1. Some of the BBI amendments cannot even be practically implemented. Let's look at the amendment to article 203 that caps the revenue the county with the highest per capita allocation will get, to 3 times the lowest.
2. Let's use the current allocations of Ksh 316 transferred to counties in 19/21 FY. Tana River & Lamu get the highest per capita allocation of Ksh 18,533 & 18,033 respectively. Nairobi county gets the lowest at Ksh 3,621. Meaning no county should get more than Ksh 10,863.
3. 9 counties in total will be above this threshold and the cap means they would have to surrender Ksh 9.687b. This is where the problems start. First, there is no suggested method to share what will effectively be taken away from these 9 counties.
4. Secondly, redistributing the 9.687b to the other counties will move the cap upwards again. Natural justice would mean that the money would be redistributed bottom up with the lowest per capita getting most of it. On that basis, assume you take Nairobi's per capita to Ksh 4,000
5. In such a case, cap now moves to 3 times that number or Ksh 12,000. Lamu's loss which was (18,033 - 10,863 = 7,170) per capita or Ksh 1.032b now becomes (18,033 -12,000 = 6,033) per capita or Ksh 868m. Will Lamu be given back the difference? If you do, you go back to square 1
6. Because of these kind of problems - a clear case of circular reference error - you should avoid inserting formulas into constitutions. Constitutions are high level principle based policy documents. Formulas are best left to where you can change them with time. CRA
7. Finally, this amendment makes per capita (population) override all the other 8 or so criteria in the same article and makes it unconstitutional. You can't constitutionalize unconstitutionality. The courts will definitely read it alongside the other articles of the constitution
8. Constitution making is a tedious process & needs serious thinking, impact analysis, stress testing & back testing of any changes. These amendments have been done behind the scenes, in boardrooms and with hardly any testing of how they would work in practice.
9. The same pple passionately pushing them today will be crying tomorrow because of their unintended consequences. Variables will change with time & you can't do referenda every now and then. Why variables are never hard coded and only high level policy is. Standard practice!
10. For the record, I am opposed to the whole BBI for reasons I have said here b4. Some of the changes will definitely cause a constitutional crisis like the 2/3 gender. We will not be able to give 600b to counties. Won't afford recurr expend of the expanded exec & bunge either!
11. Like we know NT will not likely be able to transfer the 53.5b that they promised counties to resolve the revenue sharing saga in Sept. But because that is not in the constitution, no major crisis.Why you don't hard code potentially impossible deliverables in the constitution

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More from @WehliyeMohamed

4 Dec
1. You are supposed to run smaller deficits in times of growth & run big ones to support the econ during recessionary periods. Jubilee doing the opposite. Taxes might not yield much more revenue but could actually see acceleration of businesses closing down - counterproductive
2. Whereas the govt needs money, from macroeconomic perspective, it doesn't make sense to hike taxes when the economy is flirting with recession. You just might tip it over. We are still in the middle of the pandemic and most governments have extended the Covid support measures
3. For corporates, lower tax measure accorded them some extra headroom which probably went to keep a few more workers employed. For households anyone with a pay cheque has been helping GoK to support others.The extra 5% was like a direct stimuluswith - a huge multiplier effect
Read 5 tweets
28 Nov
1. Dear H.E President Uhuru Muigai Kenyatta @StateHouseKenya. In 2022 (in sha Allah), there will be an election & there will be losers & winners, court petitions, riots, teargas not withstanding the fact that BBI will be in place. It is happening even in the USA these days.
2. BB1 will not change that. What BBI will definitely do is to add to our already heavy economic burden. We are already in a difficult situation & it is time to downsize & consolidate. Not a time to create PM office,2 deputies (remember these are not individuals but institutions)
3. It is not also the time to create a 630 bunge & hard code the transfer of 600b we don't have to the counties in the constitution. I am for devolution & I have seen the good stuff it does but the reality is we don't have the money for a bigger government - at both levels
Read 7 tweets
22 Nov
1/ 5. The promise to give counties 600B (35%) is just a pie in the sky promise that will break the country or cause a constitutional crisis in the future. As we speak, we can't afford to pay for both O&M & counties and something may have to give way very soon.
2/5. We can only afford to pay for salaries + dent & O&M or counties. That is why counties have not been paid for the last 3 months & s@$t is about to hit the fan. Those saying this will be possible because more functions will be devolved to the counties are also being dishonest
3/5. First, assuming even there is something (possible) left to be devolved, you will just be transferring the current funding problems to counties. May be that is the objective? counties are not looking for more work, they are looking for more money to do what they currently do!
Read 6 tweets
3 Sep
1. In almost every economy, the government is one of the biggest customers of the private sector for supply of goods & services. The private sector reinvests the money & this helps grow the private sector & the economy & also create sustainable employment for the citizens.
2. Since 2013, trillions of shs in development budget & recurrent expenditure has gone into briefcase cos - to well connected folks with no real businesses & who don't employ even their spousese. Their inflated profits are used to buy Mercs, real estate & expensive overseas hols
3. Add that to the fact that almost all the monies we borrowed over the last 7 years did not even come into the economy. We borrow from a Chinese bank & give the contract to a Chinese company. The money moves from one account in China to another in China.
Read 7 tweets
6 May
Covid-19

Along with dealing the health issues, the highest urgency lies in securing the funding to businesses. The government, the central bank & the commercial banks should come together and play a key role in mitigating the long term economic damage of this health crisis!
1. Covid-19 is a health crisis that has also serious economic consequences. Many countries are dealing with the health problems but are at the same time trying to minimize the impact on the economy now & once the health issues are dealt with.
2. In the last 2 months or so, I have been involved in designing Fiscal impulse, Deferral & Liquidity/Gurantee programs meant to respond to the Covid-19 crisis. In the process, I have looked at the various programs adopted by different countries (of different sizes & capacity)
Read 14 tweets
2 Jan
1. We face serious economic issues in 2020. It is no rocket science. All the numbers point to an unfolding debt nightmare. We need more strategic approach to macro-economic policy instead of piecemeal knee-jerk tactical interventions if we are to save the country.
2. Unless we put breaks to spening & turn the economy around quickly, there will be a downward spiral feeding on itself — an internal fiscal & financial sector crisis. Slower growth would also deepen an already worsening fiscal crisis.
3. Piecemeal reform is like a game of snakes and ladders — you go up one small ladder, and get bitten by a snake tumbling back to where you were. We need comprehensive bold reforms to catch the big ladder and on to the golden turnpike.
Read 8 tweets

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