DECLINING COLLECTION

Nairobi revenue streams miss targets by half, says report

No revenue stream hit its target in FY 2019-20, according to Finance CEC

In Summary

• Building permits raised Sh456.7 million against a target of Sh2.1 billion.

• Low revenue collection blamed on Covid-19 after business activities reduced in March.

City Hall building,the City Council of Nairobi headquarter/FILE
City Hall building,the City Council of Nairobi headquarter/FILE

Rates and building permits were the worst performing own sources revenue streams in the city in the 2019-20 financial year, a report tabled last week in the county assembly shows.

The rates were a low of Sh1.87 billion against a Sh3.92 billion target.

Single business permits raised Sh1.58 billion against a Sh2.89 billion target while a paltry Sh456.7 million was collected from building permits. The target was Sh2.10 billion, according to the County Revenue and Expenditure report on the year ended June 30.

Finance executive Allan Igambi says in the report that collection of building permits revenue was last year interfered with by constant reshuffles and suspension of Planning department officials and the technical committee by Governor Mike Sonko.

The technical committee is mandated to approve the permits.

This led to a backlog of more than 4,000 development applications. They were, however, cleared by Nairobi Metropolitan Services director general Mohamed Badi in July.

Parking fees raised Sh1.54 billion against a target of Sh2.76 billion while Sh753.9 million was collected from billboards and adverts against a target of Sh1.42 billion.

Overall, own source revenue collection declined compared to financial year 2018-19 when Sh1.9 billion against a target of Sh3 billion was collected from parking fees, Sh2 billion from single business permits, Sh1 billion from building permits and Sh797 million from billboards and adverts.

The Sh8.5 billion own revenue collection was half the targeted Sh17.31 billion.

This was partly due to Covid-19 after business activities were reduced since March when the first coronavirus case was confirmed in Kenya.

Measures put in place to curb the spread such as night curfew, cessation of movement and stay at home directives disrupted business.

The 2018-19 financial year was no better as the revenue was Sh10.17 billion,  Sh5 billion off the target of Sh15.29 billion.

This notwithstanding, the Kenya Revenue Authority consistently improved revenue collection on a month-to-month basis.

KRA was officially appointed the principal county revenue collector on March 16 as part of the agreement in the Deed of Transfer of functions of the county to the National Government.

The taxman was tasked with improving the county revenue collection. Since the advent of devolution, City Hall has hardly collected Sh10 billion annually

Concerned with the poor revenue collection, the County Assembly Finance, Budget and Appropriation Committee said the executive has to revise its estimates and priorities in the County Fiscal Strategy Paper.

“The coming financial year will be a challenge for us. We have to reconsider a lot of things at the County Fiscal Strategy Paper level due to the coronavirus pandemic and also our revenue collections are low. This means we shall have to cut our priorities by half,” Kariobangi South MCA Robert Mbatia said.

The executive had in March warned that it could be forced to slash its 2020-21 budget by at least Sh5.6 billion due to low internal revenue collection.

Edited by EKibii