Monday, August 15, 2011

Kibaki, Raila go for crisis talks


By DAVID OCHAMI

President Kibaki and Prime Minister Raila Odinga will today chair a crisis meeting on how to resolve the standoff in Grand Coalition over funding of upcoming County governments.
The urgency and importance of the talks lies in the fact the two principals have to disentangle the deadlock over the funds between Treasury and Ministry of Local Government. Incidentally this row has set two senior ministers from both sides of the Grand Coalition against each other, as they each give different interpretation on how the Constitution anticipates the counties will be financed.
President Kibaki and Prime Minister Raila Odinga are set to hold a crucial meeting Monday on how to resolve the standoff in the Grand Coalition over funding of upcoming County governments. [PHOTO: FILE/STANDARD]
But even more crucial to the two principals will be the fact that the two ministers at odds with each other are both Deputy Prime Ministers. On the one hand is Mr Uhuru Kenyatta who is also the Finance minister, and Mr Musalia Mudavadi, who is the Local Government minister.
At the centre of the talks will be Local Government ministry’s claim that the Treasury has a long-term agenda to stifle county governments and flourish the central Government through renewal of the Provincial Administration.
Apart from the two principals and DPMs, also expected in today’s talks is Justice minister Mutula Kilonzo and members of the Constitution Implementation Commission (CIC).
Deepening row
The deepening row has sucked in top politicians, and pits bureaucrats at the Treasury who are opposed to the allocation of significant amounts of money from the exchequer to counties as proposed in a Bill developed by Mudavadi’s ministry.
The Task Force on Devolved Government (TFDG) chaired by Dr Mutakha Kangu, which generated much of what is contained in the Bill proposed that resources be shared equitably at the devolved government level. But the Treasury argued the national and county governments should share only money collected from taxation.
According to Uhuru, the term "revenue" under the current law only constitutes money collected by Kenya Revenue Authority but does not include grants received by the government, bonds, shares and other income flowing into State coffers.
The Treasury wants one law to govern financial matters between the two levels of government while TFDG wants two separate regimes for the two levels.
TFDG defines revenues "raised nationally" to include grants and other any resources that can be shared equitably while the Treasury restricts its understanding to only taxes raised by the Kenya Revenue Authority (KRA).
The meeting will also to be attended by Chairman of Commission on Revenue Allocation Micah Cheserem and Chairman of Constitutional Implementation Oversight Committee (CIOC) Mohammed Abdikadir.
The meeting is expected to discuss issues contained in a letters the Task Force wrote to the Ministry of Finance accusing it of attempting to "introduce regulations to recentralise and give undue and unnecessary powers to one office or individual".
The Task Force said in the letter to Mr Joseph Kinyua, the Treasury Permanent Secretary, that, "such powers may lead to loss of public resources, corruption and abuse of office."
The strongly worded 14-page letter dated August 9 was copied to critical stakeholders among them Mudavadi, Uhuru, Mutula, CIC, CIOC, and Head of Civil Service Francis Muthaura.
The Treasury now stands accused of creating a Bill aimed at frustrating the mandate of Kangu’s Task Force set up to spearhead drafting of laws on devolution by staging competitive draft legislation. It is also under attack over claims it is also rallying other Government departments to reject Bills proposing a mechanism of transition to county government and establishing structures for financial management by counties.
The Treasury and other parts of Government are also being accused of trying to restrict the flow of resources to the counties and plotting to strengthen the Provincial Administration within the 47 counties contrary to the Constitution, which vests executive authority in elected county governments.
Denounced
But Sunday, Uhuru’s spokesman Mr Munyori Buku denounced the Task Force, accusing it of being "unconstitutional" and "on an ego trip".
He claimed Local Government PS Karega Mutahi and other technocrats in the ministry "have disowned its report". He further claimed the Task Force gave county governments what he called an unconstitutional role of formulating fiscal policy.
Also invited for the meeting is Attorney General Amos Wako and the Kenya Law Reform Commission, largely because of the interpretation of the Constitution and the role of the Task Force.
The thrust of disagreements between Uhuru and Mudavadi hinge on enactment of laws that will enforce the principle of devolution, including sharing of resources, definition of resources and relations between the national and county governments created by the new Constitution.
Mr Buku declared the "Task Force has an infantile definition of revenue", and accused it of imagining the (National) "government should share every penny it gets with counties including donor funds for projects."
The chain of mail capturing the depth of the disagreements are discernible from letters exchanged by Kinyua and Kangu between last month and this month over four draft Bills: County Governments Financial Management Bill, Transition Authority Bill and the Intergovernmental Fiscal Relations Bill drafted by TFDG, and the Public Financial Management Bill drafted by Treasury.
The Standard has seen several letters and documents, which display growing bitterness between the two sides with one accusing
The Treasury of drafting an unconstitutional Bill that is "so pervasive as to negate the essence of Devolution".
It claims this is apparently part of a long-term scheme to weaken County governments, force their collapse and allow the Central government to take over the Devolved units.
On July 22 Kinyua wrote to Kangu complaining about the Task Force’s draft County Governments Financial Management Bill and Intergovernmental Fiscal Relations Bill, apparently to reject what he considered their encroachment of the prerogatives of the Treasury which the PS believes must retain overall control of financial and revenue issues at the two levels of government
The Treasury went ahead to draft its own Bill and is now accused of plagiarism, myopia and breach of the Constitution.
In a scathing reply, Kangu accuses Kinyua of orchestrating an "obvious attempt to reverse the governance gains that Kenyans voted and gave themselves."
Kinyua is also accused of trying to usurp the authorities of independent offices including Commission for Revenue Allocation (CRA) which has primary mandate over revenues besides the Controller of Budget who holds ultimate authority on budgeting at both levels of government.
In the documents, the Treasury insists, "County governments should not be allocated anything more than 15 per cent of revenues raised nationally" which, according to TFDG is "a misrepresentation of the Constitution" and declares that the Devolved governments deserve more than the constitutional minimum.
Delegation of authority
The County Governments Financial Management Bill establishes the governor’s role in financial management including power to delegate authority to the County executive and other officers. It also establishes operations of a county treasury and the relationship between the National and County treasuries.
Against the wishes of the Treasury, the Bill by the TFDG says county revenues include shares raised nationally, grants from national governments and allocations from the Equalisation Fund and also proposes that Counties get 30 per cent of all royalties from natural resources located in their jurisdictions.
The Intergovernmental Fiscal Relations Bill by TFDG establishes a mechanism of coordination and consultation between the two levels of government on fiscal, budgetary matters including allocation of revenue and management of the public debt through a proposed Intergovernmental Budget Council and Inter-governmental Loans Council.

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