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Wednesday, August 16, 2017

What Percentage of County Revenue Comes from their Own Collections?

Is it it 5%, 10% or more?

Speaking during the legislative summit in Mombasa, National Treasury Cabinet Secretary Henry Rotich claimed that90-95 per cent of county revenues come from the national treasury, saying this is the reason why fiscal accountability is very weak at the counties.

The Deputy Controller of Budget Stephen Masha echoed the same point when he said that only 10 per cent of total revenue available to counties comes from their own collections.

PesaCheck has fact-checked these claims with the input ofInternational Budget Partnership (Kenya) and finds them to be false.

The county governments have severalsources of revenue.Article 209 of the Constitution grants the counties the authority to impose property rates, entertainment taxes, and other taxes authorized by an Act of Parliament. The county governments can also impose charges for the services they provide. These taxes and service charges constitute the local revenue for the counties.

Theannual county budget implementation reports by the Office of the Controller of Budget contain the information on the amount of local revenue that the county governments collect every financial year.

The revenue allocations for the county governments, inclusive of both the equitable share and the conditional grants, are obtained from theCounty Allocation of Revenue Act 2013,County Allocation of Revenue 2014,County Allocation of Revenue 2015 and theCounty Allocation of Revenue Act 2016.

We have compared the percentage of local revenue to the total revenue both inclusive and exclusive of conditional grants in order to get a more realistic view.

The conditional grants are additional sources of revenue for the county governments from the national government’s share of revenue.

Percentage of local revenue to total revenue (without conditional grants)

For the 2013/14, 2014/15 and 2015/16 financial years, we see that the county governments managed to raise KSh26.3 billion, KSh33.9 billion and KSh35 billion respectively in local revenue. When compared to the total amount of revenue, which is inclusive of the equitable share, the percentage of the local revenue to the total revenue is 12.2 per cent, 13 per cent and 11.9 per cent respectively for each of the three financial years.

Percentage of local revenue to total revenue (inclusive of conditional grant

The conditional grants for the 2013/14, 2014/15 and 2015/16 financial years are KSh20 billion, KSh14 billion and KSh16.6 billion respectively. The local revenue as a percentage of the total revenue, inclusive of both the equitable share and conditional grants, is 11.1 per cent , 12.4 per cent, and 11.2 per cent respectively for the three financial years.

Counties collect more than 10 per cent of their total share of revenue

We can see that the percentage of local revenue raised by the counties in relation to the total revenue is above the 10 per cent claimed by the Deputy Controller of Budget and also above the 5 -10 per cent claimed by the National Treasury Cabinet Secretary.

There is also an improvement in the amount of revenue that the counties are raising locally. The counties collected more money in the financial year 2014/15 than in 2013/14, and slightly more money in 2015/16 than in 2014/15.

However, it is important to note that, despite the increase in local revenue collected by the counties, the share of county revenue in relation to total revenue is decreasing. This is because the county equitable share is increasing faster than the counties own revenue. This means that the counties are becoming more dependent over time on the money received from the national government as a share of their total resources.

This report was written by PesaCheck Fellow George Githinji a socio-political analyst who is passionate about devolution and public finance. The infographics are by PesaCheck Fellow Brian Wachanga, who is a Kenyan civic technologist interested in data visualisation. The report was edited by PesaCheck Co-ordinator/Editor Florence Sipalla with fact-checking by IBP-Kenya country lead Dr Jason Lakin.

PesaCheck, co-founded by Catherine Gicheru,is East Africa’s first fact-checking initiative. It seeks to help the public separate fact from fiction in public pronouncements about the numbers that shape our world, with a special emphasis on pronouncements about public finances that shape government’s delivery of so-called ‘Sustainable Development Goals’ or SDG public services, such as healthcare, rural development and access to water / sanitation. PesaCheck also tests the accuracy of media reportage. To find out more about the project, visit pesacheck.org.

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