Fiscal decentralization in Kenya : an analysis of the implementation of the Constituency Development Fund in the Naivasha and Gatanga Constituencies.

Abstract

In the wake of government reform in Kenya, fiscal decentralization has been adopted as a new framework to share fiscal powers and functions between national and county governments. Primarily, the objective for this new approach is to create an effective means to provide efficient basic services such as healthcare, clean water, food, education, security, transport and other pressing community needs. The Constituency Development Fund (CDF) was established as a fiscally decentralized initiative administered at the constituency level under the flagship of Members of Parliament. A decade after the rolling out of this initiative, evidence was rife that despite a few successes, most constituencies were reported to have expropriated or mismanaged the Fund, while others were accused of underspending. The Fund was also marred by endemic corruption, ghost projects, abandoned and unfinished projects. This study interrogates how and why fiscal decentralization has been implemented as a governance reform strategy in Kenya in general, and also looks as the CDF as one of Kenya’s local economic development funds. The outcomes of the CDF were explored in the Gatanga and Naivasha constituencies through conducting interviews with 90 officials involved in the day-to-day management of CDF projects; through first-hand observation; and through perusing the scant documents available. Kenya’s newly inaugurated Constitution in 2010 is the first time that Kenya has officially adopted a decentralized system of government. This study concludes that legislatively speaking, Kenya is indeed a decentralized country. The CDF is indeed aimed at addressing fiscal inequality among the different local constituencies and can, in theory, contribute to local economic development as per the theory of fiscal decentralization. This in turn, could strengthen local constituency’s autonomy. The fieldwork of this study showed that these theoretical postulations were only true to some extent. A legal framework for decentralization, including fiscal decentralization and a fiscal equalization fund, like the CDF in itself will not automatically bring about local economic development. The responses from my interviews, government reports and my own first-hand observations showed some implementation failures. However, the study revealed some interesting insight into potential factors for future success. One key factor is that of good leadership as being one of the core and inevitable values needed to enhance the intrinsic norms of LED such as: fiscal participation and budgeting; economic efficiency; transparency; accountability and effectiveness. The study concludes by presenting a table which synthesizes the findings of the study. It is a toolkit designed for the Kenyan context and recognizes that there are different local challenges. Nevertheless, it offers a systematic approach and strategies on how the key drivers of LED can be supported.