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Efficiency and Efficacy of Kenya's Constituency Development Fund: Theory and Evidence

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  • Mwangi S. Kimenyi

    (University of Connecticut)

Abstract

Kenya's Constituency Development Fund (CDF) is one of the ingenious innovations of the National Rainbow Coalition (NARC) Government of Kenya. Unlike other development funds that filter from the central government through larger and more layers of administrative organs and bureaucracies, funds under this program go directly to local levels and thus provide people at the grassroots the opportunity to make expenditure decisions that maximize their welfare consistent with the theoretical predictions of decentralization theory. Increasingly, however, concerns about the utilization of funds under this program are emerging. Most of the concerns revolve around issues of allocative efficiency. In this note, I highlight some of the constituency characteristics that impact on the efficiency and efficacy of CDF and also some political economy aspects associated with this program. In particular it is observed that CDF could have negative outcomes because of fiscal illusion and reduced local fiscal effort. The paper recommends an in-depth analysis of constituency characteristics that impact on the utilization of funds to ensure that the program achieves its full potential.

Suggested Citation

  • Mwangi S. Kimenyi, 2005. "Efficiency and Efficacy of Kenya's Constituency Development Fund: Theory and Evidence," Working papers 2005-42, University of Connecticut, Department of Economics.
    • Handle: RePEc:uct:uconnp:2005-42
    Note: Research Concept Note
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    Citations

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    Cited by:

    1. Sam Barrett, 2015. "Subnational Adaptation Finance Allocation: Comparing Decentralized and Devolved Political Institutions in Kenya," Global Environmental Politics, MIT Press, vol. 15(3), pages 118-139, August.
    2. Mwangi S. Kimenyi, 2006. "Economic Reforms and Pro-Poor Growth: Lessons for Africa and other Developing Regions and Economies in Transition," Working papers 2006-02, University of Connecticut, Department of Economics.
    3. Milu Muyanga & Miltone Ayieko & Mary Bundi, 2007. "Transient and Chronic Rural Household Poverty: Evidence from Kenya," Working Papers PMMA 2007-20, PEP-PMMA.
    4. Muna Shifa & Murray Leibbrandt, 2017. "Profiling Multidimensional Poverty and Inequality in Kenya and Zambia at Sub-National Levels," SALDRU Working Papers 209, Southern Africa Labour and Development Research Unit, University of Cape Town.
    5. Harris, J. Andrew & Posner, Daniel N., 2022. "Does decentralization encourage pro-poor targeting? Evidence from Kenya’s constituencies development fund," World Development, Elsevier, vol. 155(C).

    More about this item

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General

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