Narok County netted Sh2.98 billion in own source revenue (OSR) in the three months to September 2024, piping Nairobi as the highest generator of local sources for the first time.
The ability of county governments to generate revenue from local sources, commonly known as OSR, is a critical factor in the sustainable development and fiscal autonomy of devolved governments.
The latest Controller of Budget (COB) performance report shows that in the three months to September, Narok reported the highest OSR, followed by Nairobi which collected Sh2.18 billion from its local sources.
Narok surpassed Nairobi’s OSR by Sh794 million during the three months and single-handedly collected almost a quarter (23.5 percent) of the total OSR raised by the 47 counties during the quarter.
“During the reporting period, county governments generated a total of Sh12.68 billion from their OSR, which was 15 percent of the annual target of Sh85.22 billion. The realised OSR is an increase compared to Sh10.21 billion generated in a similar period in the financial year 2023/24,” the COB said.
This is the first time since the start of devolution in 2013 that any county has surpassed Nairobi’s OSR collection, amid improved performance by the devolved units hosting national parks and game reserves since they started receiving a share of visitor fees.
In a similar quarter last year (July- September 2023), Nairobi collected Sh1.72 billion from its OSR, followed by Narok, which raised Sh1.67 billion.
For the entire 2023/24 fiscal year, Nairobi raised Sh12.5 billion from its own sources, followed by Mombasa (Sh5.58 billion), Narok (Sh4.75 billion) and Kiambu (Sh4.57 billion).
In the first quarter of the current financial year (July to September), the top 10 counties in terms of OSR collections raised Sh8.8 billion collectively, representing 69.5 percent of the total OSR collected by all 47 counties during the three months.
Other counties with high collections were Kiambu (Sh832.9 million), Mombasa (Sh832.1 million), Nakuru (Sh600.9 million), Kakamega (Sh318.2 million), Machakos (Sh287.4 million), Kisii (Sh270.5 million), Kisumu (Sh259.3 million) and Nyeri (Sh239.4 million).
“An analysis of OSR as a proportion of the annual revenue target indicated that the following counties had a performance of above 25 percent of their annual target, namely Tana River County at 81 percent, Narok County at 60 percent, Samburu County at 36 percent, Garissa County at 27 percent, and Elgeyo-Marakwet at 26 percent,” COB Margaret Nyakang’o stated.
In absolute terms, Tana River collected Sh78.5 million, Narok’s Sh2.98 billion, Samburu with a collection of Sh100.8 million, Garissa (Sh80.5 million) and Elgeyo-Marakwet (Sh78.7 million).
Poor performance
The COB report notes that among the counties that performed poorly in actual OSR collections against their annual targets during the period were Marsabit, Kajiado, and Nyamira whose collections were nine percent of their respective targets. Others are Bungoma, Machakos, and Kericho counties which were at eight percent.
With a collection of Sh259.4 million, Kisumu raised just seven percent of its annual OSR target, and Bomet collected Sh25.16 million (six percent of the target), the lowest amount against the annual OSR target for any county.
“To enhance OSR collection, the COB recommends that all counties conduct an assessment based on the Tax Administration Diagnostic Assessment Tool (Tadat). Based on the assessment results, counties should develop a Revenue Enhancement Action Plan (REAP).
dditionally, all counties must evaluate their revenue potential and aim to achieve it over time,” Dr Nyakang’o noted.
She also asked counties whose OSR performance fell below 15 percent of the annual target to adjust their OSR targets in the supplementary budget.
“This approach will help reduce the likelihood of accumulating pending bills,” she said.
