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The East African : Nov 28th 2015
24 The EastAfrican OPINION NOVEMBER 28 - DECEMBER 4, 2015 The new new fo≥mula: P≥oposal f≥om CRA makes small st≥ides in the ≥ight di≥ection The basic equal share should cover costs that are equal across counties, such as the governor’s salary Jason Lakin Senate on the revisions to the revenue sharing formula that divides money among the 47 counties. We expected the Senate to take action before the end of 2014 and wanted to influence that discussion. The Senate did not take action at A the end of 2014. They took action only several months later, when they rejected the 2014 Commission on Revenue Allocation proposal. Nine months later, CRA has now made a new proposal. What does it contain? The first thing to note is that the biggest proposed change is not in the formula parameters, but simply a change in the data used. The shift from using 2005/6 household survey data to newer poverty data based on the 2009 census, even without changing anything else, has a substantial impact on the distribution of funds lmost exactly a year ago, my colleagues and I were working furiously to finish recommendations to the for a number of counties. For example, the new data push poverty allocations in Kilifi up by 66 per cent while Kwale nearly doubles. Turkana, on the other hand, declines by nearly half. The parameter revisions that CRA has proposed seem to be both improvements and regressions from both the current formula and the first proposal to revise that proposal from 2014. I begin with the improvements. First, the proposal still contains the minor shift from the use of poverty to the use of a new composite variable called “development.” This is an improvement because the development parameter, though tiny, starts to measure access to specific services that counties provide and is a better measure of fiscal need than a general poverty measure, which is not directly related to county functions. In my view, the development parameter should have been increased further and poverty decreased further. Another improvement, both from the current formula and from the first proposed revision, is with respect to fiscal responsibility. Fiscal responsibility in the current formula has The development parameter, though tiny, starts to measure access to specific services that counties provide a two per cent weight but has never actually been measured and was simply given to all counties equally. The first proposed revision reduced this to one per cent and half of this was to be given equally. Moreover, while the CRA claimed that the other half was a measure of effort, it was actually a measure of capacity, giving the most to counties collecting the most own revenue in a single year. The new proposal retains the parameter at two per cent and is now based on changes over time in revenue collection, rather than a single year’s data. This is essential: Effort is about how we improve upon our current position and must be based on incremental change. The way the increment is meas- ured has an impact on who benefits. Unfortunately, CRA has not quite got this right. The increment is based on change in per capita revenue. That is somewhat better than total revenue, because it does allow smaller population counties that make an effort, like Lamu, to benefit. However, it continues to make it difficult for poor counties to benefit. Because the increment is in absolute terms, it is virtually impossible for counties with small economies and low revenue bases to benefit, regardless of effort. For example, West Pokot increased its total own source revenue by 76 per cent between 2013/14 and 2014/15. Mombasa increased by 45 per cent. But Mombasa receives 11 per cent of the total available for this parameter, while West Pokot receives 1 per cent. That is because West Pokot’s absolute revenue base is very low and with a 76 per cent increase it is still very low compared with Mombasa. But is this then really a measure of effort? The first proposed revision con- tained a parameter to help cushion counties that had inherited large payrolls. That has been removed. I argued previously that this parameter was important but should have been introduced as a conditional grant. It appears that CRA is headed in this direction, which will cushion counties that inherited large payrolls until the staff rationalisation process is complete. In general, this will dampen the redistribution in the first formula, which is very high and left some counties without enough resources to maintain services. Finally, there is the issue of the basic equal share. I recently argued, based on research my organisation released in September, that the basic equal share was far too large. This parameter should cover costs that are essentially equal across counties, such as paying the governor’s salary. We calculated those costs at less than 15 per cent, while the current formula puts them at 25 per cent, and the new proposal would raise this to 26 per cent. This favours small counties at the cost of providing services in larger counties. S0, the new proposal from CRA makes small strides in the right direction, but leaves more to be done. Jason Lakin is Kenya count≥y di≥ecto≥ fo≥ the Inte≥national Budget Pa≥tne≥ship. E-mail: email@example.com Alone and unloved:Has Vladimi≥ Putin finally ove≥≥eached? and cut off electricity supplies to Russianheld Crimea. In St Petersburg, his home city, on Tuesday a column of 600 heavy trucks was crawling toward the city government building to protest tolls on Russian roads (a son of a close Putin friend has a financial interest in the system). And on the TurkeySyria border, the Turkish air force downed a Russian bomber. After annexing Crimea and fomenting un- T rest in eastern Ukraine, stamping out domestic opposition, deploying his military to Syria, Putin hasn’t responded to the latest outrages. In Crimea, the lights largely have been out for almost three days, and Governor Sergei Aksyonov has called on the population to “prepare for the worst” -- that is, a blackout that could last until the end of December. In St Petersburg, the police gave up on stopping the trucks and local officials agreed to meet with the drivers; and Putin’s response to the downing of the Su-24 has been muted and pained rather than aggressive. On Tuesday, the Russian leader called the incident “a stab in the back” dealt by “those who aid terrorists.” He accused Turkey of protecting Islamic State militants because they smuggle oil into the country. He also claimed the plane had been sent to bomb Islamic State positions in northern Latakia province, where Islamic State may have no presence. When Russia acknowledged that its passen- he Russian president is confronting several simultaneous crises. Over the weekend, Ukrainian activists blew up high-voltage transmission towers Any economic sanctions against Turkey probably would hurt Russians as much as the Turks.” Leonid Be≥shidsky ger airliner had been blown up by terrorists over Egypt last month, Putin vowed to “find and punish” the perpetrators. He wasn’t as forceful on Tuesday. “Today’s tragic events will have serious consequences for RussianTurkish relations,” he said. “We will never tolerate crimes like the one committed today.” That hardly sounds like sabres rattling. Putin’s allies and mouthpieces have sensed that no forceful response is being considered. “Ankara has clearly not calculated the consequences of its hostile actions for Turkey’s interests and its economy,” tweeted Alexei Puishkov, head of the foreign policy committee of parliament’s lower house. Patriotic commentators weren’t happy with the implication that the response would be purely economic. “What, you’re going to wag a finger at them?” one wrote in response to Pushkov’s tweet. “To hell with the Turkish economy,” another wrote. “What are we going to do about the Bosphorus?” A purely economic response could include a ban on air traffic between Russia and Turkey and a freeze on joint business projects, Nikolai Levichev, deputy Speaker of parliament’s lower house, suggested. He also called for an evacuation of Russian tourists from Turkey -- one of the two most popular holiday destinations for Russians, along with Egypt, which is now off limits. One of the biggest tour operators, Natali Tours, announced Tuesday that it would suspend packages to Turkey. Any economic sanctions against Turkey probably would hurt Russians as much as the Turks. The economic ties between Russia and Turkey were a potential growth area: Putin and his erstwhile friend, Turkish President Recep Tayyip Erdogan, had vowed to raise trade volumes from the about $25 billion expected this year to $100 billion by 2020. Russia already was Turkey’s biggest import partner last year thanks to big energy purchases, but Russian oil and gas suppliers need the market. Turkey’s importance as a trading partner grew last year after Russia introduced a food embargo aimed at countries that have imposed sanctions in response to its aggression in Ukraine. Imports from Turkey dropped 38.5 per cent year-on-year in January through September, but imports from the European Union plunged 43.1 per cent. If the ties are frozen or severed, neither country will gain. In both, the stockmarkets dropped after the bomber was shot down. Putin is discovering that he may have over- stretched. He cannot send troops into southern Ukraine to restore power to Crimea, because that would cause international outrage and endanger any chance of forging an alliance with Western countries in Syria. Nor can he risk a military confrontation with Turkey, a Nato member that could cut off Russia’s main supply line to Syria -- across the Mediterranean. Russia can’t manage several simultaneous conflicts with its most important neighbours, especially as domestic discontent with austerity measures appears to be rising. Putin’s Russia is not exactly weak, it’s just alone and unloved after alienating even potential friends such as Turkey and Ukraine. In the near future, if pressure rises on any of his multiple fronts, Putin may feel cornered. In a book of interviews published in 2000, “First Person,” he described a formative episode in the dingy St Peterburg building where he lived as a boy: “There, on that staircase, I figured out once and for all what the world ‘cornered’ means. There were rats in the hallway. My friends and I would always chase them with sticks. Once I saw a huge rat and started pursuing it until I chased it into a corner. It had nowhere to run. So it turned around and threw itself at me. It was unexpected and very scary. Now the rat was chasing me.” Now, however, it’s Putin who may be cor- nered. He has pushed around his regional partners and rivals, his Western adversaries and a supine population for 15 years. If they all turn on him, he may not have a longenough stick to fight all of them off. Leonid Be≥shidsky, a Bloombe≥g View cont≥ibuto≥, is a Be≥lin-based w≥ite≥.
Nov 21st 2015
Dec 5th 2015