Budget Brief No. 29 – Have State Corporations Changed Under Devolution?

March 2015 | By John Kinuthia & Jason Lakin, IBP Kenya

Key Points

  • State corporations account for a sizable, and growing, share of Kenya’s budget, and perform functions that span the national, regional, and county levels.
  • The annual division of revenue determines how much money goes to counties and how much remains at national level. This should take into account state corporations. Much of the current debate about whether the national government has fully devolved its functions and finances relates to the roles and budgets of state corporations.
  • Presently, state corporations performing functions that should have been devolved (as per the 2010 constitution) receive around 78 billion Kenyan Shillings in domestic funds from the budget. If these corporations are reformed, some (but certainly not all) of that money might flow to counties.
  • Since devolution began in 2012, no fundamental reform of state corporations has taken place. While state corporations performing devolved functions need to be reformed, given the nature of their funding and the complexity of their functions, this will require substantial policy debate.
  • Even if some state corporation money were released to counties, it might be better to do so through conditional grants, rather than the unconditional equitable share. This would help to ensure that the money is used for specific purposes (e.g., road maintenance) as is currently the case.
  • In other cases, state corporations performing regional functions should potentially be maintained, but with counties given some managerial control through the boards of state corporations.
  • Parliament should act immediately to consider how to reform all of the state corporations performing at least some devolved functions, so that this matter will be resolved in time for the next division of revenue.

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Budget Brief Have State Corporations Changed Under Devolution.pdf

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Authors

John Kinuthia

Senior Program Officer, IBP Kenya

John is a Senior Program Officer at the International Budget Partnership Kenya (IBPK). He joined IBP in October 2012 just as Kenya’s ambitious devolution program was taking off. John leads IBPK’s research and analytical work in Kenya, and he is part of the team that works to promote budget transparency and to improve public engagement on how the government raises and spends public resources.

He has done extensive research on Kenya’s public finance system for evidence generation that IBP uses to provide technical support to civil society organizations and, in some cases, government agencies. John’s research focuses on equitable revenue sharing mechanisms, equity in government expenditure, social protection, budget credibility, public participation in budgets, sub-national budget transparency, among other areas. His role also includes supporting capacity building and the publication of guides and tools that IBPK uses to improve community engagement with national and sub-national government budgets. John also plays a role in coordinating IBP’s programmatic work in Kenya, including supporting fundraising and administrative tasks.

John holds a Bachelor of Science degree in Physics from Jomo Kenyatta University of Agriculture and Technology (JKUAT), an MBA in Strategic Management from the Kenya Methodist University, and a professional award on Decentralization and Local Governance from SOAS University of London.

Before joining IBP, John worked with Twaweza East Africa as an Associate Analyst, where he helped to build the Kenya Budget Explorer, a centralized budget portal, to improve citizens’ access to budget information.  He is a big data enthusiast, a happy bee farmer, and a part-time historian.

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