Nairobi to set up revenue authority to collect levies

Nairobi county government is setting up a revenue agency that will be tasked with collecting all rates, fees and charges.

The Nairobi City County Revenue Administration Authority will be headed by a board, while the management will be under a chief executive officer, who will be the principal collector of revenue.

The authority will breath life to the Revenue Administration Act, which was passed by the county assembly in 2019 and assented to in 2021.

Laikipia has set similar agencies and is among the counties that record high revenue collection.

Last year in August, the annual revenue collection for the Laikipia County Revenue Board  surpassed the Sh900 million mark, defying the difficult economic environment. This was unprecedented. 

The board recorded a monumental collection of Sh903 million for the financial year 2021-22 surpassing its previous year revenue collection by Sh63 million.

Moving to a similar structure, Nairobi Governor Johnson Sakaja is set to implement the Nairobi City County Revenue Administration Authority.

The Nairobi City County Revenue Administration Bill was initiated by Kariobangi South MCA Robert Mbatia and assented to by ex-governor Ann Kananu on September 14, 2021.

It has, however, never been implemented mainly due to the deed of transfer from March 2020 to November last year that put KRA in charge of revenue.

With his administration now in place, Governor Sakaja believes Nairobi has the capability to collect its own revenue.

"Growth is inevitable and we had to move from the Nairobi Revenue System, which was brought by KRA, because Nairobi now has its own capacity to have its own revenue," he said.

The Act is aimed at sealing loopholes and make revenue collection moves on an upward scale.

It seeks to solve all inadequacies and capacity challenges that have led to low revenue collection since devolution.

The Act further suggests the establishment of the County Revenue Authority  would be headed by a County Revenue Administrator, competitively recruited by the Public Service Board.

The administrator shall hold office for five years and will be eligible for reappointment for a further and final term of five years.

There will also be a board of directors, headed by a non-executive chairperson appointed by the governor with the approval of the county assembly, which shall serve as the governing council of the revenue authority.

The board would also consist of a finance chief officer, four other people appointed by the executive, a member from special interest groups and a county revenue administrator who shall be an ex-officio member.

The board members’ term shall be three years but subject to renewal once.

According to the Act, the County Revenue Authority would then register and maintain revenue payers in the county.

Consequently, all revenue payers would be assigned a revenue identification number, while the County Revenue Authority will move to adopt an integrated collection system for the purposes of ensuring effective and efficient administration of public money.

All funds after being received by revenue collectors, officers and staff in the CRA, will be deposited into the County Revenue Fund.

Already, City Hall has a CRF account at Co-operative Bank which holds all the revenue collected in the capital before being taken to the Central Bank of Kenya.

The CRA would then assess revenue payable to the county where applicable, advising the finance executive on all matters relating to the administration and enforcement of revenue laws.

However, to achieve the revenue target, the CRA would also be getting directions of the  County Executive for Finance.

In addition, to ensure CRA is held accountable and meets its targets, the act proposes that it gives quarterly reports on its operations and annual reports on the collection of revenue and other matters related to that.

This year 2022-23 , Nairobi aims to collect Sh18.2 billion own source revenue. This is part of the Sh38.3 billion county budget.

Demonstrating the county is destined for improved collection, Nairobi's own-source revenue collection has picked up by Sh673 million in the last three months.

Data from the Office of the governor on Tuesday revealed that not only did the overall revenue collection improve but the monthly records surpassed that which was collected in a similar moment in the Financial year 2021-22.

Nairobi City County’s own source revenue has been erratic and unpredictable for the past years, with a low of Sh8.97 billion collected in the FY 2021-22.

According to Sakaja, this negative trend seems to have been tamed with a monthly comparison portraying an increase in the months of January to March 2023, compared to the same period in 2022.  

Monthly own source revenue collection data reveals that Sh1.42 billion, Sh1.3 billion and Sh1.78  billion was collected for the months of January, February and March 2023 respectively.

This shows a sustained increase compared to the year 2022 where Sh1.39 billion was collected for January, Sh0.99 billion for February and Sh1.45 billion in March 2022.

The county has been falling short of its revenue target since it came into existence in 2013 despite the digitisation of 136 of its revenue streams.

This has been blamed on unreliable rates, low collection from single business permits and inefficient collection of parking fees.

The highest amount ever collected was Sh11.71 billion in 2015-16 which was still short of the Sh15.3 billion target.

The lowest was collected in 2019-20 at  Sh8.5 billion which was half the targeted Sh17.31 billion. 

-Edited by SKanyara