Revenue collection by county governments dropped by Sh1.2 billion in the nine months to March compared to a similar period last year, signalling potential borrowing by the devolved units to finance some of their operations.
The 47 counties collected a total of Sh24.7 billion between July 2016 and March this year compared to Sh25.9 billion realised over a similar period a year earlier, data by the Treasury shows.
“Collections so far have also declined as a proportion of the annual target,” the Treasury said in its latest budget outlook paper, adding that the revenue collected by counties in the nine-month window is 41.4 per cent of the targeted amount.
Only 20 counties posted a growth in revenue collection compared to the previous year — underlining the massive revenue generation and collection challenges facing the entities.
Nairobi recorded the biggest drop in revenues by Sh900 million to Sh8.7 billion, accounting for three quarters of the total drop in county revenues.
Nakuru’s internally generated revenue also dipped by Sh400 million to Sh1.1 billion, according to the data by the Treasury, while Uasin Gishu collected Sh18 million less at Sh524 million.
On the flipside, Mombasa grew its revenues to Sh1.9 billion from Sh1.6 billion, while revenue receipts for Kisumu remained unchanged at Sh776 million.
Bomet grew its revenues 88 per cent to Sh197 million in the review period, Baringo by 10 per cent to Sh222 million while Bungoma’s receipts surged 61 per cent to Sh526 million.
Boost revenue collection
The Treasury said a newly drafted policy that seeks to incorporate the Kenya Revenue Authority (KRA) in county revenue programmes would help improve collections.
The policy was developed by an inter-agency committee drawn from county and national government teams.
“If approved by the Cabinet and Parliament respectively, it is expected that the policy and legislation will help to unlock counties’ revenue potential,” the draft said.
According to the proposed policy published this month, six of the 47 counties will be required by law to contract KRA for revenue collection.
The six, which are classified as devolved units with “relatively high revenue” are Nairobi, Mombasa, Kiambu, Narok, Nakuru, Kisumu, Machakos and Nyeri.
“It would be easier for KRA to collect revenue from more urbanised counties with large formal sectors; this would allow KRA to fully apply its professional skills, personnel and technical resources,” says Treasury in a draft national policy to support enhancement of county revenue.