The government of Kenya has made deliberate efforts to decentralize most of its development

projects over the past five years, key among them, the projects aimed at meeting the MDGs.
More precisely, in the year 2007-2008 budgetary allocations, more than Ksh 58 Billion went to
devolved structures. One of the devolved fund regimes instituted under this period was
Constituency Development Fund through the CDF Act, which was later changed to CDF
amendment act of 2007. The fund comprised of an annual budgetary allocation equivalent to
2.5% of all the government ordinary revenue collected in every financial year. Constituency
development fund is managed at the national and the grass root levels. At the national level there
are constituency development fund boards and the constituency fund committees, while at the
grass roots the fund is mainstreamed in the provincial administration structure under the District
development Committee (DPC), Constituency Development Fund Committee (CDFC),
Locational Development Committees (LDC), and the Ward Development Committees (WDC).
The devolved funds in Kenya are the Constituency Development Fund (CDF), Local Authority
Transfer Fund (LATF), Constituency Bursary Fund (CBF), Women and Youth Funds.

Pitfalls of the devolved funds

1. Electoral populism vs. development planning
The citizen-state interface has been significantly altered over the past two decades through
devolved funds and public service reforms. While the greater role played by the devolved funds
could be a positive factor, thinly spread resources, expensive administrative structures,
proliferation of roles and responsibilities and distorted incentives (e.g. electoral populism vs
development planning) undermine the efficiency and accountability of public spending.
Particularly with respect to CDF and LATF, governments monies are used to boost political
power rather than in accordance with strategic development agendas.

2. Capacity of committee member’s problem

Decentralization has created a new managerial layer in which citizen participation has been fore
grounded. But capacity of the committee members is still a barrier. This is expressed principally
through representative committees, where citizens, government representatives and other
stakeholders jointly engage in the management of public monies and development planning.
Given the centrality of committees for citizen participation, much more investment is needed to
build the capacity of committee members and streamline management structures (electoral
processes, constitutions, reporting channels.). This applies not only to committees, but also to
barazas, suggestion boxes, and accessibility of government offices. Linkages need to be
developed between committees and local sites of power and representation (especially religious,
women’s groups & youth groups). Otherwise, committees will tend to support individual rather
than collective interests, and be subject to malpractice.

3. Managerial problems
Alongside managerial and systemic factors, behavioral dynamics also undermine the
effectiveness of the governance system and create barriers to citizen participation. These include
intimidation, exclusion and theft, which feed off ignorance and lack of empowerment. In order to
address the problem of ignorance, massive civic education is needed on the nature of government

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provisions (funds and services), the channels of reporting, monitoring and management.
Education and awareness will also help to address lack of empowerment or ‘fear’.

4. Under sourced projects

In the Kenyan context, devolution processes suffer from a number of more widespread factors
that have accompanied contemporary governance reforms. Devolution of funds are implemented
in a top down fashion rather than being instigated from the bottom up by citizens actively
claiming a greater role in governance systems, thereby undermining ownership and the extent of
genuine citizen participation. Devolution processes are under-resourced and under-capacitated
undermining their effectiveness to deliver good governance. Devolution processes tend to
support normative power structures, even while shifting the locus of power from national to local
levels. (Hadiz, Cornwall and Coelho, 2007).

5. White elephants
Devolved funds were valued mainly because of evidence of construction. However this becomes
a façade for low quality construction and unfinished buildings. Rampant corruption and lack of
information / inaccessibility were also mentioned as barriers to the effectiveness of devolved
funds. The poor rating of devolved funds is an interesting finding, given that devolved funds
have been designed to increase citizen involvement in planning and execution.

6. Politics
There are some political dimensions that arise from the nature and management of devolved
funds. It’s noted that CDF, LATF and other funds is a form of decentralization. However, unlike
in pure fiscal decentralization which is characterized by both revenues and expenditures, CDF is
a one sided fiscal decentralization scheme since expenditure are not linked to the local revenue
sources or fiscal effort. Such partial decentralization can associate with fiscal illusion which
minimizes the extent to which beneficiaries monitor use of funds. Simply, beneficiaries consider
the funds as ”free” and thus are not motivated to monitor utilization of funds since they do not
take into account the costs of the projects. It is therefore important to investigate the monitoring
aspects associated with CDF and the degree to which constituency characteristics may influence
fiscal illusion and therefore inefficiencies.

7. Governance
The Acts of Parliament that have created some of the funds give immense power to the local
Member of Parliament (MP). Corruption cases have been witnessed in the use of the funds, such
as some councilors/MPs demanding that beneficiaries make advance contributions before
receiving a fraction of the benefits due. CDF is seen as the most abused in this aspect, followed
by the HIV/AIDS and bursary funds, in that order. Political loyalties have led to unfair sharing of
resources across constituencies/wards. In addition, there is a general lack of transparency and
accountability probably due to the blending of supervisory and implementing roles.

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8. Implementation

Poor awareness by community members and fund managers of their roles and responsibilities in
the governance of funds has contributed to poor performance and in some cases a complete
failure of the funds. Poor participation, particularly for marginalized groups, results in poor
prioritization of projects and exclusion. The criteria for allocating secondary education bursary
fund, for example has been found to be unfair to orphans, whose multiple roles undermine their
academic performance. No mechanisms exist to deal with projects such roads, water systems,
and schools that may cut across constituencies entailing shared benefits. No clear mechanisms
exist to avert duplication of functions. Both CDF and the Ministry of Education offer education
bursaries. There are also reported instances of a single project claiming support from different
funds, with no checks to prevent ‘double’ accounting. Finally, there are challenges to ensuring
that all decentralized funds reach all parts of the district or constituency in adequate quantities,
and that all funds allocated are actually utilized instead of being returned to the source.

9. Monitoring and Evaluation

There is a lack of professional and technical supervision, which has led to poor project quality. In
addition, there is low community participation in monitoring and evaluation due to the
inadequacy of data and general information about the funds. There is general misconception by
community members that funds are ‘free’ or are the personal gifts from the political leaders. Poor
monitoring and evaluation has led to abuse of funds and fostered a sense of impunity amongst
the perpetrators.

10. Effectiveness and Efficiency

Allocations from the various funds are inadequate. In addition, tension between fund managers
and technocrats over money management and remuneration has led to delays in the release of
funds. Inappropriate professional and/or technical support, especially from Government
ministries, has prevented funds from reaching their full potential, while lack of transparency in
procurement systems has affected the cost-effectiveness of projects. Lastly, there has been
increased dependency on these funds, especially in education. For example, free primary
education has created a demand for more teachers, classrooms and other school equipment, and it
has been difficult to meet this increased demand.

11 Political maximization vs welfare maximization

CDF also has some direct political implications. Political leaders may view CDF as an
investment in their political careers with returns spread over the electoral cycles. Simply, a
politician would prefer projects that maximize political returns while voters would prefer
projects that maximize welfare. These two objectives may be in concert but there are many cases
where the constituency characteristics might result in divergence such that political
maximization is not equivalent to welfare maximization. To the extent that members of

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Parliament have a key role in the identification and implementation of the projects, we do expect
choices to be influenced by political maximization.

13. Suppression of local fiscal effort

Finally, there is a possibility that devolved funds could suppress local fiscal effort which has
hitherto been through voluntary contributions for community development. Such displacement
effect could be counterproductive and may actually weaken participation. Ideally, devolution of
funds should not discourage local mobilization of development resources but should instead be
complementary. In evaluating the efficiency and efficacy of devolution, it is necessary to
investigate the extent to which the funds are complementing or substituting local resource
mobilization.

Conclusion
There is no doubt that devolution of funds is a novel concept and one that is expected to have
major positive impact on development at the grassroots. In addition to advancing the welfare of
the people through community projects, Devolution has a salutary effect on participation which
is itself pivotal to empowerment of communities.

Because of the apparent positive evaluation by beneficiaries of these devolved funds, there is
high probability that other developing countries will seek to emulate the Kenyan concept. There
are indications that a number of countries in the region are intended to study the Kenyan model
with the hope that they can legislate similar programs. As such, understanding the operations of
devolution, particularly the aspects that impact on efficiency is crucial.

Recommendations

1. It is therefore recommended that a rigorous study to identify the main sources of concerns that
are emerging be undertaken so as to avert major failures in the future. Such a study would offer
concrete recommendations on reforms and also the type of information and data that should be
required of all devolved funds projects for effective monitoring and evaluation.

2. A better understanding of devolution can provide important information that should help in
design of other decentralization schemes that may be implemented. There is therefore a great
deal of work to be done to educate communities on the role and of the various funds. There is
need to provide general education and information about the funds and the procedures for
application and use of the allocated funds.

3. There is need to train the managers of the fund managers and community organizations on the
procedures for utilization of the funds. New regulations and restructuring of the current funds are
necessary to ensure that the funds meet the needs of the targeted beneficiaries.

4. Development of a better legal and institutional framework is necessary for improved

administration of the decentralised funds. In addition, there is a need to mitigate barriers to
effective implementation of projects, such as the interruptions that may occur with changes in
government or the ‘privatization’ of funds by certain fund managers.