Fiscal Decentralisation in Kenya and South Africa: A Comparative Analysis
Fiscal Decentralisation in Kenya and South Africa: A Comparative Analysis
Author Francis Njihia Kaburu
ISSN: 2521-2613
Affiliations:LLB (Hons) and LLM (Public Finance and Financial Services Law) University of Nairobi; Advocate of the High Court of Kenya; Lecturer at the University of Nairobi, School of Law, Kisumu Campus
Source: Africa Nazarene University Law Journal, 2014, Issue 1, p. 76 – 106
Abstract
Kenya and South Africa have adopted fiscal decentralisation models in their Constitutions. Though Kenya’s system is at its nascent stages and its implementation is slowly progressing, South Africa has, to a great extent, successfully implemented its system since 1996. South Africa leads the African continent in fiscal decentralisation, and is therefore of significant comparative value while analysing the opportunities and limitations of the Kenyan system. The comparative analysis is based on the pillars of effective fiscal decentralisation. Although both systems adhere to the pillars, South Africa has three spheres of devolution whereas Kenya has two. This article establishes that the Kenyan decentralisation system is weaker in a few respects. First, it devolves minor functions to the County Governments, leaving the bulk of the health and education expenditures under the control of the National Government (NG). Second, it devolves taxation powers to County Governments for taxes which, under the previous local authorities system, have historically been low yield and hard to collect. Third, it insists on National Government guarantees, which may be an incentive for irresponsible borrowing by County Governments. However, the Kenyan system is stronger in two respects. First, it creates an equalisation fund, with decisions on amounts being made by Parliament in consultation with the Commission on Revenue Allocation (CRA). This insulates the system from skewed allocations meant to benefit certain areas over others. Second, the Kenyan system has more implementation supervision institutions, including the CRA, the Constitutional Implementation Commission (CIC) and the Transition Authority (TA). The only such body in South Africa is the Financial and Fiscal Commission (FFC), playing a supervisory role in devolution of fiscal matters.
