to the devolved funds which has now brought services closer to our people. But even then the communities in ASAL region are still the most vulnerable, marginalized and poorest communities in Kenya.
This serves as a pointer to the enormous work still ahead of us, that of bridging the gap between ourselves and the rest of the country a gap that is as a result of decades of Neglect of this region.
Ladies and Gentlemen of the Press,
The ASAL counties occupy more than 75 per cent of Kenya’s total landmass and is also the most disadvantaged region by the new county revenue sharing formula (see attached Map) meaning locking out literally the entire country out of the development discourse. This is exactly what happened in the past with sessional paper no. 10 of 1965 that resulted in high levels of illiteracy, poverty, lack of water, poor infrastructure insecurity and poor access to basic services in Kenya particularly in our region compared to the rest of the country. And there is real danger of aggravating an already bad situation and jeopardies all the gains we have witnessed in the last few years through devolution.
Article 2009 (b) (iii) of the Constitution affirms “the public finance system shall promote an equitable society and in particular, the expenditure shall promote the equitable development of the country, including by making special provision for marginalized groups and areas.”
Therefore, those propagating for the amended version of the new resource allocation formula and supporting so called the one man, one-shilling politics are not only returning us to those dark years back into another phase inequitable development but are also undermining the spirit and the letter of our constitution. It is also based on false claim and sense of entitlement by the leaders from Mt Kenya region leaders even when their region contributes less to the revenue.
It is not true that their region is sidelined in development and the region is generating 60% of the country’s GDP, while it only received 20% of county revenue share. The 9 counties that make up this region do not generate 60% of our GDP. And they don’t also get 20% of the revenue as they claim too.
GDP is the total value of goods and services produced in a country. Our GDP is valued at Kshs. 10 trillion. The revenue shared between the counties is actual tax revenues collected by KRA, which was Kshs 1.4 trillion in 2018/19 financial year. We know VAT is the largest source, at Kshs 410B, which is paid by all Kenyans because it is charged on 99% of items used/consumed/ imported by Kenyans. For instance, the bottle of water purchased by a pastoralist in Lodwar, Mandera, Moyale has 14% VAT, paid at source, mainly Nairobi or other major towns where industries were set up because infrastructure. PAYE is next, at Kshs. 293B paid by 3.8 million Kenyans in employment. The largest source is company workers, teachers & civil servants working across the country, and PAYE is also deducted at source too, again mostly in Nairobi. The other source is Corporation taxes that is paid by companies at Kshs. 296B, followed by excise duty at 196B and customs duty at 105B. Nearly 80% of these taxes are collected in Nairobi, and Mombasa (VAT & import duty). Our industries & businesses are generally located in Nairobi where the taxes are paid. Similarly, we all import our goods mainly through Mombasa where we pay the VAT, Duties, IDF, etc. Yet, all these goods are supplied across the country. This was the wisdom behind centralization of revenue collection in our Constitution.
KNBS reported in 2019 that Nairobi contributes 21.7% to GDP, yet it generates nearly 60% of the tax revenues. Similarly, Mombasa’s GDP is only 4.7%, well behind Nakuru at 6.1% and Kiambu at 5.5%, but it generates over 20% of the taxes through the port. Hence, higher GDP does not necessarily correspond to higher tax generation. Taxes paid by one large petroleum, telecom or cigarette company may be more than taxes collected from all regions outside Nairobi & Mombasa combined.
Nairobi got Kshs. 16B from the 2020/21 Kshs. 316B county revenue allocation. That represents 5% despite contributing nearly 60% of the tax revenues. If Nairobi were to use GDP as Mt Kenya leaders wish the Kenyans to believe them, it would seek 21.7% of the total county allocations, amounting to Kshs. 69B! Similarly, Mombasa got only Kshs. 7B, being 2% of the county allocations and not 20% of the taxes generated by the port. If Mombasa were to use GDP ratio, it gets double the amount.
It is not true that Mt Kenya region is sidelined in revenue allocation compared to its population? The 9 counties have a population of 8.5 million, representing 18% of the national total. In 2020/21 allocations, they receive Kshs. 53.3B, being 17% of the total county revenues. On per capita basis, Kshs. 316.5B will work out to Kshs. 6,600 per person. This region’s allocation works out to per capita of Kshs. 6,200. Hence, if the sharing is on population which they deem essential, they got more than their share of one man one-shilling mantra.
So what’s the issue? The region’s leaders believe naively that their numbers are probably half the country! They also think they generate all the taxes. In 2003, when examining the cost of devolved governments, we established that Central Kenya contributed 2% of the tax revenues. Not much has changed since. Most of our farm produce such as tea, coffee, flowers etc. are for exports; KRA only gets income taxes from these businesses. There are no taxes on the cabbage, beans or maize on the farms. Productivity is quite apart from tax revenue generation. They need to study KRA sources of revenue to understand which sectors/ areas raise the taxes. The Mt. Kenya do not pay tax because they produce goods from farms for their food but they want all revenues paid by others given to them. This is ridiculous. This must stop.
They want a new formula to channel resources to their already developed region by selecting parameters such as hospitals beds, access roads, farm homesteads etc. This is inequitable and ultra vires the Constitution that sets out factors to be considered. It must be rejected and we thank Senators for rejecting it.
Ladies and Gentleman,
It should be noted that we are not here to ask for a favor or beg for what is not rightfully and legally ours. We are here today demanding for equity, fairness and acceptable Revenue Sharing formula that put this country together which is also not based on factors that will disadvantage deliberately our people. Allocation and Revenue sharing should be pegged on development needs and priorities, those crafting this new amended formula, ought not to forget the level of underdevelopment in our regions caused by such policies crafted by their forefathers. As Kenyans they should be concerned, sensitive and committed to eradicating poverty, in fact consider increasing more allocation to poor region than reduce allocation that is made deliberately poor by past government policy. Unfortunately, what we are seeing now is an attempt to take us back to era of channeling resources to already developed regions at the expense of such like deserving areas. The people of our region are Kenyans and we deserve to be treated like everyone else.
Ladies and Gentlemen of the Press,
We also plead with you members of the fourth estate to further sensitize members of the public on where this country is headed with this kind of divisive politics where one region feels it has more right to development than other when they contribute so little but wish to benefit from the National resources than the rest of other Kenya. This is a route that we should as citizen forever block and put it beyond use. It is re-engineering division and mistrust among the Kenyan people. Our forefathers were there and this country and the people suffered from it, we must not go back to it.
We are once again making a clarion call to our senators as they are about to make history again to stand by their earlier decision and defy divisive politics that will destroy this country and damage the rights of the marginalized citizens of this country. Our democracy guarantees that we all move forward as one Nation where equity prevails.
Hon Alois Lentoimaga, Chairman, MP, Samburu North
Hon Bashir Abdullahi Sheikh, Vice Chairman, MP Mandera North
Hon. Rehema Dida, Isiolo County MP, Secretary General
Hon. Ali Wario Guyo, MP Garsen
Hon Qalicha Gufu Wario, MP Moyale
Hon Nasri Sahal, MP
Hon Sophia Abdinoor, MP Ijara