DFD-I-00-05-00221-00_Kenya_Devolution_Assessment.pdf

DEVOLUTION IN KENYA STUDY

POLICY ANALYSIS AND PROGRAMMING STRATEGIES

OCTOBER 18, 2011

This publication was produced for review by the United States Agency for International

Development. It was prepared by J. Tyler Dickovick, Management Systems International.

DEVOLUTION IN KENYA STUDY

POLICY ANALYSIS AND PROGRAMMING

STRATEGIES

Contracted under DFD-I-00-05-00221-00

DCHA/DG Core Task Order (Rapid Response)

DISCLAIMER

The author’s views expressed in this publication do not necessarily reflect the views of the United States Agency for International Development or the United States Government.

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CONTENTS

Executive Summary

1. Overview: Goals and Parameters of the Study

1.1. Kenya’s Policy and Programming Environment

1.2. Devolution and USAID Goals

1.3. Outline of the Study

2. Assessment of the Environment: Devolution, Political Economy, and Institutions

2.1. The Country Context: Political Violence, Constitutional Reform, and

Devolution

2.2. The Devolution Framework: Policy Analysis

2.2.1. Advances in Devolution

2.2.2. Limitations and Uncertainties of Devolution

2.2.3. Promise and Risks: Speed and Extent of Devolution

2.3. Political Economy

2.3.1. Individual Actors: Politicians in the Executive

2.3.2. Ministerial and Administrative Actors

2.3.3. Elected Officials: Members of Parliament and County Politicians

2.3.4. Commissions and Independent Bodies

2.4. Implications for USAID Goals and Objectives

3. Framework: Promoting Effective Devolution in Kenya

3.1. Counties in Context: Supporting Institutions “Above” and “Below” County

Level

3.2. Towards Programming: A Strategy for Supporting Institutions

4. Approaches and Entry Points

4.1. Stakeholder Coordination and Targeting: Developing a County Baseline

4.1.1. County Baseline Analysis

4.1.2. Where to Program?

4.2. Accountability on the Demand Side: Strengthening Civil Society

Effectiveness

4.2.1. Comparative strengths: existing programs

4.2.2. Civil Society for Resource Mobilization: a new harambee?

4.3. Capacity on the Supply Side: Building Intergovernmental Institutions

4.3.1. Sectoral Forums

4.3.2. Intergovernmental Forums: Elected Officials

4.3.3. County and Sub-county level (including wards and villages)

4.4. Sectoral Approaches: Combining Demand-Side and Supply-Side

Interventions

4.4.1. Health

4.4.2. Land tenure and conflict

4.5. Improving Measurement

V. Conclusions and Implications

Appendix A: References

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Appendix B: List of Interviews and Meetings

Appendix C: Kenya Desk Study August 2011 [advance deliverable]

Appendix D: Lessons from Comparative Assessment of Decentralization in Africa

Appendix E: Kenya’s Leading Politicians and Relations to Decentralization

TABLES

Table 1: Geographic Units of Kenya with Population Estimates

Table 2: Goals, Opportunities, and Risks of Devolution in Kenya

Table 3: From Risks to Responses

Table 4: Potential Collaborators on County Baseline Survey

Kenya Devolution Study 0

EXECUTIVE SUMMARY

This study offers programming strategies for USAID/Kenya’s support of the country’s devolution of powers and resources to 47 counties that is currently underway and will culminate with elections and installation of new counties in 2012. Devolution poses substantial opportunities and risks in Kenya, given the ambition of the undertaking and the backdrop of civil strife in 2007/2008. USAID objectives will be to support the overarching goals of stability, development, and democracy; the programmatic interventions proposed here are designed to mitigate risks and promote the positive attributes of devolution. The recommendations are based on an analysis of the political economy and the prevailing institutional framework, which includes the decentralization laws that are being passed in August 2011. The analysis suggests that there is a political commitment to proceed with devolution, but that it will be subject to centripetal forces from central government ministries and elected officials. Supporting effective implementation will thus be crucial to future performance.

The recommendations are as follow. First, USAID can engage in a period of modest information gathering to determine the “State of Readiness” of specific counties, as suggested in the Kenya DG Assessment; this can be low-cost to USAID/DG if undertaken collaboratively with other stakeholders and development partners. After selection of target counties (for which Coast and Rift Valley are leading candidates, based on prior experience and likely criteria), the recommendation is for simultaneous interventions on the demand and supply side. The demand side can benefit from existing USAID experience on support to civil society and to civic education; the main challenge will be adapting these to the new dispensation. The supply side may require a more unconventional approach that features support to “articulating institutions” that link county governments to other actors; this can complement support targeted directly at building the technical capacity of county actors themselves. Support to intergovernmental institutions – such as sectoral forums, Senator-county forums, or sub-county bodies – can make governance more coordinated above the county level and more local below the county level. Together, these recommendations should allow for a feasible set of interventions that can target major USAID goals and contribute to a successful institutionalization of effective county governance at the crucial early stages after 2012.

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1. OVERVIEW: GOALS AND PARAMETERS OF THE STUDY

This study provides policy recommendations and programming strategies for USAID/Kenya’s support of the country’s devolution of powers and resources to 47 counties in 2012. The purpose of the report is to provide recommendations for future action in two areas: policy advocacy and programming strategies. The study took place during a period when many of the major policy decisions were being made in the ongoing policy debate in Kenya about devolution. Since some of these decisions are difficult to impact at this stage, the emphasis is on programming strategies for the future, with analysis of policy shortcomings serving to inform these strategies; programming recommendations are based in part on existing policy gaps.1 The time frame for the most substantial programming is for the period after the planned general elections in 2012, though some steps are proposed prior to that date.

1.1. Kenya’s Policy and Programming Environment

Devolution poses substantial opportunities and risks in any country undertaking reforms, but the stakes are arguably even higher in Kenya than in most other African countries. This is due to two factors. First, the devolution in Kenya is substantial and consequential, which is not always the case in Sub-Saharan Africa; the implications of devolution are likely to be much more significant than in less-decentralized countries, whether francophone countries such as Burkina Faso, lusophone countries such as Mozambique, or certain Anglophone countries such as Botswana. Second, Kenya has a volatile political environment, and ethno-regional differences are a sore spot that devolution touches upon directly. The elections of 2007 resulted in violent clashes between supporters of the two leading candidates, and the ethnic dimension of the conflict clearly remains salient for 2012 and beyond. There are shifting and complex political maneuvers involving leaders representing the Luo, Kikuyu, and Kalenjin communities (three of the largest in Kenya), while contestation over land between the groups continues at the local level.2 At the same time, pushes for autonomy from the current Coast province have even culminated in separatist and secessionist movements there. These ethnic and regional concerns are set against a backdrop of rapid increases in the cost of living – especially in food price inflation and the rising cost of land and property – that can further contribute to rising tensions. Devolution has the ability to either mitigate or exacerbate ethnic tensions that could erupt into violent conflict.

Devolution holds substantial promise for Kenya, though it clearly should not be considered a panacea for improved governance. Interviewees discussed the promise of devolution in a variety of ways, but were unanimous in their expectations that whether devolution works will be quite consequential for Kenya’s future.3 Common phrases included terming decentralization a “game changer”, or a reform that can make a “huge difference in this country”. Less optimistically, one observer noted that this is the “last chance to get it right”, given Kenya’s historic track record with poor governance. Devolution in Kenya has several notable and promising characteristics, including a substantial legal framework, broad political and legal support for subnational elections and a county civil service, and relatively strong revenue transfers mandated to accompany the devolution of public services; a more thorough analysis of the policy environment – including drawbacks and risks – is taken up in detail in section 2.

The structure of representation in Kenya after devolution can be seen in Figure 1. There are several noteworthy features. First is the creation of a Senate to represent county government at the national level.

The Senate has the power to vote on matters that pertain to or affect county government; how broadly this constitutional provision is construed will have a substantial impact on the politics of devolution. Second, the county appoints administrators to the sub-county and ward bodies below the county level, but there are also elections held at those levels. Specifically, MPs are elected in constituencies that are geographically identical to the sub-county structures, while the wards elect the members of the County Assembly. (Below the wards, Kenya Devolution Study 2 legislation of each county will provide for villages as further decentralized units.) This means that while Kenya will not have a devolved level of local government below the county level, there will be elected officials representing those smaller geographic units. This report argues that devolution will benefit not just from a county government with technical capacity, but also from a Senate capable of defending the principle of devolved government and through the strengthening of linkages between sub-county structures and elected officials; this can be seen by the dashed line in the figure below.

Figure 1: Representation under Devolved Governance in Kenya

Senate

Senators elected from counties

County

(47)

Elected Governors & County Assembly

Sub-county

(290)

Administrators appointed by county

Ward

(1,450)

Appointed by county;

constituencies for County

Assembly

National Assembly

MPs elected from constituencies

Parliamentary Constituencies

(290)

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1.2. Devolution and USAID Goals

USAID/Kenya’s strategic environment can be understood with respect to the three main goals identified by USAID as motivations for programming in decentralization and in democracy and governance more generally (see DDPH 2009; CADA 2010; Connerley, Eaton, and Smoke 2010). These are the promotion of stability, development (to include improved service provision as well as promotion of economic growth), and democracy.

As this report moves from analysis to proposals for specific programming interventions, it works with these overarching goals as guiding principles.

While a more thorough treatment of Kenya’s policy environment comes in the next section, it can be said here that devolution presents both opportunities and risks on all three goals, and the recommendations are designed with a twofold purpose: to maximize the likelihood of contributing to the goals, while minimizing the likelihood of exacerbating their opposites: instability, underdevelopment, and a low quality of democratic governance. In Kenya, it is essential that programming to support devolution take into account a “do no harm” principle. The features of Kenya’s decentralization noted above do engage all three goals of stability, development, and democracy.

1.3. Outline of the Study

The study is specific to current issues in Kenya, and explicitly builds upon Kenya Democratic Governance Assessment from 2010, but also draws upon existing USAID knowledge and experience in decentralization and local governance. In particular, the study makes reference to the Democratic Decentralization Programming Handbook (DDPH, 2009) and the various reports of the Comparative Assessment of Decentralization in Africa (CADA, 2010), which featured assessments of 10 African countries along with a comparative synthesis study;

to keep the main text succinct, most references to the latter are contained in Appendix D. There is occasional reference to the objectives and goals identified in other USAID documents, insofar as these support the current study, but the structure of the study is based on Kenyan specificity.

The report is based on meetings held in Kenya over the period from Aug 6 to Aug 24, though the report also draws freely upon the Kenya Desk Study (see Appendix C), where the findings from that study remain intact.4 Due to the meetings and interviews held in Nairobi, it was not possible at this stage to investigate local variations in different regions or localities of Kenya. More contextualized analysis of which localities and regions are suited to programmatic intervention is necessarily left to a further information-gathering stage proposed later in the report.

The report is organized into five sections, including this brief introduction. Section 2 below addresses the policy environment. This includes the legal framework in Kenya, with an analysis of the strengths and gaps of the new dispensation. It also includes a political economy analysis of those actors and institutions that set the agenda on devolution.5 Section 3 briefly develops a framework for supporting devolution in Kenya; this leads quickly to Section 4, which offers specific approaches and entry points for programming. The final section brings together these findings into a conclusion that includes a proposed “ideal type” intervention.

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2. ASSESSMENT OF THE ENVIRONMENT: DEVOLUTION,

POLITICAL ECONOMY, AND INSTITUTIONS

Kenya’s political environment is marked by the trauma of civil strife after the hotly contested general elections of 2007. As part of the process to overcome this unrest, the country passed a new constitution that included an unprecedented devolution process for the historically centralized country. This devolution is “on track”, with substantial enabling legislation working its way through Parliament in August 2011, but it is also subject to major centripetal forces in the central government, with a skeptical presidential administration and ministries that are seeking to put the brakes on certain aspects of devolution. This cautious approach to devolution among central government actors is to be expected and is advisable against the backdrop of such a rapid and extensive process. More worrisome are structural factors that could lead to negative outcomes:

ethnic and regional conflict that can compromise stability, political cultures of weak local government that could linger into the new arrangement, and lack or reversal of political support for the new systems of governance.

2.1. The Country Context: Political Violence, Constitutional Reform, and Devolution

Kenya has been an essentially centralized state since its independence from the United Kingdom in 1963, and the current devolution is the first significant attempt to break with that pattern since the early post-independence days. After an early experiment with quasi-federal regionalism known as majimbo was ended in 1964, the government centralized authority under two presidents from the governing Kenya African National Union (KANU): Jomo Kenyatta (1963 – 1978) and Daniel arap Moi (1978 – 2002). During the period of KANU dominance, much of the authority at local levels and in rural areas fell to the Provincial Authority, a deconcentrated arm of the central government that operated more as internal security apparatus than service provider.

Following a political decompression in the 2000s, current President Mwai Kibaki was elected from opposition in 2002; amid efforts from civil society and opposition actors to push a new decentralizing charter after Kibaki’s election, the new president attempted to engineer a new constitution in 2005. This failed in referendum, however, and the 2007 election set up as a contest between Kibaki and Raila Odinga of the Orange Democratic Movement (ODM). Kibaki was deemed reelected in a suspicious election, which resulted in civil strife between ODM members and followers of Kibaki’s party. The strife became ethnic in nature, with clashes in particular between Kikuyu (Kenya’s largest ethnicity) and Kalenjin in the Rift Valley.

In response to the unrest, Kibaki and Odinga successfully brokered a power-sharing agreement and agreed on the drafting of a new constitution that passed with strong support in a 2009 referendum. The Constitution that went into effect in 2010 reflected a strong consensus among the populace on the need for devolution, partly in response to concerns that winner-take-all politics was exacerbating ethnic grievances, corruption, and patronage by leading Kenyan elites to treat the state as the main fount of an ethnic spoils system; as the common saying goes, victors treated their election as signifying it was “our turn to eat”.

Since 2009, there has been relatively robust support among leading officials for a process that will establish 47 semi-autonomous counties, effective with the general elections in 2012. Legislation has proceeded apace and counties should be installed on time in 2012, although the phasing in of devolution will take place over subsequent years. Devolution is currently the subject of ongoing negotiations between a variety of political actors, including national ministries (especially National Treasury, but also line ministries), several implementing commissions and task forces, other stakeholders in civil society and the donor community, and principals including the President and Prime Minister. Also part of the political mix – though in a less

Kenya Devolution Study 5 articulated fashion – are would-be candidates for forthcoming elected positions such as the 47 county governors, the County Assemblies, and the city, municipal, and town councils that will be instituted in the counties as semi-autonomous delegated units. The current situation seems to be the passage of the major pieces of enabling legislation, albeit with some provisions to which decentralization advocates object. The merits and demerits of the new dispensation – including analysis of the legal framework itself – are treated in section 2.2.

2.2. The Devolution Framework: Policy Analysis

There are several established elements of the new dispensation in Kenya that can be expected to provide concrete advantages in the devolution process. These are:

Elections for Governors and County Assemblies in 47 counties;

Decentralization of major public service responsibilities (especially in Health and Agriculture, with more limited decentralization in Education);

Intergovernmental transfers for distribution based on formulas (yet to be established);

Creation of a county public service to which county officials will belong;

Supporting institutions for the devolution process and transition.

2.2.1. Advances in Devolution

In terms of USAID’s knowledge on decentralization, these support several of the four desirable characteristics in a decentralization reform: authority, autonomy, accountability, and capacity. The reforms clearly provide the county governments with a significant degree of authority, and an important measure of autonomy from the center. The extent to which these characteristics are present to the appropriate degree depends largely upon the implementation and execution of the legal framework. The laws also generate numerous mechanisms for accountability, both downward to local residents through civil society forums and civic education forums at the county and sub-county levels, and upward to the center through patterns of intergovernmental relations. The cost-effectiveness of these institutions and the balance between upward and downward accountability are the subject of debate (as noted in section 2.2.2), but the legal provisions have the merit of addressing the characteristic of accountability. Less clear from the legal framework is the fourth essential characteristic: the capacity of the future county governments. That said, there are legal provisions creating a central government role in evaluating county capacity, adapting decentralization to correspond to the exhibited capacity, and building it where needed. (Whether these provisions create obligations for central governments or openings for the center to slow or halt decentralization by asserting low county capacity is a matter of interpretation.)

Effective decentralization is not simply a matter of increasing county authority, autonomy, accountability, and capacity. In some areas – namely authority and autonomy – too much power for subnational governments (SNGs) can be as detrimental as too little if central governments are unable to coordinate national policies, achieve economies of scale in public services, or supervise the spending and borrowing of SNGs. Put in terms of accountability, counties must balance upward accountability to national actors with downward accountability to local actors. Even in the area of capacity, where more would seem to be better, there are direct and indirect costs associated with more mechanisms and more institutions; one of the key observations of many interlocutors is that Kenya’s thoroughgoing dispensation risks creating a “big government” at too many levels. With these caveats, however, an operating assumption is that programming should often seek to promote these four characteristics, largely due to the desire to break with Kenya’s centralized past. The programming recommendations focus relatively little on strengthening central government capacity for oversight and monitoring, given the historical fact that top-down monitoring has been substantial and that

Kenya Devolution Study 6 there is little reason to expect central government authority to evaporate overnight. This expectation of continued central government power is buttressed by the fact that the Treasury looks set to play a major role in the future dispensation and that line ministries will continue to set national standards, even if the much-reviled Provincial Authority is restructured.

Apart from the four characteristics identified as crucial by USAID, Kenya’s 2012 dispensation can also be evaluated in terms of three dimensions commonly used to assess the extent of decentralization: political decentralization, fiscal decentralization, and administrative decentralization.6 Political decentralization occurs when authority is placed under elected subnational governments; this creation of elected positions at the subnational level is the necessary component of devolution, the form of decentralization occurring in Kenya.

Elections will be held for a single Governor in each county and for members of a County Assembly, who will be elected in county wards. Fiscal decentralization will take place with the creation of the guaranteed revenue transfers, along with the transfer of public service responsibilities in several major areas, including health, agricultural extension, and infrastructure. The new counties are slated to receive a guaranteed 15% of the national budget, with lower-income districts receiving “equalization grants” to the tune of 0.5% per annum of the national budget to address service backlogs. In addition to these central government transfers, counties are authorized to raise their own revenues from several sources, including property taxes. Administrative decentralization will also take place, with the transfer of a large number of management and planning responsibilities. This affects a range of existing institutions, including line ministries and Ministry of Finance procedures in effect for the management of intergovernmental relations between the center and local governments. In Kenya, the prior existence of various levels of subnational government complicates the assessment of whether decentralization is new, as Local Authorities previously had some such attributes at the local level, but the new framework is widely interpreted as strengthening decentralization in scope and scale, breadth and depth.

2.2.2. Limitations and Uncertainties of Devolution

While the provisions above do constitute an impressive reform to Kenyan governance, the dispensation is also characterized by substantial retention of central government authority in many areas. This includes expected administrative leverage through line ministries, as will be detailed below. In addition, processes will be in place in the National Treasury to continue to supervise and monitor county fiscal operations (e.g., Medium Term Expenditure Framework, or approval of subnational borrowing). Indeed, the role of the Treasury with respect to county finance is currently the most heated topic in debates over the dispensation, as many devolution advocates have stressed that Treasury seeks to dominate or control all aspects relating to county finance (interview, Kangu; CSO roundtable on devolution).

A full examination of the debate between Treasury and decentralization advocates is beyond the scope of this study, but a brief word is in order. Both the Treasury and the Task Force on Devolved Government developed different versions of a Public Financial Management Bill. The Treasury version has stronger language about Treasury’s control of the economy and particularly public spending, while also integrating issues of national and county financial management into a single bill. The Task Force, conversely, proposed two distinct bills for national and county financial management. This standoff resulted in President Mwai Kibaki and Prime Minister Raila Odinga intervening in the discussion (amid media allegations of IMF involvement), with the apparent result being a preference for the integrated bill forwarded by Treasury. This is seen by decentralization advocates as undercutting the autonomy of counties, but by some public financial management specialists as providing a single comprehensive framework that will allow devolution to proceed while retaining safeguards against counties compromising the national economy by overspending. This study does not take a stance on the relative merits of the two positions, particularly since the debate is likely to be resolved before programming begins. Nonetheless, it can be said that other country experiences suggest a substantial degree of central government monitoring of the economy is in order to set overall spending parameters, but that devolution depends upon a degree of county autonomy in the details of expenditures.

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Ironically, the African country that has most informed Kenya’s devolution process – South Africa – is viewed as a model by Kenya’s advocates of decentralization, but is also a country with a very strong National Treasury; Kenya seems set to follow this model in certain respects, although the more competitive political party system in Kenya may result in counties more willing to contest central authority.

Besides this uncertainty about the Public Financial Management Bill, another concern is that counties will have little in the way of own-source revenue bases: they will rely heavily on a property tax (the proceeds of which will vary considerably from wealthier to poorer counties) and on user fees and charges. This in turn means that the vast majority of revenues will come from the central government transfers. While these transfers are constitutionally guaranteed and not subject to central government discretion, other African countries show that a reliance on transfers is likely to leave the counties in a situation where central government monitoring of spending in public service sectors remains considerable (see CADA Final Report).

Several aspects of the dispensation are still in flux, and for several reasons. First, the legal framework is still taking shape under the auspices of various task forces, commissions, and elected officials engaging in the process of drafting, debating, and redrafting laws. This leaves some uncertainty at the time of this report.

Second, there is a scheduled phasing-in of devolution over a three year period once the laws are passed.

Implementation can be expected to proceed more rapidly in some counties, in some sectors, and on some issues, while lagging in others. Finally, there are concurrent competencies in many public service areas written into the framework laws. This means that central and county governments will be sharing (but also contesting) responsibilities, even after laws are settled and fully implemented. Each of these elements of uncertainty is explored further below.

Kenya thus has a strong constitutional framework for devolution, with a legal framework in progress, guaranteed devolution of resources and expenditure areas, and new institutions including the Task Force on Devolved Government, the Commission on the Implementation of the Constitution, the Commission on Revenue Allocation, Governors and County Assemblies, and the Senate, among others. The decentralization bills (Devolved Government, Intergovernmental Relations, Intergovernmental Fiscal Relations, and Urban Areas and Cities, as well as the Transition Bill) clearly establish legal authority for counties. Insofar as other African experiences serve as a guide, challenges in authority have generally been found in implementing assigned powers, as authority is often more impressive on paper than in practice.

2.2.3. Promise and Risks: Speed and Extent of Devolution

Kenya’s approach to devolution process can backfire if it takes shape either “too little, too slow” or decentralizes “too much, too fast”. The “too little, too slow” possibility is the likelier. This could occur if there are inadequate voices in the domain of politics and policy that “speak for counties”. Nominally, the Senate and county-level elected officials should represent county interests, but there are risks that this support will prove too thin in a short time frame and for counties that as yet have low administrative capacity and little political heft. “Too little, too slow” would likely take the form of weaker decentralizations elsewhere in Africa: unfunded mandates, low own-source revenue and limited fiscal autonomy for counties, and resistance among civil servants and ministries to transfer to the counties. Such a path would have two foreseeable consequences. The first is that the impetus for decentralization will slow, stop, or reverse without champions. The second and related outcome is that citizen commitment can wane and be replaced with cynicism and a sense of alienation from the process. This would have substantial opportunity costs as it would represent foregoing a major chance to recreate interactions between Kenyan citizens and their state.

Conversely, a decentralization that undertakes too much, too fast can be just as problematic. Problems here often result from a lack of upward coordination or upward accountability between newly autonomous subnational governments (in Kenya’s case, the counties) and the central government. This inadequacy of central control has been a problem in Africa only rarely, and even less so in unitary states, but it has been

Kenya Devolution Study 8 salient in selected countries, most notably in Nigeria, where accountability mechanisms in highly autonomous state governments are geographically uneven and underdeveloped in many areas (see CADA Nigeria reports 2010). If an extensive devolution of authority is followed by low capacity or poor performance, recentralization may occur, as happened in neighboring Uganda with the abolition of the graduated tax and the attendant reduction in the importance of subnational governments in the 2000s (CADA Uganda 2010).

A variant of the “too much, too fast” problem in Kenya could also come from a lack of downward linkages to more local levels, since sub-county levels have yet to be the subject of substantial investment. Kenya’s devolution process is in fact something of a misnomer in the sense that Kenya’s 47 counties are actually replacing a range of Local Authorities; these Local Authorities had less constitutional, fiscal, and political significance than the new counties, plus poor reputations for governance, but they did arguably have the relative merit of being “more local” than the counties. Table 1 illustrates a dilemma of Kenya’s new dispensation: to be local, the process will need to empower geographic units smaller than the counties, yet the political debate is heavily focused on the county level itself. Sub-counties and smaller wards (as shown in Figure 1 above) are provided for in the Devolved Government Bill, and these will fall administratively under the purview of counties, but much of the discussion regarding their composition, powers, and relationship to the county level has been deferred.7

TABLE 1: GEOGRAPHIC UNITS OF KENYA WITH POPULATION ESTIMATES

Geographic Unit Number of units Avg. Population per unit (est.)

Kenya 1 41,070,934

Counties 47 873,850

Sub-counties/constituencies 290 141,624

Wards 1450 28,325 Sources: CIA World Factbook estimate, July 2011 (https://www.cia.gov/library/publications/the-world-factbook/geos/ke.html); Devolved Governments Bill [August 1 draft]

Kenya has a unique challenge given the size and scope of the single level of subnational government.

Counties are “small” on the one hand, especially with regard to coordination of policy in a unitary state and with respect to counties trying to deliver public services that benefit from economies of scale, such as advanced health care (see also Kenya DG Assessment 2010).8 On the other hand, the 47 counties will average around 800,000 persons each, which is “big” when contrasted with the larger number of less-populous municipalities in many African countries. This need for governing layers of different sizes suggests a strategy to empower institutions “around” the counties that can give the counties the support they need (both politically and administratively) to succeed. At the same time, several interlocutors cautioned against decentralization as a recipe for big government, a concern highlighted by the creation of mandatory civil society forums and civic education committees in every sub-county and every ward. This need for balance – for a “Goldilocks” decentralization that is neither too big nor too small – is especially important when considering the stakes of “getting it right” in Kenya in the lead-up to 2012.

2.3. Political Economy

Decentralization is puzzling because it involves political actors voluntarily choosing to grant powers and resources to other actors rather than retaining them. The decisions of national level leaders to decentralize can be explained in several ways: the political will of leaders having a deep democratic commitment; the self-interest of leaders who stand to benefit politically from decentralization; or the constrained optimization of leaders seeking a best solution in an institutional environment that shapes their choices. These may operate separately or jointly to promote decentralization. Understanding the incentives of central government actors is crucial to determining how decentralization will proceed and what limits will be imposed by political realities.

https://www.cia.gov/library/publications/the-world-factbook/geos/ke.html https://www.cia.gov/library/publications/the-world-factbook/geos/ke.html

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Even when central governments pass decentralization into law, they are typically interested in reforms with certain characteristics: limited authority and decision-making autonomy for subnational governments, along with accountability for those SNGs that points upward to the center as much or more than downward to local citizens. The modal form of decentralization in Africa has the merits of a legal framework that creates subnational elections, decentralizes some major public service responsibilities, and transfers revenues through grants from the center based on clear formulas, but also constitutes a weak form of decentralization for several reasons. In much of Africa, most decision making over public services remains controlled by central government standards, the civil service (including teachers) remains under central government purview, and fiscal resources transferred to local governments are inadequate to meet responsibilities, resulting in unfunded or underfunded mandates that offload responsibilities from the center to SNGs. In this setting, the gains in local autonomy and downward accountability are modest. Whether Kenya follows the modal African experience depends upon the incentives facing leading actors and institutions.

2.3.1. Individual Actors: Politicians in the Executive

Kenya’s devolution will take place in tandem with a wide-open 2012 general election that presents considerable uncertainty about the likely president and the likelihood of civil strife. There are expectations that “the next occupant of State House will determine whether devolution works or not” (interview, Kangu).

The open electoral field contrasts with decentralization processes in many other countries in Africa, where the national level features a dominant party (CADA Final Report 2010). This is both an opportunity because it indicates prospects for democracy and a risk because it is more challenging to foresee the eventual administration’s incentives on implementing devolution.

Different candidates may indeed have distinct perspectives and ideologies about devolution, but a political economy analysis focuses on the incentives of political actors, rather than understanding “political will” as a purely personal characteristic that some individuals always possess and others never will. From a political economy perspective, the offices held by individual decision makers go a long way towards determining their political positions; the dictum goes that “where you stand depends on where you sit”. Thus, leading government figures and governing institutions may have incentives to support devolution, may have mixed incentives with regard to devolution, or may oppose it outright, but any of these are subject to change as political realities and prospects shift.

Central government officials that stand to lose control over the resources transferred to counties have incentives to oppose decentralization. By contrast, it is common to find proponents of decentralization among those who do not control the presidency, and among those defeated in national elections. Depending upon the outcomes of elections, backers of strong presidentialism under a given president may continue with this perspective or may be much more amenable to strong counties upon losing control of State House, while advocacy for devolution by others can wane upon assuming the presidency. (These statements are in general terms, and references to specific leading politicians and their positions on decentralization are found in Appendix E.)

The general observations are not to deny that different actors will have formed different levels of commitment to decentralization, in part due to their previous statements and positions. But given Kenya’s political-economic history and tensions between groups, it is likely any incoming presidential administration (regardless of ethnic backing) will seek to retain certain powers and control over resources at the national level. This preference will inform how national ministries and county-level officials that are in the president’s party shape the implementation of decentralization after 2012. The incoming president will appoint top ministry officials and will seek to exercise some authority over co-partisans; it can be anticipated that these officials will face at least some incentives to comply with central directives, though Kenya’s multiparty system

Kenya Devolution Study 10 presents an important contrast with many other African countries where single parties are dominant and operate in top-down fashion.

Among those with incentives to support decentralization, the most obvious candidates are those elected officials responsible to county populations, as well as the appointed officials who in turn accountable to elected county officials. On the elected side, this includes Governors, County Assemblypersons, Senators, and possibly MPs insofar as electoral constituencies work alongside counties. Appointed officials such as county secretaries, city administrators, and members of the county civil service are also included here.

However, caution must be exercised even among these groups that should be expected to support devolution. Kenya’s history of strong centralized rule and ethno-regional divisions, combined with political ambitions found in all political systems, can lead to county elected officials eager to comply with and attend to the political needs of the central leadership. It is speculative yet to estimate how much county officials will be accountable “downward” rather than “upward”, but results can generally be expected to vary as a function of how centralized the political party system is after the elections: a more centralized and top-down party system will lead to greater challenges to devolution.

2.3.2. Ministerial and Administrative Actors

Politics and policy reform take place in a given institutional framework, even when that framework is itself in revision and reformulation, as in Kenya. The current structure of government institutions must inform recommendations. Among the most relevant institutions are the National Treasury and the sectoral ministries for devolved areas, such as Health. These institutions may have institutional memory that can be both helpful and detrimental to devolution. On the negative side, these institutions may have pathologies such as embedded corruption and inefficiencies. On the positive side, fiscal and administrative capacity will be one of the key challenges in Kenya’s devolution, and preexisting institutions may be where a large portion of that capacity resides. Planning and management will depend upon personnel who are familiar with a range of governmental processes. Retaining institutional memory can be compatible with major reforms to improve public management, capacity, and probity.

The National Treasury (Ministry of Finance) is one of the leading organizations whose instituted practices are likely to continue to shape county governance past 2012. It has perhaps some of the clearest (and most justified) reasons for wishing to ensure central control, including proper accounting of government expenditures and protection of the national macroeconomy. A range of existing features may be adjusted or largely incorporated into the new devolved system, including such processes as the Medium Term Expenditure Framework (MTEF), Ministerial Public Expenditure Reviews (MPER), and the Integrated Financial Management System (IFMS). The presence of similar institutions in the intergovernmental systems of South Africa and Uganda suggests these are compatible with significant moves toward devolution. USAID approaches could include building upon these mechanisms with capacity-building among county-level officials in intergovernmental finance and the promotion of priority issues for the counties in Budget Review consultations.

Sectoral ministries will continue to exert authority over civil servants under their purview, while also seeking to ensure county compliance with national standards. The wish to ensure national standards for service delivery often coexists with a reticence to devolve power to subnational elected officials, though the form of administrative decentralization known as deconcentration is often supported. A related set of institutional actors are those in the civil service, who may resist transfer to the subnational level and can be a powerful constituency that delimits county power. In many African countries, the continuation of a centralized civil service for most personnel, such as teachers in the education sectors, may be the fact that has most consistently tempered the devolution of public service responsibilities.

Kenya Devolution Study 11

Within their sectors, line ministries in Kenya may have several mechanisms for retaining central control. One was observed during this study, when one of Kenya’s two health ministries moved to reclassify certain hospitals as referral hospitals of national scope, thus preparing them for retention under central government control rather than for transfer to counties; it can be argued this was advisable given questions about county capacity, but the key point is an illustration of how ministries matter in the implementation and extent of devolution. On a similar note, Kenya will be undertaking a crucially important process of identifying capacity and county readiness to assume functions and responsibilities. This process is ill-defined, but it seems self-evident that the counties will not simply self-evaluate. Rather, determinations about capacity will certainly be made through ministerial processes, both in line ministries for administering expenditures and in the National Treasury for managing revenues. County officials may well have lower technical capacity than ministries at the central level, and a challenge is that this may be used (as in other African countries) by the center as a justification for limiting or reversing devolution. Central ministries may even be reticent to develop local capacity, if they have political incentives to retain power. Even where local officials do have adequate technical competence, there will be difficulties in adapting to the new systems and procedures as officials from various Local Authorities are worked into the county system (see below). In short, line ministries and their approaches to the county capacity question will strongly condition how devolution unfolds.

Staff of current Local Authorities (LAs) will also frequently have occasions to shape the future of local governance. The Local Authorities currently in place will cease to exist in 2012, but they are staffed by administrative personnel that will often transfer over to the new county governments. This represents a source of continuity with Kenya’s prior system of local governance. These LAs are criticized for their ineffectiveness and poor performance (such that Kenya’s devolution process is described by its advocates as decisive a break with the past), but not all LA officials will necessarily prove detrimental to local governance in the future. The LAs have presided over several processes that are echoed in devolution.9 For example, they spend the proceeds of the central governments Local Authorities Transfer Fund (LATF), which will be expanded in the new framework in the form of the equitable share of 15% of revenues for county governments. They also preside over a degree of public participation in the Local Authorities Service Delivery Action Plan (LASDAP) that is being transformed into civil society forums in the new counties.

Finally, LA officials have worked under the Kenya Local Government Reform Program (KLGRP). This suggests some staff of LAs may allow the new counties to retain some institutional memory of how to manage resources and participatory processes. In addition to these administrative staff members, elected officials currently found in Kenya’s LAs are likely to run for county elected positions as well (see below under 2.3.4).

2.3.3. Elected Officials: Members of Parliament and County Politicians

Besides elected and appointed officials in the executive, legislators in the National Assembly (also referred to as MPs, members of parliament) will have considerable say over the extent, pace, and implementation of decentralization.10 Because all legislation must pass the National Assembly, the members of the chamber can collectively prevent decentralization from taking place or can push it convincingly. At present, for instance, the current form of the decentralization framework laws in August 2011 took shape in negotiations between the Task Force on Devolved Government that drafted the laws and a committee of MPs that demanded changes to the laws – the so-called Naivasha Compromise, after the town where the retreat took place (cf.

CSO roundtable).

Advocates of decentralization may be able to help shape the incentives of MPs regarding decentralized governance. By enhancing links between national legislators, County Assemblies, and sub-county officials at the constituency level, champions of devolution can attempt to encourage members of the National Assembly to become allies supporting county governments. MPs will be elected in constituencies that are geographically coterminous with the sub-county level of devolved government; while MPs will not be directly

Kenya Devolution Study 12 accountable to county officials, collaboration between these national and sub-county actors can be of mutual political benefit if enhanced service provision is to the advantage of incumbents.

That said, National Assembly MPs will still be more or less attentive to the central executive, depending upon the extent to which the new dispensation alters how partisan powers operate. At present, Kenyan politics is characterized by patron-client relationships: MPs are frequently subordinated to the executive actors in policy decisions, though they are monitored only weakly by central government oversight of their spending (especially with the use of the Constituency…