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Governors have firmed up a “monumental case” against President Uhuru Kenyatta’s Jubilee administration amid a protracted revenue sharing standoff.

With county governments staring at a complete shutdown without money two weeks into the new financial year, the county chiefs on Monday launched one of the boldest and aggressive campaigns targeting the national government.

They accused the Kenyatta regime of presiding over a rogue National Assembly determined to suffocate devolution.

The governors outlined five points of contention that they want the David Maraga-led apex court to arbitrate.

They want the Supreme Court to determine the input of the Senate in protecting counties at the Legislature, the legality of the IFMIS system and the formula for allocation of grants.

The devolved units’ chiefs want the apex court to decide the legality of vote heads held by the national government yet relevant functions are devolved.

Further, they want the Supreme Court to pronounce itself on whether MPs can deviate from the recommendations by the Commission for Revenue Allocation on the shareable revenue.

The governors mobilised county assembly members to join Senate leaders in a symbolic protest march in Nairobi that culminated in the filing of the case at the Supreme Court.

The Supreme Court asked the petitioners to submit written submissions within three days and serve the respondents before the case is mentioned on Friday, July 19.

It is unusual for governors, who are heads of devolved units to hold protests, but yesterday the over 30 governors, deputy governors, Speakers of county assemblies and dozens of MCAs held a procession from the Intercontinental Hotel to the Supreme Court.

The county bosses were in an unfamiliar territory chanting “Haki Yetu (Our right) as they walked under tight security following the impasse on the Division of Revenue Bill 2019,
“In this second term, devolved governance is being attacked by denying county governments their resources. The National Treasury continues to hold counties hostage by always deviating from the Commission of Revenue Allocations recommendation by constantly denying disbursement of funds to counties,” CoG chairman Wycliffe Oparanya said.

The governors ignored an appeal by Deputy President William Ruto who had on Sunday asked them not to file the case as the Division of Revenue Bill, 2019 impasse would be resolved amicably.

Parliament wants the 47 counties to be given Sh316 billion, up from the Sh310 billion they had approved while senators want the devolved units to be given Sh327 billion, a compromise from the Sh335.7 billion set by CRA.

The mediation between the senators and MPs collapsed, triggering the stalemate that now threatens to sink counties into a deeper financial crisis.

The forum was attended by most of the governors, Senate Majority leader Kipchumba Murkomen and his Minority counterpart James Orengo. Both fully backed the governors on the court case.

As we speak counties cannot operate. It is shameful for the national government and they should take full responsibility for this situation.

Kisii Governor James Ongwae
“If we leave the national Assembly to operate the way it is doing in the next two years, Kenya will be worse than the one-party Kanu regime. We are fully behind governors on this,” Murkomen said.

In their constitutional reference petition, the governours want the Supreme Court to declare itself on the role of the Senate in the legislative function of Parliament amid claims it is being muzzled by the National Assembly.

Crucial bills, especially those concerning county governments, are never forwarded to the Senate for consideration, debate and approval, the governors argue.

“Where this is done, the input of the Senate is often disregarded. The most crucial of the bills is the annual Division of Revenue Bill. The National Assembly has totally declined to consider the input of the Senate on the quantum of the equitable share of county governments,” the governors said.

They argue that the situation has resulted in the under-funding of county governments while the allocation for the national government has since 2013 continued to increase.

The petition says that despite the constitutional role of the Senate in protecting devolution, the National Assembly does not regard the Senate as an arm of Parliament.

The county bosses have also advanced the issue of financial vote heads for devolved units amounting to billions of shillings being held by the national government.

They state that a large portion of the national government budget comprises allocations that are supposed to be channelled to county governments to follow devolved functions.

They named the national government ministries responsible for health, regional development, agriculture, water, environment, roads, and natural resources as among those getting huge allocations in the annual Division of Revenue Bill and budget yet most of the functions they undertake are devolved.

In their reference petition at the Supreme Court, the governors also want the court to declare that conditional or unconditional grants sent to the counties by the national government should be allocated from the national government’s equitable share.

The governors have taken on the Jubilee administration over deduction of grants from the counties’ shareable revenue.

Governors, for instance, say that Treasury officials continue to run conditional grants meant for the counties even when the money has been deducted from the counties’ shareable revenue.

Some of the grants include funds for free maternal health care, leasing of medical equipment and grants for Level-5 hospitals.

They say the money appear merely on paper as conditional grants in the annual Division of Revenue Bill yet they are managed by accounting officers of the national government.

“Ideally, conditional grants should appear first as outright allocations to the national government before being netted off as conditional or unconditional grants to the Counties,” the governors said in the petition.

Governors say that the Constitution implies that counties are the ones to manage and account for the conditional funds in accordance with the conditions set if any.

“Therefore, there is a need for the Supreme Court to offer an advisory to ascertain whether the allocation of conditional grants in the annual Division of Revenue Bill is made in accordance with Article 202(2) of the Constitution,” the governors submitted.

They want the apex court to rule on issues about late exchequer releases to counties.

They accused the National Treasury of having joined the National Assembly in killing devolution by starving counties of resources.

“The exchequer releases are not predictable. They are made at the discretion of the National Treasury. In addition, the releases are often made at the end of the financial year. This makes it impossible for county governments to implement projects and discharge their constitutional mandates,” the CoG’s petition says.

The devolved units accuse the Treasury of holding them hostage by running a deeply problematic IFIMS system which it “shuts down and opens” at its discretion.

The CoG argues that there is a need for the Supreme Court to clarify whether IFMIS as currently constituted and administered violates the Constitution on the institutional autonomy of the county governments by impeding the performance of county governments and their expenditure.

Regarding the thorny issue of the Division of Revenue, governors want the Supreme Court to clarify if the National Assembly or the Treasury can disregard the Commission for Revenue Allocation recommendations on the shareable revenue.

Up to 300 gold miners in Nandi County are facing job losses after the Kabere Gold Mine shut down its operations in the wake of a dispute with the owner of the nine-acre land on which its plant stands.

The company recently laid off its employees after the land owner, Cheseret arap Korir, declined to renew its 10-year lease after it lapsed in January.

The parties are now locked in a legal tussle over whether either of them has the right to terminate or renew the lease.

The row at Kabere comes soon after Kilimapesa Gold, which has operations in Migori County, also shut down its mine after failing to raise new capital to finance operations of the plant.

The gold mine closures are happening at a time when the price of the commodity has rallied to a six-year high of $1,400 (Sh141,000) per ounce, underlining the missed opportunities for investors and the government, which earns royalties from the companies.

Kabere, formed in 2008, has been producing gold with a value of about Sh800 million per annum. The company, owned by a group of Kenyan citizens and institutional investors such as Maris Africa and Dutch investment fund FMO, signed a 10-year lease agreement with Mr Korir on June 12, 2009.

The rent was set at the rate of Sh3,000 per month per acre amounting to Sh324,000 per year and increasing at five percent per year.

Kabere wrote to Mr Korir six months before the lease expired, informing him that the company wished to renew it for another 10 years.

The landlord rejected the notice and directed the company to vacate the property upon expiry of the lease in January.

The mining firm went to court which, on March 1 2019, ordered the company to cease operations and further directed the parties to resolve their dispute through arbitration as provided for in the lease agreement.

“The plaintiff (Kabere) is also restrained from carrying on any activity on the suit parcels of land pending the outcome of the arbitration,” Judge Antony Ombwayo of the Environment and Land Court at Eldoret ruled on March 1, 2019.

Kabere, which says it risks suffering a huge loss after investing a cumulative Sh1 billion in the mine, won in the arbitration process but the decision has been challenged in court by Mr Korir.

The arbitrator, Anthony Githinji Kimani, said that the mining company had a right to renew its tenancy for a further 10 years according to clause 2.2 of the lease agreement.

“The lessee shall have the option to extend the term by notice in writing given to the lessor six (6) calendar months prior [to] the end of the term for a further period of ten (10) years on the same terms and conditions as this agreement (save for any amendments and/or variations agreed between the parties) and the rent payable shall be agreed between the parties at least one calendar month prior to the expiry of the term,” the clause says.

The arbitrator accepted Kabere’s argument that it has invested heavily in development of the land and its business in reliance on the provisions of the clause.

Mr Kimani said that the company “therefore had a contractual and legitimate expectation that the respondent would renew the lease term for a further 10 years upon expiry of the initial 10-year term.”

The company says the lease dispute has also held up its mining licence since it is now a requirement that it receives consent from every land owner within its designated mining area before its licence can be renewed.