Fiscal decentralization in Kenya: a case for an effective legal framework for intergovernmental fiscal relations.

Abstract

This study defines fiscal decentralization as transferring the authority of revenue collection or expenditure responsibility from national level to sub-national levels for the purpose of attaining more efficient public services aimed at improving the public welfare of residents. A scholar has defined it as the devolution by the central government to local governments of specific functions with the administrative authority and fiscal revenue to perform those functions. 1 The Constitution of Kenya 2010 (New Constitution) has devolution as its main objective. To ensure successful devolution, it proposes a fiscal decentralization framework. This framework does not fully comply with the pillars of an effective fiscal decentralization framework. The details of this framework cannot be fully captured in the Constitution, with other details being left to statute. Several statutes have been passed to elaborate on the fiscal decentralization framework. However, these statutes do not fully implement the framework envisaged in the constitution. These statutes also enact a framework replete with aspects of previous unsuccessful attempts at implementing fiscal decentralization in Kenya. The purpose of this study is to investigate the extent to which the fiscal decentralization framework as provided for in the Constitution of Kenya 2010 adheres to the pillars of effective fiscal decentralization. To this end, the study first examines the constitutional framework within the pillars of effective fiscal decentralization. It then compares it with the legal framework in other countries where devolution has been effective. Insight gained from this study will be helpful in establishing the gaps in the existing policy and legal framework on fiscal devolution in Kenya and proposing far reaching changes that will ensure effectiveness and support the goals of decentralization as envisaged in the Constitution.