Nairobi revenue drops by Sh80 million in first quarter

City Hall revenue has been declining since 2014

In Summary

• In July last year, the Commission of Revenue Allocation said Nairobi has the potential to collect Sh77 billion, but only managed Sh10.7 billion.

• KRA has taken over Nairobi's own-source revenue collection under the Deed of Transfer that shifted key county functions to the national government. 

Nairobi's Central Business District.
CBD: Nairobi's Central Business District.

Nairobi county's own source revenue decreased by Sh80 million in the first quarter of the financial year.

KRA, which collects county revenue, collected Sh1.46 billion.

The decrease compares with Sh1.54 billion collected during the same period last year.

The Controller of Budget report on Q1 county spending said:“In the first quarter, the county generated a total Sh1.46 billion as own-source revenue. [It was] a decrease of  5.3 per cent compared to Sh1.54 billion  during a similar period in the first quarter of last year. It was 7.4 per cent of the annual target."

City Hall has been losing local revenue since 2o14 as local revenue streams have underperformed over the years, missing targets by big margins.

This decline has led to a budget financing shortfall, hence, the frequent cash flow challenges and accumulation of pending bills.

KRA was appointed the principal county revenue collector in March 2020, as part of the Deed of Transfer functions of the county to the national government.

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

Since KRA took over, it has been on the spot for failing to reverse the trend of declining collections.

A group of MCAS expressed concern over the "competency" of the taxman, claiming KRA is not up to the task.

In July last year, the Commission of Revenue Allocation said Nairobi has the potential of collecting Sh77 billion annually, but only managed Sh10.7 billion.

Budget chairman Robert Mbatia agreed Nairobi could collect Sh77 billion by introducing a new revenue system and revising the valuation role.

However, the taxman improved Nairobi’s collection by Sh1.2 billion for the financial year ending June 30,2021, despite the Covid-19 pandemic . It collected Sh9.7 billion.

In the first full year with KRA in charge, revenue collection improved compared to Sh8.5 billion in FY 2019-20.

NMS, KRA and City Hall are now counting on a new revenue system to increase collections.

The Nairobi Revenue System is said to be a tamper-proof, durable system that will give residents reliable access to services for years.

From last month, Nairobi residents started paying for county services using a new digital platform to replace the Local Authority Integrated Financial Management System (Laifoms), which has been in use since 2014.

All new applications must be processed through NRS to access parking services, pay county houses rents, obtain business processes, pay for fire services, payment of market fees, land rates, public health certification, development control, social service and other permits.

(Edited by V. Graham)