Collections from Appropriation-in-Aid (A-I-A) by government ministries, departments, and agencies (MDAs) have surpassed targets for the first time in many years, helping to ease pressure on budget financing and reduce the urgency for additional borrowing.
The latest data from the National Treasury shows that MDAs raised Sh503.38 billion in A-I-A in the financial year ended June, outperforming the Sh489.37 billion target.
A-I-A are non-tax revenues such as fees, levies, fines, and charges collected by government entities for providing services.
These include fees for the issuance of identification cards, passports, birth, death and marriage certificates, and work permits, while substantial amounts are also collected from funds set up for specific purposes like maintenance of roads (fuel levy paid by motorists) and construction of affordable houses.
The collections in the review year represented an increase of 21.68 percent from Sh413.7 billion in the previous year ending June 2024.
The non-tax revenue streams have been swelling in recent years after the government raised the cost of some government services, such as the processing of passports and work permits for foreigners, introduced new levies, and raised the rates of existing ones.
Sagas collections
Some specific A-I-A receipts are road maintenance levy charged at Sh25 per litre of petrol and diesel, railway development levy at 1.5 percent of the value of imports, housing levy at 1.5 percent of gross personal earnings matched by employers, petroleum development levy, and university fees.
Revenues such as royalties, investment income, as well as fines and forfeitures go into the non-tax revenue pot.
Albert Mwenda, the director-general for Budget, Fiscal, and Economic Affairs at the Treasury, attributed the above-target performance to enhanced transparency and accountability in the collection and expenditure of the cash collected by Sagas.
“The government has been including revenues collected by Semi-Autonomous Government Agencies (Sagas) into the budgets in the line ministries under which those Sagas belong. This has increased the A-I-A budget of the National Government over and above the traditional A-I-A items like the road maintenance levy, the railway development levy, etc,” Mr Mwenda told the Business Daily via WhatsApp.
“For example, in the State Department for Medical Services budget, we have revenues collected by Kenyatta National Hospital, Kenyatta University Teaching and Referral Hospital, and Moi Teaching and Referral Hospital included. Likewise, we also have the revenues collected by the public universities in the budget for the State Department for Higher Education.”
This means a large portion of the A-I-A cash is increasingly being spent at source on approval from the Treasury and appropriation by lawmakers.
The Treasury has further credited the growth in non-tax revenues to the ongoing digitisation of government services and processes, which has improved accountability and made reporting more timely and reliable.
Government entities are, for example, now required to report the cash they collect through the Government Investment Management Information System (Gimis) — a digital platform for uploading financial data such as revenues, expenditures, and investment information into a centralised database at the National Treasury.
The Treasury officials say Gimis has enhanced transparency, accountability, and monitoring, ensuring that revenues collected by Sagas are accurately reflected in ministerial budgets.
The integration of the non-tax revenue data into the national budget framework has not only helped the Treasury grow the A-I-A base, but also strengthened fiscal planning.
“Through this system, Sagas upload their financial data, and the team at the National Treasury gets this information in a ready-to-use format, and this has improved reporting,” Mr Mwenda said.
A-I-A targets
Analysis of the data shows that the A-I-A collections have more than doubled in the last five years, rising from Sh221.7 billion in 2020/21. They have, however, not surpassed the goal set by the Treasury in recent years, achieving 82.80 percent in 2021/22, 95.85 percent in 2022/23, and 92.65 percent in 2023/24, before exceeding the target in the last fiscal year.
The above-target non-tax revenue collections provide the Treasury with more headroom to fund programmes without burdening the taxpayers with additional debt.
The government has set its sights on growing the non-tax revenue streams in the coming years to complement tax revenues after measures to impose new taxation measures faced a fierce public pushback in June 2024, forcing the President William Ruto administration to reconsider the approach.
The Treasury is largely banking on continued digitisation of services, integration of revenue systems across agencies, and expansion of charges on government services to bolster non-revenue collections and reduce fiscal stress.
“The government is exploring non-tax revenue measures to reduce MDAs’ dependence on exchequer revenue, ensuring that MDAs’ Appropriation-in-Aid is sufficient to cover their expenditures without relying on the exchequer,” the Treasury wrote in the 2025 Budget Policy Statement.
“The government will ensure that proposed charges, levies, and fees are reasonable, avoiding undue burden on Kenyans and maintaining effective service delivery.”
Lawmakers in December 2024 shot down a move by the Interior ministry to raise the charges for acquiring or replacing documents such as identity cards as well as birth and death certificates, partly citing lack of sufficient public participation in the drafting of the regulations.
The rejected Registration of Persons (Amendment) rules sought to slap a fee of Sh300 for the application of a new ID, while the charges for registration, re-registration of births, and correcting a birth or death entry were to attract Sh1,000.
State Department for Immigration and Citizen Services has become a key target area for growing non-tax revenues given the importance of documentation agencies under its process.
These include ID cards, passports, birth and death certificates, as well as work permits for foreigners.
