Why reforms are critical in sustaining devolution

It’s been almost 15 years since the country promulgated the new Constitution ushering in devolution. Since then, remarkable progress has been realised as counties establish themselves as distinct units of political administration. Despite the progress, counties continue to face significant challenges negatively impacting their capacity to deliver.

At the core of these struggles are factors such as delayed disbursement of equitable share from the National Treasury, lower than expected collection in counties own source revenue, improper human resource management practices leading to high wage bill, a bloated public service and pending bills accumulation leading to stalled projects.

It is these identified gaps and challenges that informed the design of the Second Kenya Devolution Support Program (KDSP II). This four-year programme, financed by the government and the World Bank, aims at strengthening county governments’ performance in the financing, management, coordination and accountability for resources.

The programme is implemented by 19 National Ministries, Departments & Agencies (MDAs) and the 47 county governments. Under the programme, the MDAs provide technical support to counties to implement reforms under three key result areas; namely, sustainable financing and expenditure management, intergovernmental coordination, institutional performance and human resource management, and oversight, participation and accountability.

Digital system 

A key reform initiative, under the programme, involves the automation of the Exchequer process. This initiative, being implemented by the National Treasury, Office of the Controller of Budget and the Central Bank of Kenya, involves transitioning from manual Exchequer requests and withdrawals to a digital system. The aim is to reduce the number of days taken to process an Exchequer requisition once submitted by counties.

To improve county collection of own source revenue, the Commission on Revenue Allocation (CRA) is spearheading the development of revenue streams mapping guidelines. These guidelines assist county governments to identify different revenue streams, learning which one gives more compared to others. Presently, Only Machakos and Mombasa counties have been successful in mapping their revenue sources due to the steep cost of undertaking the exercise.

According to a study done by CRA in 2022, counties have a collective potential to collect Sh216 billion in revenue, but they are currently collecting Sh59 billion, thus running on a shortfall of Sh157 billion.

To collect revenue, counties must forecast how much they expect to collect in a financial year. Accurate forecasting is crucial for counties to meet their own source revenue targets. To ensure accuracy of this forecast, KDSP II is supporting the National Treasury to develop a cutting-edge revenue forecasting tool. This tool is aimed at ensuring both the national and county governments employ data- driven evidence-based approach and avoid unrealistic revenue projections.

This will enhance budget credibility and empower counties to optimise revenue collection through real time analytics and adaptive policy adjustments. this initiative marks a transformative step towards smart fiscal governance, ensuring counties can sustainably fund development and deliver better services to citizens.

Pending Bills in counties is another key reform area. To implement this reform, the Office of the Controller of Budget is tasked with developing a pending Bills template. Under this template, counties are mandated to come up with time-bound clearance plans with measurable targets . This framework ensures systematic reduction of existing liabilities while enforcing fiscal discipline to prevent future accumulations. By mandating transparent reporting and accountability ,the reform aims to stabilise county finances and restore confidence in Public Financial Management.

Human resource functions

To strengthen management of the human resource functions in the public service, the programme is supporting the development of the Human Resource Information System -Kenya (HRIS-K).

The HRIS-KE will integrate the human resource records and payroll. With a unified government payroll, the system will completely root out ghost workers as all employees will have one Unified Personal number.

It’s important to note that through the support of KDSP II program, the country now has one unified payroll system. This was realised in December 2024 following a successful transition from the Integrated Payroll & Personnel Database (IPPD) to the new Human Resource Information System. Additionally, The HRISK-KE system has been integrated with IFMIS, I-tax and Central Bank of Kenya Internet Banking (IB).

Pension has been a recurring pain point for retired public sector workers in the national and county governments. Through the Human Resource Information System -Kenya, all documentation required for pension payments will be uploaded on the system. This will eliminate the manual processes and human interventions that have been blamed for inefficiency and corruption in processing of pension for retirees.

To address issues of ghost workers in counties, the State Department for Devolution in collaboration with the State Department for Public Service has developed guidelines on staff establishment, organisational structures and HR and Skills Audit. These guidelines will assist counties to determine the number of staff in each cadre and how to effectively conduct their HR and Skills Audit.

To improve performance management, counties will be incentivised to undertake monitoring of performance contracts and cascading of the performance contracts to the lowest level.

Strengthening oversight role of citizens on projects initiated by county governments is a key reform objective. Through establishment of community driven project management committees, citizens will now oversee implementation of projects and this will eliminate “white elephants”.

For devolution to be effective, a sustained, deliberate and focused reforms programme is certain to address the catalogue of issues derailing service delivery in counties.

Michael Loikenu Lenasalon is the Principal Secretary, State Department for Devolution