72297 DEVOLUTION WITHOUT DISRUPTION – PATHWAYS TO A SUCCESSFUL NEW KENYA EXECUTIVE SUMMARY June 2012 1. Kenya’s new Constitution marks a critical Kenya. Kenya’s fourty seven counties will soon juncture in the nation’s history. It is widely have an average population of one million people. perceived, by Kenyans from all walks of life, as This means they will be relatively homogenous, a new beginning. Indeed, many feel that post- but not big enough to become strong regional Independence Kenya has been characterized by blocks. Counties will be better placed than the centralization of political and economic power national government to deliver social services in the hands of a few, resulting in an uneven and because they have specific challenges and the unfair distribution of resources and corresponding local knowledge to address them. For instance in access to social services; the opposite of an the case of health, lagging counties still need to inclusive state. Born of the political opportunity catch-up in providing basic health services while created by the 2008 post-election violence, the leading urban counties will be faced with new the Constitution finally adopted, after almost a types of diseases (mostly non-communicable decade of unsuccessful reform attempts, presages such as diabetes and cancer). With these stark far-reaching changes. Its vision encompasses differences, it makes little sense to provide the a dramatic transformation of the Kenyan state same mix of services across the country. And through new accountable and transparent even if there are no dramatic improvements institutions, inclusive approaches to government in service delivery, people prefer to make and a firm focus on equitable service delivery for decisions themselves rather than following all Kenyans through the newly established county directions imposed by a central government. governments. With a constitutional guarantee of unconditional transfers from the center, Kenya’s counties will 2. Devolution is at the heart of the new have the means and the autonomy to begin to Constitution and a key vehicle for addressing address local needs, and their citizens will be able spatial inequities. A more decentralized to hold them accountable for their performance. government makes eminent sense, given Kenya’s diversity and experience with political 4. But Kenya’s devolution is incredibly ambitious, use of central power. Decentralization has been and therefore commensurately risky. It is a increasingly seen and adopted worldwide as a massive undertaking from a logistical point guarantee against discretionary use of power of view. In one go, on day one after the next by central elites as well as a way to enhance the general election, Kenya’s system of government efficiency of social service provision, by allowing will be profoundly remodeled and the transition for a closer match between public policies and the will inevitably encounter teething problems. desires and needs of local constituencies. Kenya’s Moreover, there are diverging views on how far Constitution entrenches devolved government by and how fast it should go. Since Independence, guaranteeing a minimum unconditional transfer Kenya’s leaders have held diverging views about to countyies under the new dispensation. devolution. From one perspective, it offers the potential to redress perceived ethnic and political 3. From a social and institutional perspective, bias by giving local communities far greater Kenya’s devolution makes a lot of sense. This is control over resources and decisions about service a very diverse country with ten major and more delivery. However, from another perspective, than thirty minor ethnic groups. Needs are very devolution could potentially undermine national different between the arid and semi-arid North unity by encouraging fragmentation of the and the highlands, between the rural Northern state along partisan lines or by ‘decentralizing Rift and the urban centers of Mombasa, Nairobi, corruption’, leaving citizens worse off if local elites and Kisumu, and between the coast and western are able to capture resources to the detriment of 1 Devolution without disruption – Pathways to a successful new Kenya: Executive Summary the majority or if newly established counties fail have done so to entirely new sub-national units, to put in place the systems needed for effective which they have had to establish from scratch. and transparent service delivery. Kenya will undergo a dual transition: a transfer of power and resources from the center to the sub- 5. In the short run, managing the transition national level and a simultaneous reorganization to the new system and people’s expectations of local government, with the consolidation of will be critical. From a political standpoint, the existing local structures into forty-seven newly- devolution process has generated tremendous created county governments (Figure 1). hope in the population and sometimes unrealistic expectations of how quickly things can and will Figure 1: Kenya's devolution presents massive challenges for political and administrative restructuring change in the ordinary lives of Kenyans. From a logistical, technocratic standpoint, this is a 8 Provincial Administra�ons highly complex undertaking, which Kenya has embarked upon in a context of political division. Going forward, the challenge will be to manage 47 Coun�es expectations of how much and how quickly devolution can deliver and to make sure that the transition to devolved government causes 175 Local Authori�es as little as possible disruption (and litigation) to Solid waste management, public health parking and street ligh�ng, markets, the delivery of services that are essential for the slaughterhouses, water sewerage, storm water drainage, billboards, noise control, welfare of the people of Kenya as well as for the �re �gh�ng, libraries, game parrks. health of its growing economy. Equal distribution 280 + De-concentrated 280 + District Administra�ons Administra�ons of wealth across Kenya may be desirable politically Health, agriculture, livestock, �sheries, planning, Liquor licensing, disaster but it is impossible economically. With a few housing, lands, transport, rural electricity, sports and culture, plant and animal quaran�ne, environment management, control of drugs and pornography. exceptions, counties will be too small to generate and conserva�on. the economies of scale, which companies need to Source: World Bank KEU, 5th edition. be successful. Firms will only come to Kenya and expand if they can operate in the whole country 7. The devolution train has already left the and beyond. Moreover, no matter what remote station: the challenge is to make sure it arrives counties do to attract them, most will chose to at destination, safely and on time. The politics locate their operations in Kenya’s big cities to of devolution explain the high intensity of hopes benefit from the markets around them. and expectations that have been pinned to it. It also means there are high risks if they are 6. The next two years will be critical because the disappointed. There are great opportunities foundations of the devolution architecture will and enormous challenges waiting for Kenya, in a be laid then. Anyone who has ever built a house critical election year, which will determine the fate knows that it is impossible to alter the foundations of the country, politically and economically for once the building is finished, at least not without years to come. This report takes a snapshot look knocking it down and starting again. Kenyans at the critical issues facing Kenya’s policy makers sense that a momentous restructuring of their today. It does not argue for or against devolution country is underway. There are high expectations (a decision that belongs solely to Kenyans), but and much anxiety. Kenya’s devolution is not only presents suggestions and recommendations on a critical milestone in this country’s history; it is how best to navigate the tough choices ahead. It’s also remarkable in global terms. Many countries main focus in on helping Kenya manage a delicate –both rich and poor– have transferred power and transition. resources to lower levels of government. Few Devolution without disruption – Pathways to a successful new Kenya: Executive Summary 2 Financing county needs: Transferring the right amount with an appropriate mix of instruments 8. Decentralizing power requires transferring constraints. First, the TA may simply take too long resources from the center to the local level: but to get established, with the result that detailed how much, how fast and to whom is not obvious. function assignments will not be determined in Resourcing Kenya’s future counties involves a two- time adequately to inform the budget process. step process to “fairly� divide national resources. Second, the asymmetric transfer of functions First, it requires determining the optimal currently envisaged (with each county applying to aggregate “vertical� split between the national the TA for each function to be devolved to it on an and county governments, in such a way that each ad hoc basis) may be overly complex to manage is adequately resourced to carry out its mandated and may also lack transparency, potentially functions. Second, total county resources must undermining accountability at the local level. In be split across the forty-seven counties in a way this report, we argue that the process of function that recognizes their different inherited needs assignment should start now, possibly under the and also addresses historical inequalities between aegis of the Commission on Revenue Allocation them. This will be particularly difficult in an (CRA), until the TA is fully operational. We also overall context of fiscal stress with limited scope propose three optional frameworks for organizing to increase public funding. a phased “‘bulk� transfer of functions to counties in a way that minimizes ad hoc arrangements and 9. A golden rule of decentralization is “funding maximizes efficiency and transparency (Table 1 follows function�, which is why the function shows one proposed option). assignment process is so important. While Kenya’s Constitution provides high-level guidance 10. By prescribing a minimum transfer to on the respective responsibilities of the national counties, Kenya’s Constitution has not pre- and the county governments, much more granular empted the use for aggregate costing of county work is needed to provide a basis for sharing needs. This is essentially for two reasons: first, the resources. A Transition Authority (TA) will be overall cost of functions to be devolved is likely to set up with the mandate to carry out a detailed be significantly in excess of the constitutionally assignment of functions, but there are two major guaranteed share of 15.5 percent of national Table 1: A Phased Approach to Transferring Functions to Counties Timing of transfer Readiness criteria Types of functions Examples Phase 1 Immediately after • None / automatic Functions not currently • Local government functions county formation being performed by • County assemblies any national agency • Establishment of basic systems Phase 2 Transfer when basic • Basic county HR Basic operation of • Operation of rural and district county systems are and PFM systems in service delivery health facilities, ambulance operational place programs services etc. • Sectoral plans in place Phase 3 Transfer only when • Specific system More complex • Purchasing and distribution of specific readiness or capacity programs and supply pharmaceuticals (only after criteria are met requirements chain management stock control and ordering system in place) Source: World Bank. 3 Devolution without disruption – Pathways to a successful new Kenya: Executive Summary revenue; and second, functions will be phased diverse counties. Given these constraints and in over time during the transition period and additional objectives, there may be a case for therefore counties may not initially receive the full limiting the equitable share transfer at –or close amount guaranteed to them. Working out a ‘‘fair to- the constitutional minimum of 15%. split’’ of available resources in a context of limited fiscal space as well as the most appropriate mix of 14. Own-revenues will be critical for resourcing grant instruments will require detailed evidence county governments and also –critically– for of how much counties will need and when. fostering accountability at the local level. Yet the Constitution only grants limited revenue-raising 11. In one “moderate� scenario, this report powers to counties (broadly those currently costed aggregate county needs at Ksh170 billion, enjoyed by Local Authorities), which will remain just to maintain services at their existing levels. highly transfer-dependent unless new revenue- This is above the amount appropriated in the raising powers can be granted to them (Figure 3). 2012 Budget Policy Statement (Ksh160 billion) but below the CRA estimate (Ksh200 billion). Figure 2: Flows of revenues from different sources for county governments Moreover, the figure needs to be understood with all its limitations: it is based on a number of Na�onal Revenue assumptions which ultimately the TA / Parliament will need to determine, (such as the fate of CDF, LATF etc); it only costs existing services (and does not provide for additional equalization, for running the new administrations or financing urban services); and it does not account for the transfer of functions over time or the possibility that seconded staff may remain on the national government’s payroll. 12. Because total county financing needs will Source: World Bank KEU, 5th edition. be in excess of 15%, Kenya’s policy makers should consider together the full set of options 15. To maximize the own-revenue potential of for resourcing counties. Figure 2 shows the Kenya’s counties, existing sources should be various ways in which county governments will reformed and new ones found. The collection of be resourced, including the equitable share but property taxes should be strengthened (as Kenya also own revenues, the Equalization Fund and under-collects by a wide margin by international additional transfers from the national government standards) by updating revenue base information, (conditional or not). updating rates and minimizing applicable exclusions. There is also scope to revisit the 13. It would be misguided to seek to meet all Single Business Permit. However, increasing of county needs through the equitable share. county fiscal autonomy would almost certainly The equitable share transfer, because it is require creating additional revenue sources such unconditional, is critical in giving future counties as piggybacking county taxes on existing national substantial autonomy, but it also imposes taxes. In addition, it is likely that discussions significant constraints. Because the equal share over the sharing of taxation related to national transfer is untied and formula based, the central resources will be brought to the fore. government should consider using additional conditional instruments to (i) secure funding for 16. In the short term, the priority is to ensure critical programs at the local level, (ii) reward that county governments are legally entitled to performance, and/or (iii) correct for imbalances collect revenues as they come into existence. created by applying a crude formula to highly- This is because the constitutional base for county Devolution without disruption – Pathways to a successful new Kenya: Executive Summary 4 tax collection has not been converted into legal 18. In the short term, Kenya’s policy makers will instruments to enable counties to collect revenues need to decide on the fate of three earmarked on day one. In order to address the current legal programs, which -if maintained- would constitute vacuum, two instruments could be adopted, one conditional grants. Alone, these three programs to provide for the interim continuation of LAs’ –the Road Maintenance Levy Fund (RMLF), the structures after the elections and another to Constituencies’ Development Fund (CDF) and the allow counties to collect revenues through LAs’ Local Authorities Transfer Fund (LATF)- accounted existing staff and systems. Over time a decision for Ksh38 billion or 8% of 2010/11 national will be needed on tax administration at the county revenues. Maintaining them, at their existing level, possibly involving KRA acting as an agent of level, would greatly affect the space available counties. for unconditional funding through the equitable share. Conversely, shifting the responsibility 17. There are powerful reasons to consider over to counties (and channeling the funding conditional grants to county governments, unconditionally) would require a substantial although to date the debate has focused increase above the minimum 15 percent. exclusively on the equitable share. Conditional funding will be important in at least four ways 19. A system of capital grants may be required to support devolution: to ensure that national to protect development spending under the priorities continue to be supported under new dispensation. Worldwide, sub-national devolution, to address region-specific needs governments tend to spend a high proportion of (including marginalization), to mitigate possible their budgets on wages and salaries and relatively shortcomings of the equitable share transfer little on investment. In order to ensure minimum formula in specific counties and to support a sub- standards of service delivery throughout Kenya national performance management system. and promote catching up in capital-poor areas the Figure 3: Vertical imbalance: applying the CRA formula, only two counties would receive less than half of their resources from transfers 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Pokot Nyeri Mandera Kirinyaga Bomet Murang'a Migori Kericho Kisii Turkana Siaya Kili� Baringo Makueni Marsabit Lamu Nandi Nairobi Wajir Meru Kajiado Nakuru Laikipia Kisumu Garissa Busia Tharaka Marakwet Kitui Narok Nyamira Trans Nzoia Vihiga Isiolo Machakos Nyandarua Kakamega Samburu Kwale Bungoma Homa Bay Tana River Embu Kiambu Mombasa Taita Taveta Uasin Gishu Transfers Own Revenue Source: World Bank calculations. 5 Devolution without disruption – Pathways to a successful new Kenya: Executive Summary national government may consider implementing they will be able to perform their missions. As part a capital grants scheme based on a transparent of a sub-national performance monitoring system, formula. grants can (i) help spur healthy competition between counties, and provide the incentives for 20. Finally, conditional grants could provide the county governments to (ii) regularly monitor and backbone of a county performance monitoring report on their performance and (iii) address key system. As counties come into existence, there service delivery bottlenecks. is much uncertainty as to how well and how fast Key Recommendations on financing county needs • The process of clarifying function assignments should begin now. The CRA could take the lead until the Transition Authority is operational • There should be a roadmap to streamline and simplify the initial asymmetric transfer of functions, possibly through a three-phase approach with functions transferred in ‘‘lumps’’ • Costing devolved functions should begin with historical costing, but a more detailed and thorough costing methodology will eventually need to take into account gaps peculiar to the Kenyan budget and any equalization objectives, which would require significant redistribution or additional budget • Resourcing counties should consider all possible sources of revenue available to them and the full range of transfer instruments • The tradeoff between unconditional and conditional funding deserves particular attention as the scope for one will constrain the use of the other. As a matter of urgency, the GoK should decide the fate of existing earmarked programs • In the immediate term, a decision should be made on financing a number of key ‘‘big ticket items’’ which will greatly influence the estimation of total county needs, including provincial hospitals, CDF, construction of new roads and the remuneration of seconded public servants • Legal instruments ought to be put in place to allow counties to continue collecting revenues and charges currently collected by local authorities until taxation laws can be passed by county assemblies • A new interim national law to govern county own-revenues could provide an opportunity to revise existing taxes, particularly property rates and SBPs • Additional local fiscal revenues should be sought among a range of possible options, including PIT surcharges, taxes on the use of motor vehicles, payroll taxes, etc. • Particular consideration should be given to the sharing of taxation related to natural resources as their potential may increase vastly in years to come and this issue often constitutes a source of conflict • Given the radical and experimental nature of Kenya’s devolution, it may make sense to maximize the scope for conditional funding (and minimize that of unconditional resourcing) if only to ensure that essential programs will remain funded • Conditional grants programs could be considered specifically for - Capital projects, possibly folding together the current RMLF and CDF programs - Supporting urban service delivery - Providing temporary stop-gap support to counties at risk of experiencing severe fiscal shortfalls during the transition - Fostering inter-county performance and promoting a system of performance monitoring at the local level. Devolution without disruption – Pathways to a successful new Kenya: Executive Summary 6 Promoting greater equity while safeguarding service delivery 21. Promoting greater equity in the allocation of 23. The simulated county transfers, using this spending and services is at the heart of Kenya’s formula, display a strong equalization bias. This new Constitution. Moreover, expectations are is not obvious at first because, on an absolute high that devolution will rapidly bring about spatial basis, the better-off counties (such as Nairobi and equalization, after years of unequal development Kakamega) will be receiving the lion’s share of the across Kenya. And yet, seeking to equalize too funds. However, the picture is almost entirely much too quickly would be a risky strategy. The reversed once one looks at allocations on a per goal of equalization will need to be pursued in capita basis, with Isiolo, Lamu, Marsabit and Tana a tight fiscal environment –limiting the scope to River coming out the big winners. In other words, increase spending- and without undermining once population is “netted out� the poorer and existing service delivery, which is unequally smaller counties receive disproportionately big distributed to start with. This has two major allocations. (Figure 4). implications: first, existing imbalances may only be tackled over time; and second, equalization 24. Because it promotes substantial re- should target the people who will benefit from distribution of resources across counties, the services, rather than trying to achieve equalization CRA formula creates risks for both “winners� across geographic locations. and “losers� on day one. There are two twin challenges. Those areas that were historically 22. The CRA-proposed formula for allocating the privileged will inherit service delivery obligations equitable share is highly redistributive. While that will require substantial funding (by definition the formula places heavy emphasis on county above and beyond what a strictly population- population (60%), this is logical since population based formula would provide). There, the is the main driver of service needs. Yet taken challenge will be to rapidly streamline service together, all of the other components in the delivery without interrupting key services or formula (amounting to 40%) favor counties that making inefficient reallocations. By contrast, have been historically underserved. (Table 2). those counties that were hitherto underserved Table 2: Components’ Source, Weights and Objectives in the CRA Consultation Formula Components Population Poverty Equal Share Land Area Fiscal Discipline Year / Source Census (2009) KIHBS (2005/06) TBD (allocated equally initially) Weight 60% 12% 20% 6% 2% Objective Resource Promote Provide each county Factor in the Provide counties to redistribution with resources to higher cost incentives for deliver services in favour of cover the fixed costs of delivering prudent fiscal equally on a historically lagging of running county services management per capita basis areas administrations in remote, irrespective of sparsely population or size populated areas Source: World Bank based on CRA documentation. 7 Devolution without disruption – Pathways to a successful new Kenya: Executive Summary Figure 4: Per capita equitable share allocations to counties (assuming 15% equitable share) 14,000 12,000 10,000 8,000 KES 6,000 4,000 2,000 0 Nyandarua Nandi Nyeri Migori Taita Taveta Nairobi Wajir Mandera Vihiga Kitui Siaya Lamu Samburu Busia Isiolo Embu Makueni Murang'a Meru Kajiado Nakuru Narok Machakos Homa Bay Kili� Kisii Kakamega Marsabit Turkana Kwale Bomet Mombasa Baringo Nyamira Kirinyaga Trans Nzoia Bungoma Kericho Tana River Elgeyo Marakwet Laikipia Tharaka Nithi Uasin Gishu Kiambu Garissa West Pokot Kisumu Source: World Bank calculations. will receive substantial extra cash (relative to counties to develop adequate PFM, HR and service their current service delivery obligations) and delivery capacity. Additionally, this may require the challenge will be to manage these resources only phasing-in the transfer of functions over well and to scale-up service delivery with limited time, following predefined capacity benchmarks. capacity. Unfortunately, alleviating one bottleneck (such as increasing the share of the equitable 26. The Equalization Fund, provided for in the transfers) would only exacerbate the other. Constitution, will be too small to address deep spatial inequalities. At 0.5 percent of national 25. These likely imbalances call for three short- revenues (and even increased as per the current term actions to phase in equalization over time. BPS) the Equalization Fund will represent a fraction First, it is urgent to model inherited costs of service of the resources currently channeled through the delivery at the county level. This would require CDF. Moreover, if the Fund crowds out existing compiling detailed geographically-disaggregated funding for lagging areas, such as programs spending data on services to be devolved from currently under the Ministry for the Development which to estimate the future cost of service delivery of Kenya and other Arid Lands or the Ministry of at the county level. Second, with this information, Special Programs, its net impact could be nil or the GoK may need to consider complementing the negative. Therefore, as a matter of urgency, policy CRA-formula based equitable transfers with “hold- makers should clarify the Fund’s objectives and harmless� provisions that would be limited in time target it as much as possible to specific areas or and specifically targeted to allow cash-strapped communities and uses. Given its modest size it counties to maintain existing services at least at might be better used as ‘seed money’ to leverage their current level. Third, a strategy is needed, to additional resources into a bigger, more effective build capacity rapidly and systematically in lagging fund. Devolution without disruption – Pathways to a successful new Kenya: Executive Summary 8 Key Recommendations on financing county needs • It may make sense to limit the equitable share transfer at –or close to- 15% during a transitional period, given the experimental nature of the CRA formula and lack of clear estimate of actual county needs and capacity • Unmet needs at county level could be filled via other unconditional or conditional instruments • In counties that have been historically over-serviced (relatively) the key would be to avoid service delivery interruptions by extending ‘stop-gap’ funding to be phased out overtime • In counties that have been historically under-serviced and marginalized, it will be vital to build up the capacity to handle vastly increased funding efficiently and transparently • A priority should be to clarify the object of the Equalization Fund and particularly o the definition of ‘‘marginalized areas’’ o the scope of interventions which should be focused on alleviating key service bottlenecks • It may not make sense to dedicate the Fund to financing infrastructure. Instead catalytic interventions could consist in addressing: o staff incentives problems in working in remote locations o capacity constraints in applying for capital funding (under a capital grants program) and for managing capital projects 9 Devolution without disruption – Pathways to a successful new Kenya: Executive Summary Managing money efficiently and transparently for county development 27. For counties to make the most of their 30. While the national government would resources sound PFM systems will need to be in continue to assume some devolved functions place. At county level, this may be particularly during the transition, allocations to counties challenging as many PFM related functions will could be clearly shown in the budget under need to be established more or less from scratch. ‘‘county votes’’. While counties may not have In turn this raises the question of the degree of responsibility initially for all devolved powers and oversight that the national government should functions, specific resource allocations will be be allowed to exert over counties - sufficient to made to counties on day one. During this transition lead capacity building and promote application of period there could be county votes clearly set out standards but limited enough to prevent abuse in the national budget showing explicitly the total and excessive control. funding allocated to each county and specifying how much is to be spent directly by the county 28. Kenya’s new Constitution has provided the and how much will be spent on its behalf through basis for a more coherent PFM legal framework national government systems. This may require a but oversight remains contentious. As well as short amendment to the transitional provisions of replacing or consolidating a number of existing the PFM Bill. laws, the PFM Bill provides a framework for PFM in the new county governments as well as urban 31. The new Constitution greatly increases the areas and cities: for the first time in Kenya there power of the legislature in the budget process, will be a single PFM legal framework for all levels creating risks of gridlock. In particular, because of government. However, the Constitution leaves the Division of Revenue Bill (DoRB) is not defined room for interpretation regarding the extent as a money bill (which must be passed or amended to which the national government has a role in by the Assembly only on the recommendation of “overseeing� county PFM. the relevant committee of the Assembly) there is a risk that delays in approval of the DoRB could 29. Budgeting for the transition will be difficult derail the budget process at both national and given the asymmetric transfer of functions. county levels. One approach adopted elsewhere is The transition period –during which functions a two-tiered budget process in Parliament, where will be gradually transferred to counties- raises the legislature at national and county levels bind challenges for the annual budget process: the themselves to a fiscal framework for the duration new counties may simply not have the capacity of the fiscal year prior to the consideration of the or the time to budget for 2013/14 and there is DoRA, CARA and budget estimates. the additional question of how to budget for devolved functions temporarily executed at 32. Building-up the capacity to budget at the national level. To limit the confusion that a county level will be a tall order. Counties will be fully asymmetric transfer of multiple devolved comprised of staff from Districts, who have very functions could cause in the budget process, the limited experience of preparing and managing GoK could consider some ‘bundling’ of functions budgets, and from former Local Authorities, to simplify the functional transfer process into who have only limited experience in budget manageable “chunks� (Table 1). management. Therefore, in anticipation of the Devolution without disruption – Pathways to a successful new Kenya: Executive Summary 10 difficulty of establishing budgeting functions from functions. One way of promoting this would be scratch at county level, guidelines and associated through a ‘‘county performance assessment tool’’. templates should be developed to guide the formulation of county budgets. This would also 34. PFM is only one dimension of promoting provide an opportunity to integrate the planning accountability at the local level – and there and budgeting functions into a single process, to would be important payoffs from setting up be overseen ideally by a single county institution. accountability systems at the local level from Lastly, it will also be essential to ensure that county the get-go. Contrary to the common expectation budgets are prepared, executed and reported, that decentralization enhances accountability and using a single country-wide chart of accounts. efficiency in service delivery, experience suggests that the contrary often holds true. Devolution 33. Kenya’s counties may not manage to spend presents a particular challenge for service delivery the funds available to them, without determined by breaking apart existing more centralized capacity building and monitoring. Experience accountability relationships and requiring new among Kenya’s local authorities suggests that ones to be established. This is also an opportunity this is an issue many counties –particularly to start from a clean slate and Kenya has all the those historically marginalized- may face (Figure assets to be a leader in Africa with respect to 5). Specific capacity needs to be developed for transparency and local government accountability. resource allocation, cash management -in line with the principle of a treasury single account- 35. Transparency, participation and accountability and budgetary oversight through the Controller of are clear requirements in the Constitution but Budget. The national government will also have a laws alone are insufficient. Instead a social key role to play in setting standards and monitoring accountability system must be developed with performance, for instance through league tables three core elements: (i) fiscal transparency, (ii) and rankings and a system of early warnings to participation mechanisms and (iii) accountability identify service delivery problems in devolved mechanisms. (Figure 6). Figure 5: Counties where local authorities ran budget surpluses in 2008/09 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Wajir Marsabit Kwale Pokot Narok Kiambu Bomet Murang'a Kericho Kakamega Meru Migori Nyamira Tana River Bungoma Samburu Tharaka Taita Taveta Busia Laikipia Nakuru Kisumu Kili� Kitui Turkana Nandi Uasin Gishu Trans Nzoia Garissa Nairobi Kajiado Mandera Nyandarua Source: World Bank calculations. 11 Devolution without disruption – Pathways to a successful new Kenya: Executive Summary Figure 6: Elements of Social Accountability Systems Government Transparency: Participation information Accountability and Feedback: for citizens information from citizens Citizens Source: World Bank. 36. Kenya can draw on its extensive experience Key elements include accurate and timely with devolved funds to reinforce both upward financial and performance information – and in and downward accountability. For instance the turn this would require both capacity building and LATF system was largely successful in ensuring enforcement mechanisms (such as penalties for reporting by local authorities even though the failure to produce accurate information). A second information they produced is not usually made priority is to strengthen the relation between public. As for the CDF experience, it shows that planning and the budget process, since public there is an important role for civil society in participation in planning will only be meaningful auditing projects. Building on LASDAP, county if the choices made are translated into spending. governments could be required to involve citizens Lastly, county governors and administrators should in the budget and planning process. have easy access to “social accountability toolkits� guiding them on the use of popular interventions 37. For social accountability systems to function, such as participatory budgeting, scorecards, social supporting institutions need to be put in place. audits and procurement oversight committees. Key Recommendations for promoting sound and transparent financial management in counties • During the transition period, the budget could include “county votes� showing total county allocations even if a portion remains executed by the national government on behalf of counties • A two-step budget process could be introduced with parliamentary votes at each stage to generate consensus around the fiscal framework and mitigate the risk of executive-legislative gridlock • Building county PFM systems from scratch will require central support to capacity building, monitoring of county progress against clear benchmarks and standardized guidelines and templates developed nationally • Public financial information (including results) should be made public in a way that allows citizens to assess the efficiency and effectiveness of national and county spending • Citizens should be actively involved in planning and budgeting at local level and equipped with the tools to make significant contributions • Accounting systems at county level should allow to track spending on individual projects and by service delivery unit • Social accountability toolkits should be developed for the benefit of local administrators Devolution without disruption – Pathways to a successful new Kenya: Executive Summary 12 Protecting the urban growth engine 38. Unless corrective action is taken, Kenya’s two of which will effectively be county-cities and cities may well be the big losers of the devolution will be governed as county governments (without process. This would be dramatic as Kenya’s city boards). In all other urban centers, a rather cities are growth engines for the entire country uncertain arrangement for “town committees� and the main source of own fiscal revenues for will apply. A number of substantial urban centers local administrations. Kenya is experiencing a with viable existing local governments, including demographic transition that will see increasing twenty-one urban centers each with more numbers moving to the cities seeking the than 80,000 residents will thus be effectively opportunities that urban areas have to offer, and recentralized into the county administration. cities are also increasingly useful and meaningful (Table 3). to rural residents as well: they are the main Table 3: Twenty-one urban centres with source of local fiscal revenue and provide services more than 80,000 residents will not and infrastructure that reach well beyond city have municipal boards boundaries. Urban centre Population 39. Kenya’s devolution is unique in that it Ruiru 240,000 involves simultaneous decentralization of key Kikuyu 230,000 services and resources from the national to Kangundo-Tala 220,000 county governments but also recentralization of Naivasha 170,000 urban management. Existing arrangements will Machakos 150,000 be profoundly affected in the new dispensation, as the current system of local authorities, with Mavoko 137,000 elected management and significant discretion Thika 135,000 over resources and functions, will be replaced by a Vihiga 120,000 new system that gives much more power to county Nyeri 120,000 executives. In the new dispensation, Kenya’s Malindi 120,000 cities will be managed by appointed boards, Ngong 110,000 with far less power and autonomy than the local authorities they replace: most of their functions Kitui 109,000 will be delegated by county governments and they Karuri 107,000 will have no guaranteed funding. Mumias 100,000 Kitale 100,000 40. Moreover, only three urban centers will have Kericho 100,000 municipal or city boards. The Urban Areas and Kimilli 95,000 Cities Act (UACA) sets the threshold for city status at 500,000 and for a municipality at 250,000 Awasi 93,000 and only cities and municipalities are entitled to Kakamega 90,000 boards. Yet at present there are only five urban Kiambu 85,000 areas in Kenya with a population over 250,000 Kisii 80,000 (Nairobi, Mombasa, Kisumu, Nakuru and Eldoret), Source: World Bank based on KNBS 2009 census. 15 Devolution without disruption – Pathways to a successful new Kenya: Executive Summary Figure 7: Despite rapid urbanization, most counties are still predominantly rural Source: World Bank calculations based on KNBS Census. 41. Looking forward, there are three ways in 43. Kenya’s Constitution makes county which the management autonomy of cities could governments responsible for financing urban be expanded. One is by lowering the threshold service delivery, and there is a risk that urban for the definition of municipalities. Alternatively, services may be under-funded as a result. Because the Act could deem all county capitals to be rural residents will dominate most counties (Figure municipalities (which would still leave out 7), county governments may chose to preference important towns like Riuru, Naivasha, Ngong, rural services and to redistribute revenues raised etc.). A third option would consist in enhancing from urban residents to their rural constituencies. the managerial autonomy of town committees to This may jeopardize the economic development make them function in the same way as municipal potential of Kenya’s urban areas and violate boards. the fiscal federalism axiom that revenues and expenditure responsibilities should be aligned to 42. With all urban functions and resources vested the extent possible at the local level. by the Constitution in county governments, specific functions and resources will need to 44. Urban service delivery will depend largely be delegated to city and municipal boards. Yet on the priority which county assemblies give there is no clear process or framework for such them, but the national government could also delegation and no transparency requirement consider urban grants. The UACA envisages that concerning the delegation by county governments county governments will provide transfers to city to city and municipal boards. A useful measure and municipal boards but not to town committees would be to require county governments to and it offers no guidance as to how these amounts publish the functions and revenue streams ought to be calculated. In this context, the assigned to urban boards so that urban residents national government could help to ensure that understand what services they are entitled to urban services are adequately provided through receive as services from which level of authority. earmarked urban services grants which could be Devolution without disruption – Pathways to a successful new Kenya: Executive Summary 16 paid either to county governments or to the urban able to borrow, this will be subject to national boards directly. To ensure that counties maintain government review and guarantee. This is helpful their own levels of funding for urban services, to prevent the risk of uncontrolled borrowing the transfer could include an additionality clause at the sub-national level. However, the flipside binding the county to maintain a certain level of may well be insufficient access to capital for funding. infrastructure, particularly in Kenya’s larger cities, as the national government may well be reluctant 45. However, even additional transfers may be to encourage sub-national borrowing that would insufficient to finance the type of infrastructure end-up on its balance sheet. that Kenya’s cities need. While counties may be Key Recommendations on protecting urban areas under devolution • More urban centers should have corporate bodies to manage them. This could be achieved either by lowering the threshold for ‘municipality’ status or by amending the powers and functions of towns under the current law • Functions of city and municipal boards should be clarified as well as the formal process for counties to delegate additional functions to them • Standards ought to be set for urban service delivery and urban boards should be required to report against those to the county assembly • City and municipal boards should be given own revenue powers through delegation of additional national taxing power • Cost benchmarks are needed to monitor future resourcing of urban functions. The current cost of urban services should be calculated, based on past spending and monitor that funding is adequate to at least maintain resourcing for services at current levels • The role and functions of local authorities should be extended during the transition until their staff, functions and assets can be accommodated by the new counties 17 Devolution without disruption – Pathways to a successful new Kenya: Executive Summary Decentralizing Public Service in a sustainable way 46. Kenya’s existing public service structure is public servants by setting the general framework currently highly centralized, so devolution will for management, specifying who is responsible bring about major changes. Forty-seven new for regulating the detail of how county public county civil services will be created with two servants should be managed and providing immediate sets of challenges: to define the overall statutory instruments to specify the detail of the governance framework for county civil service management arrangements. and to manage the HR transition implied by their creation. 49. It is unclear who should fill existing regulatory gaps. The most immediate issue is to 47. The new devolved arrangements offer the determine which agency in government should opportunity to rationalize the current highly be responsible for the making laws covering fragmented arrangements for service delivery, county civil servants. From a legal perspective, but the legal framework for managing county the missing elements of the regulatory framework public services has important gaps. By contrast could be provided in regulations under the CGB, to today, counties will have considerable or they could be in separate legislation under autonomy over public service management: the the auspices of the Ministry of State for Public county governments will be responsible within a Service. Alternatively, individual counties could be framework of uniform norms and standards, for left to fill these gaps with their own laws. If the establishing and abolishing offices, appointing former approach is adopted, two ministries will public servants and exercising disciplinary control regulate public service matters at different levels over them. In each county a public service board of government (since the CGB is the responsibility –whose members will be nominated by the of the Minister responsible for intergovernmental Governor- will exercise these powers on behalf of relations). If the latter is chosen, the two ministries the government. will regulate county public service concurrently, with scope for overlap and contradiction. 48. The County Government Bill (CGB) provides the regulatory framework for counties to engage 50. Devolving public service management involves their own public servants but it leaves a number balancing the risks of too much central control of important gaps in the policy framework. In against excessive local autonomy. With too much particular, while the Constitution provides clear control, county autonomy and accountability may authority for the national government to set out be undermined. With too little oversight, local a framework of national standards, this could still controls could be ineffective undermining service leave room for counties to regulate some aspects delivery. This is a paradox of decentralization of civil service management. Going forward there – that effective devolution actually requires a should be a clear decision as to which issues strong central government. Failing local controls national laws and policies should cover and which could result, for instance, in elite capture and should be left to counties. Also some interim politicization of appointments. Establishing provisions will be needed before counties develop independent county public service boards has their own laws (the Transition Authority could the potential to mitigate these risks but they have usefully propose an approach to government). The been given too much power. In particular, the new framework should set national standards and concentration of human resource management guide counties in their day-to-day management of creates the potential for fiscally unsustainable Devolution without disruption – Pathways to a successful new Kenya: Executive Summary 18 recruitment and excludes direct supervisors and skills across the country. For instance the ratio of other stakeholders from an appropriate role doctors to population varies across counties by a in recruitment. In addition, the governor will factor of ninety! Yet the counties that currently appoint board members with approval of the have the lowest levels of public service skills are county assembly but in the absence of a specific also likely to be those which will have the hardest process to ensure their integrity and competency. time attracting skilled personnel, given their Areas that may benefit from a national framework overall remoteness, lack of mobility prospects include providing career development pathways they offer and weak systems for incentivizing staff. to encourage service in remote counties and In turn this could put undue upward pressure on imposing limits on salary spending. In addition, remuneration, crowding out other important types the CGB could set out the process for selecting of expenditures. These risks call for incentives – county public service board members and the especially non-financial- within the framework of national government should provide support a single public service where staff can be offered (training mentoring, procedures…) to the boards greater access to training and promotion if they as they come into existence. serve in remote counties and where mobility from one county to another can be guaranteed. 51. Matching sub-county structures to political boundaries (constituencies and wards) could 54. In coming months, managing the transfer exacerbate the risk of –a different kind of- of staffs to counties will be the number one political capture. For instance, if the CDF is challenge. Most of the public servants needed maintained, this alignment could increase the to run county functions are already there but allegiance between sub-county administrators the conditions under which they will remain are and local politicians (MPs). Moreover, while unclear and fiscal implications have not been political boundaries are drawn up with regard to properly assessed. demography, they may not make sense from the point of view of managerial efficiency. 55. Initially, national public servants will be seconded to county governments but the 52. Uncontrolled spending on personnel “zero-basing� approach is unusual and risky. expenditure is a common feature of Most commonly, countries that establish a new decentralization and an issue for Kenya. The level of government simply transfer existing reasons for excessive local spending on wages staff performing devolved functions to the new are complex: they often reflect patronage but governments. In Kenya, in order to maximize also the fact that it is easier to spend money on county flexibility, a secondment approach was salaries than on investment projects. Spending chosen. The secondment of national staff will on personnel alone does not contribute to come to an end when the seconded officer is either better services per se, if the recruited staffs have appointed to the county public service or handed insufficient access to funding for operating costs back to the national government. Moreover, if and facilities. In Kenya, there is already anecdotal public servants feel they have the right of return evidence that uncontrolled salary spending is rife to the national government they may also opt ex in local authorities despite national controls. The ante not to apply for a position in the county civil public service provisions of the CGB emphasize service. But if a large number of secondees are control over recruitment of public servants but returned to the national government, it may not leaves employment of non-public-service staff have the jobs or the funding to absorb them. relatively unregulated. 56. It is unclear how the salaries of the seconded 53. Paradoxically, devolution could widen staff will be managed. The CGB provides for the capacity gaps across Kenya. There is already salaries of national officers on secondment to gross inequity in the distribution of public service continue to be paid by the national government 19 Devolution without disruption – Pathways to a successful new Kenya: Executive Summary unless there is an agreement to the contrary. But 57. The fate of local authorities’ staff needs to it is not fiscally realistic to expect the national be addressed. Existing public employees at the government to transfer the full amount of the county level include some 33,000 LA staff of whom county revenue share while continuing to pay 30,000 are not civil servants. They are employed the salaries of seconded staff. Therefore, some and managed by the LAs themselves outside of arrangement will need to be made to fund the state civil service. But LAs will cease to exist salaries of county public servants from the county on the day of the next general elections and equitable share (although no conditions may be further laws called for under the UACA to cover attached to it) or the national government could what happens to the staffs assets and liabilities of be left with an unsustainable fiscal burden. the former LAs have not yet been prepared. Key Recommendations for managing the public service transition • National policy on county public services should be developed but first a national law should make it clear who is responsible for it • At the very least, the framework of regulation should provide uniform procedures and a comprehensive regulatory framework to apply until the counties pass their own laws • National regulation of some aspects of county public service management is needed, in order to maximize career progression opportunities and encourage public service mobility • Some national standardization of county pay policy would be beneficial, but care needs to be taken not to impose unaffordable fiscal burdens on county governments • The national government should support the establishment of county public service boards to ensure that they are fully independent and competent and a regulation under the County Government Act should set out the process and criteria for appointing Board members • As a matter of urgency the fate of Local Authorities’ employees should be clarified through a law to deal with transition issues involved in abolishing local authorities • A priority should be to tighten the loopholes that may allow uncontrolled non public service employment at the county level • As a matter of priority the GoK should decide which level will be responsible for paying the salaries of seconded staff and if these will be deducted from the counties’ equitable share transfers • A plan should be developed to absorb redundant staff at the national level should a significant number of county secondees seek to return to the national civil service Devolution without disruption – Pathways to a successful new Kenya: Executive Summary 20 Promoting intergovernmental coordination between national and county governments 58. Devolution everywhere complicates At the county level also, sector staff will have to the management of government, but adapt to new roles including resource constrained intergovernmental coordination will be budgeting and independent formulation of policy particularly important in Kenya. Devolution or legislation. potentially diffuses accountability between levels of government and introduces the possibility 61. Two laws -one proposed and one of mismatched resources, responsibility and passed- establish the framework for future authority. In Kenya, the Constitution mandate relations between levels of government. The shared responsibility for some important Intergovernmental relations Act (IRA) establishes aspects of service delivery, with the national intergovernmental mechanisms (such as the government generally responsible for policy National and County Government Summit, the and counties in charge of implementation. But Intergovernmental Relations Technical Committee it gives the national government limited fiscal and the Council of Governors) and the Public or supervisory levers with which to influence Financial Management Bill (PFMB) establishes a the achievement of national policy priorities. In Budget and Economic Council. the absence of such levers, given Kenya’s long standing history of distrust between government 62. A particular challenge will be to get the and local stakeholders and the fact that no level system working with forty-seven counties and to of government is superior to the other, the effectively coordinate implementation. Many of institutions of cooperative government become the international models for intergovernmental all the more important. coordination involve much smaller numbers of sub-national units. Moreover, in some countries 59. The current framework for devolution focuses the main objective of coordination is joint policy mainly on the relations between governors and development. In Kenya the real challenge will around the budget process, overlooking issues be to coordinate at the level of implementation in sectors. International experience suggests in areas where both levels of government share that frictions between levels of government service delivery responsibilities. The first area of undermine service delivery. In Kenya, the main policy coordination that will be required is the devolved sector is health. Coordination and unbundling of the constituent elements of the decision making will be complicated by the sheer different functions to ensure clarity as to who will number of counties and creative approaches will do what. As part of this exercise there should also be needed to ensure that the coordination bodies be a joint planning process to work out day-to-day can still make decisions effectively. coordination around implementation. 60. Effective intergovernmental coordination will 63. It is not yet clear how the existing system require both a change of culture and capacity provincial and district administration will building at both levels of government. Line relate to county governments. The Constitution ministry staff will have to reorient from a service requires the system of provincial administration delivery role to a policy role and understand how to to be restructured in line with devolution within use new tools at their disposal to influence policy five years but how exactly remains to be worked outcomes (like standards and expenditure norms). out. A key question is how the remaining national 21 Devolution without disruption – Pathways to a successful new Kenya: Executive Summary functions not devolved to county governments 64. Given the resilience of provincial will be organized: in some cases functions that are administration over the years, Kenya will need best performed at local level (like social welfare to manage the risk that parallel and competing or children’s and gender programs) have not structures could undermine the effectiveness of been devolved and in others, functions of existing county government. Administrative parallelism, department heads might be split (like education). under which staff of central government either Therefore it will be important to define a new continues to manage sub-national functions architecture both for day-to-day relationships or jointly administer them alongside national between national and local agencies in each staff, would weaken the accountability of county county, and also for arranging the functions that governments. remain national. Key Recommendations for promoting intergovernmental coordination under devolution • It is important to focus on getting intergovernmental relations bodies functioning early on • The first priority is to get sector bodies working on issues of function assignment, service delivery standards, and performance monitoring • The second priority is to focus on intergovernmental relationships at the county level, particularly by resolving the role of provincial and district administration staff, and designing the new arrangements for remaining national staff at county level Devolution without disruption – Pathways to a successful new Kenya: Executive Summary 22 Managing the transition to hit the ground running 65. Kenya’s transition to devolved government they all do their part. Although the Transition to will be as complex as it is ambitious. Managing Devolved Government Act (TTDG Act) gives the such dramatic transition will be key since it will Transition Authority power to make regulations, set devolution back or forward for years to come. there is no clear sanction if they are not followed. Immediate challenges include the movement The best way the Transition Authority can ensure of public servants from line ministries to county that the rest of government follows its lead is by governments, setting up sound PFM systems in (a) ensuring that it gets Cabinet sign off on its counties and ensuring continuity of urban services. strategic direction; (b) meaningful involvement of the implementing ministries; and (c) using 66. For the transition to be as smooth as possible, transparent reporting of expectations and progress Kenya needs institutional arrangements for in meeting them, to create an environment in managing the transition itself. There is a clear which line ministries feel public pressure to meet legal framework but much work remains to be their planned obligations. done. In February 2012, Parliament enacted three laws to implement Chapter 11 of the 69. A detailed planning process for the transition Constitution. Together with the provisions of the should also be considered. Under the TTDG Act, Fifth Schedule of the Constitution, they provide the CIC is responsible for requiring individual a set of institutional arrangements for managing ministries to submit implementation plans and transition through a Transition Authority, an for monitoring their implementation, but the independent body with broad membership and TA issues the guidelines about what the plans powers to coordinate implementation by the should contain. The guidelines issued by the TA various organs of government. could play a crucial role in setting the agenda of issues the line ministries should address, but 67. Irrespective of when the election is held ideally it should be determined in dialogue with ushering in the new counties, the Transition line ministries. This is why it would be useful Authority has a great deal to accomplish in a to develop an overarching strategy as well. The very short time. The TA will need funding to be strategy should guide the decision about what to effective both under the current financial year do first. It should highlight the respective roles and under the 2012/13 budget. The Commission of the TA and line ministries, and the relationship on Revenue Allocation (CRA) and the Commission between the bureaucratic machinery and the on Implementation of the Constitution (CIC) political leadership. were established in early 2011, and found their operations were constrained by not having their 70. The process of developing the detail of the own budget appropriation until July 2011, when system of devolution has so far not been well the 2011/12 fiscal year began. integrated with line ministries. It is the line ministries who are devolving their functions, 68. It will need to command respect across seconding their staff, and reorienting their own government. The TA cannot make devolution role to reflect a new focus on policy, standards happen alone. Devolution will occur through the and service delivery performance, and supporting actions of line ministries in each sector, and the the development of county capacity. Ministries Transition Authority’s job will be to ensure that are most likely to undertake effective change 23 Devolution without disruption – Pathways to a successful new Kenya: Executive Summary if they are actively responsible for planning it. place the systems they will need for those. For Some further ways in which the TA can enhance example, the county assemblies will need clerks coordination could include: seconding an official and other staff to make the work of the assembly from each main ministry to the TA, providing line and its committees effective. Those staff can only ministries with standard toolkits that they can use be appointed by the County Public Service Board and holding regular structured discussions with and therefore appointing the county public service the Principal Secretaries (Permanent Secretaries) boards and establishing the systems to make them of the key ministries in devolved sectors. functionally effective are first-order priorities. 71. The TA will also need to engage county 72. There will be big differences in capacity governments on day one. A great deal will be between weaker and stronger counties. One expected of the forty-seven new governors, and of the main risks of devolution is that it actually they should have the basic systems in place that exacerbates these gaps. The TA should develop allow them to achieve some early wins. The TA a strategy for ensuring that weaker counties could appoint teams for each county to help get receive special assistance. This might involve these systems established. It is helpful to think targeting donors to give priority to supporting about what decisions the county governments specific counties, or developing special programs will want to make first, and focus on putting in of assistance for them. Key Recommendations to manage the transition process • The TA will need to be empowered financially and statutorily to lead the transition process with clear authority over other organs of government • The TA should develop an overarching strategy for implementing devolution and provide uniform guidelines for line ministries to follow when preparing their implementation plans • The TA should appoint teams in each county to help establish basic systems in a sequence prioritizing the first decisions county governments will have to make • The TA should develop a strategy for filling major capacity gaps in Kenya’s most disadvantaged counties so as to pre-empt a widening of these gaps under devolution Devolution without disruption – Pathways to a successful new Kenya: Executive Summary 24 Conclusion 73. Managing expectations will be a big implies in a country that remains highly unequal challenge because decentralization is no silver- (chapters 2 and 3). Part II, focuses on the main bullet. It will take time to balance resource parameters of the devolved intergovernmental allocations, let alone improve equity of access to fiscal architecture, starting with an estimation of services. Many Kenyans believe that devolution future county needs (chapters 4 and 5) and laying will bring dramatic change overnight: upgraded out the overall funding architecture through infrastructure, more jobs and opportunities and which they will have to be addressed (chapter better services (see Box 1). But they have different 6). Part III, examines one by one by one each of and often contradictory views of how this will the possible funding streams for decentralized happen. For instance, lagging areas are counting services including own revenue sources (chapter on redistribution of national wealth to help them 7), the unconditional equitable share (chapter 8), catch-up, while leading regions see devolution as additional conditional instruments (chapter 9), and a chance to run their own affairs un-impeded. the Equalization Fund (chapter 10). Finally Part III, tackles implementation challenges in translating 74. The transition to devolved government will into reality the vision of a more responsive and be long, complex and risky but the potential accountable government through devolution. payoffs are commensurately high. This executive Chapter 11 addresses intergovernmental summary provides a snapshot look at main coordination challenges while chapters 12 and 13 devolution-related challenges and opportunities focus on the systems to put in place to ensure that in months ahead. A more detailed analysis will be sound public financial management and effective presented in the forthcoming full report, along social accountability are effectively promoted in the following lines. Part I, sets the stage and the new counties. The final chapters relate to key provides contextual elements. It retraces the issues in the transition namely the management historical and political-economy context against of urban areas (chapter 14), the public service which the devolution project has been developed implications of devolution (chapter 15) and the (chapter 1) and emphasizes the ambitious management of the transition itself (chapters 16). character of the administrative reorganization it Box 1: What Kenyans hope devolved government will do for them Alice Vutage – Housekeeper in Nairobi. Born in Western Kenya 32 years ago, Alice Vutage migrated to Nairobi in 2000 in search of employment. With little education and great determination to support her family back home, she found a job as house-help. Alice is not conversant with the new Constitution. All she knows is that it will improve the livelihood of Kenyans, a fact gathered from her daily interaction with friends and relatives. “People say that the new Constitution will bring a lot of development in the country, and this makes me happy, because I would like to see people in my village leading a better life,� she said. Alice who is a single mother of a two year old daughter, hopes that the new Constitution will help to create job opportunities in her rural area, so that people can engage in economic activities, and become less dependent on financial support from relatives who work in big cities. “I am really eager to see how life will improve for my daughter and me when the new Constitution is implemented,� she said, with a hint of apprehension in her voice. Source: World Bank interview. 25 Devolution without disruption – Pathways to a successful new Kenya: Executive Summary