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Revenue plunge hits tourism counties hard on Covid woes

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Tourists stroll on the white sandy beach of Diani, Kwale County on January 2, 2018. FILE PHOTO | NMG

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Summary

  • The tourism-reliant counties of Mombasa and Narok posted the steepest fall in internal revenue collections in the six months to December.
  • The latest data from the Controller of Budget shows that Narok’s internal revenues fell by Sh1.56 billion in the period under review.

The tourism-reliant counties of Mombasa and Narok posted the steepest fall in internal revenue collections in the six months to December, leading the way for 27 devolved units whose numbers dropped in the wake of the coronavirus disruptions.

The latest data from the Controller of Budget shows that Narok’s internal revenues fell by Sh1.56 billion in the period under review as the county reeled from the slump in tourist numbers to the Maasai Mara Game Reserve.

The county raised a paltry Sh334.4 million in own-source revenue in the six months to December down from Sh1.89 billion in the corresponding period a year earlier while Mombasa posted a decline of Sh403.2 million to raise Sh1.08 billion from Sh1.48 billion a year earlier.

The counties rely on beach and wildlife attractions to woo tourists who in turn contribute to a huge chunk of their Own-Source Revenue (OSR).

Mombasa and Narok led 25 other counties whose OSR took a hit from the economic disruptions occasioned by restrictions imposed to curb the spread of Covid-19.

The country imposed a dusk-to-dawn curfew, banned social gatherings and suspended international and domestic flights as well as restricted movement into and out of four counties including Nairobi and Mombasa in March after reporting the first Covid-19 case.

The shutdown and disruptions hurt taxes and levies due from streams like single business permits, rates for the market traders and cess for lorries that mainly ferry agricultural produce and construction materials like stones and sand across counties.

Own-Source Revenue for the 47 counties in the six months to December declined by Sh1.525 billion to Sh12.72 billion from Sh14.24 billion in a similar period a year earlier due to the adverse effects of coronavirus on economic activities.

“During the reporting period, county governments generated a total of Sh12.72 billion, which was 23.4 per cent of the annual target of Sh54.41 billion. This was a decrease compared to Sh15.33 billion generated in a similar period of FY 2019/20,” says the report.

Counties raise their revenue from land rates, single business permits, market and trade licensing, parking fees, liquor licensing, entertainment levies and cess, among others.

Machakos, Kiambu, Kisumu and Samburu close the list of six devolved units whose Own-Source Revenue dipped by more than Sh100 million in the six months to December compared to a year earlier.

Kiambu’s Own-Source Revenue fell to Sh897.97 million from Sh1.06 billion in the six months to December 2019 while Samburu raised Sh26.32 million from Sh149.94 million.

Kisumu collected Sh247.56 million from Sh363.96 million while Machakos County raised Sh417.42 million from Sh526.4 million raised in the six months to December 2019.

In Mombasa, hotels and tourist attraction sites that usually record booming businesses in August and December perhaps endured the worst holidays as local and international tourists shied away despite the easing of the measures.

Thousands of foreign and local tourists who usually flock to the Maasai Mara to witness the wildebeest migration did not show up even as the State eased travel restrictions.

revenues

Slowed recovery

Between June and October — the high season marking the climax of the wildebeest migration, Narok stared at losses in the absence of the tourists setting the stage for perhaps one of the worst years for the county government’s Own-Source Revenue.

The slowed recovery for businesses following the easing of the restrictions from July has been dealt a blow for the enterprises and traders in Nairobi, Machakos, Kajiado, Kiambu and Nakuru.

This is after the State imposed stiffer measures in the four counties to curb a resurgence in the spread of the virus.

The state closed all bars and liquor indefinitely, enforced an 8pm to 4am curfew and banned movement into and out of the five counties in the latest push to curb the spread of the virus in the counties described as disease infected areas.

While traders can freely move across the five counties, the reduction in working hours and closure of other businesses will dent collections for the devolved units.

Collections from revenue streams such as market rates, cess and licenses from the liquor shops will take a hit in the wake of the restrictions whose review date remains unclear.

But the impact of the restrictions on the collections of the five counties will be laid bare when the Controller of Budget releases the report for the full year that ends in June.

The restrictions piled more pressure on the Own-Source Revenue collections across the 27 counties even as the remaining 20 defied the Covid-19 disruptions to post growth in their collections.

Nairobi City County whose Own-Source Revenue collection is now in the hands of the Kenya Revenue Authority (KRA) led the list to raise Sh3.96 billion, a growth of Sh3.1 billion in a similar period in 2019.

Kajiado County came second with Sh386.78 million from Sh263.04 million followed by Kilifi County whose Own-Source Revenue rose to Sh365.91 million from Sh288.11 million.

Embu and Siaya closed the list of the top five performers after raising Sh172.47 million and Sh136.2 million, from Sh97.73 million and Sh71.54 million respectively.

Despite the rare growth in Own-Source Revenue for the 20 counties, the devolved units have perennially missed their targets for the internal collections.

The misses have been blamed on weak resources to nab defaulters, corrupt officials who collude with traders and motorists and the use of land rating systems that do not match the current market prices for property.

But now, the counties are set to enjoy the services of two modern revenue collection systems that are expected to boost their Own-Source Revenue.

A multi-agency team comprising officers from the KRA, Commission on Revenue Allocation and the Council of Governors picked the two undisclosed revenue collections systems that will be rolled across the 47 counties.

The team was formed in February 2019 and tasked with coming up with a Single Integrated County Revenue Management System for the counties.

Treasury secretary Ukur Yatani last month said the multi-agency team is working on enhancing one of the two systems for the counties.

“The key finding on this report is that there are two county revenue systems that meet a significant number of required system features and the technical committee is exploring the possibility of enhancing one of the two county revenue systems to be rolled out to all the 47 county governments,” Mr Yatani said without providing detail.

Currently, counties and the national government use 11 different revenue systems, which are blamed for the low level of collections.