The Treasury has raised concern over the lack of integration and ownership of revenue collection systems across county governments, warning that the gaps pose data breach and revenue leakage risks.
An assessment of county public financial management contained in the Treasury’s 2025 Budget Review and Outlook Paper (BROP) notes that the majority of county governments continue to use unintegrated revenue collection platforms, many of which are operated by third-party service providers.
Treasury says the fragmentation limits oversight and increases the risk of manipulation and data loss. The gaps were identified during the implementation of the 2024/2025 county budget.
“In addition, most counties do not own the revenue management systems, exposing them to data breaches and losses during transitions,” the Treasury said in its latest review.
The warning comes as counties grapple with persistent shortfalls in own-source revenue — a key component of their financial autonomy.
Despite ambitious targets, most have consistently failed to meet their annual revenue projections, with shortfalls forcing them to rely heavily on national government transfers.
Records by the Office of the Controller of Budget shows that counties missed their own-source revenue target of Sh87.67 billion by 23 percent in the financial year ended June 2025. The collections realised over the period stood at Sh67.3 billion.
The lack of centralised and automated revenue systems has hurt efficiency and accountability in local revenue management. The Office of the Controller of Budget has consistently flagged counties for collecting revenue but spending it at source without oversight.
In some cases, county officials were accused of colluding with system vendors or intermediaries to manipulate collection records, resulting in the loss of public funds.
Having ownership of data and systems that lie outside government means counties lose continuity and oversight, especially during vendor transitions or contract disputes.
The goal is to create a uniform platform that allows real-time monitoring of county revenues, enhances transparency, and ensures that all collections are deposited directly into county revenue funds.
Last year, KRA Commissioner-General Humphrey Wattanga told the Senate ICT Committee that the lack of standardised revenue administration and collection processes was hurting county revenues.
He said that procurement of these systems also presents challenges, such as unclear technical requirements and vendor-driven contracting processes.
“Additionally, vendors usually charge a percentage of revenue collected, which in some cases is unreasonably high,” Mr Wattanga said.
While some counties — including Nairobi, Mombasa, and Kisumu — have begun integrating digital solutions, many others still operate manual or semi-digital systems that are prone to inefficiencies and fraud.
The lack of technical expertise and weak enforcement of ICT standards have compounded the problem. Some of the systems do not align with the Public Finance Management Act and the Data Protection Act, which require public entities to safeguard citizen information and ensure accountability in the use of financial data.
