Migori, Uasin Gishu and Kwale are best placed to meet their annual own-source revenue (OSR) targets, new data by the Controller of Budget Office showed, turning the spotlight on other struggling counties.
Analysis of local revenue as a proportion of the annual revenue target indicates that Migori, Uasin Gishu and Kwale Counties recorded the highest proportion at 72.7 per cent, 69.8 per cent and 68.9 per cent respectively, over the first nine months of the fiscal year 2017/18.
By the end of quarter three Migori had netted Sh145.35 million against a full year target of Sh200m, Uasin Gishu had Sh387.54m against an aim of Sh593.54m while Kwale was Sh86m short of its annual collection target of 275m.
Conversely, those that recorded the lowest proportion of local revenue against annual targets were Nyamira at 25.4 per cent, Mandera at 20.3 per cent and Kisii at 18.5 per cent — tracking after a national trend of low collections.
Statistics showed that in the first nine months of the 2017/18 fiscal year, the aggregate revenue raised by County Governments from own sources amounted to Sh22.23 billion, which was a decline of 11.2 per cent compared to Sh24.71billion raised in a similar period in the previous financial year.
This amount accounted for 42.3 per cent of the annual local revenue target of Sh52.52 billion.
Only 12 counties managed to realise more than 50 per cent of their annual own-source revenue targets by the end quarter three of 2017/18.
Counties that generated the highest amount of local revenue were; Nairobi City, Mombasa and Narok at Sh7.64 billion, Sh1.68 billion and Sh1.63 billion respectively. On the other hand, the lowest amount was generated by Mandera, Lamu and Tana River at Sh46.97 million, Sh41.49 million, and Sh16.19 million respectively.
Most counties continue to be dogged by fiscal constraints due to funding gaps occasioned by unrealised revenue projections.
To address this challenge, the National Treasury is exploring legal options to capping counties’ OSR revenue growth estimates, based on their historical performance.
A number of county governments are under investigation by the Treasury for falsifying their revenue collection figures after an audit revealed a mismatch between expenditure and cash generated.
A recent audit of bank statements and expenditure returns by the Controller of Budget Office revealed that spending in some counties surpassed their total OSR as well as Exchequer releases from the County Revenue Fund (CRF) to operational accounts.
“Such violations suggest that OSR is being spent at source. The Controller of Budget has analysed counties and identified those where not all OSR is ‘swept’ into respective CRF accounts,” the Treasury said in its Budget Policy Outlook statement for 2017.
The law requires that the total revenue collected by all counties be distributed equitably in accordance with a resolution approved by Parliament.
Several counties were, however, found to have directly spent revenue without approval.
In the 2017/18 fiscal year, the combined county governments budgets approved by the County Assemblies amounted to Sh413.63 billion and comprised Sh266.98 billion (64.5 per cent) allocated to recurrent expenditure and Sh146.65 billion (35.5 per cent) for development expenditure.
To finance the budgets, county governments expect to receive Sh302 billion as equitable share of revenue raised nationally, Sh23.27 billion as total conditional grants from the National Government, Sh16.41 billion as total conditional grants from the Development Partners, generate Sh52.52 billion from own sources of revenue and Sh26.66 billion cash balance from 2016/17.
The conditional grants from the National Government comprise Sh4.5 billion for Leasing of Medical Equipment, Sh4.2 billion for Level 5 Hospitals, Sh11.07 billion from the Road Maintenance Fuel Levy Fund, Sh900 million for compensation of User Fee Foregone, Sh2 billion for Development of Youth Polytechnics and Sh605 million for construction of county headquarters in Isiolo, Lamu, Nyandarua, Tana River and Tharaka Nithi Counties.