Counties generate paltry 10% revenue yet demand more

Counties generate less than 10 per cent of their budgeted revenue even as agitate for more allocation of funds from the national government, a new report shows.

The  Consortium of Researchers on Governance (CORG) report points out that county governments raised paltry Sh22.32 billion (9.54 per cent) of the Sh232.8 billion budgeted total revenue for the first nine months of the 2017/2018 financial year.

The amount was marginally better at Sh28.92 billion (9.55 per cent) of the Sh302 budgeted total revenue in a similar period in the 2018-2019 financial year.

“County governments are responsible for raising their own source of revenue. Therefore, we analysed counties revenue data from July 2017 to March 2019 to ascertain performance,” CORG’s team leader Charles Mc’Olonde says.

The report comes just after senators agreed to the Sh316.5 billion allocation as proposed by the National Assembly, ending a three-month standoff that had plunged the counties into a cash crisis.

The National Assembly had insisted on Sh316 billion allocation while the Senate demanded Sh335 billion allocation for the devolved units.

Mc’Olonde said on Monday while releasing the findings of the report in a Nairobi hotel that Kakamega recorded the highest increase in revenue collection in the period under review.

The county doubled the collection from Sh284.09 million to Sh569.88 million  – a 100.6 per cent increase.

Tana River followed with Sh32.21 million from Sh16.19 million, a 98.9 per cent rise and Laikipia, a 94.9 per cent increase from Sh293.85 million to Sh572.82 million.

Embu was fourth from Sh253.75 million to Sh480 million (89. 3 per cent). Tharaka Nithi sealed the top five positions at Sh129.61 million from Sh70.18 million (84.7 per cent).

Tharaka Nithi Governor Muthomi Njuki said the county will improve on revenue collection to reduce its reliance on the national government.

“We intend to increase revenue generation every financial year, not necessarily by increasing taxes but by ensuring the collection is streamlined and investments are encouraged,” he told the Star.

Homa Bay was at the tail-end with revenue generation reduced from Sh72.04 million to Sh58.27 million (-19.1 per cent). Wajir county also recorded a decrease from Sh55.06 million to Sh45.74 million (-16.9 per cent) while Machakos was third last with a decrease from Sh633.21 million to Sh527.44 million (-16.7 per cent).

Nairobi was 39th in the ranking with Sh8.2 billion collected, a 7.9 per cent increase from Sh7.6 billion.

The CORG study says county revenue collection can be improved via internal bench-marking without overtaxing the masses.

The objective of the study was to measure the growth of own-source revenue, its relation to annual revenue targets and gross county product.

CORG brings together corporate and individual researchers, policy and data analysts and communication experts.

The study was self-funded and lasted from July 5 to September 9, 2019, to among others, assess county own source revenue performance and accountability in the management of public finance.

The study sought to provide an enlightened discourse in light of the Division of Revenue Bill debacle and the ongoing agitation for more allocation of equitable shareable revenue to county governments.

Counties generally get revenue from an equitable share of revenue raised nationally, conditional grants from the national government, conditional grants from development partners, cash balance carried forward from the previous financial year and own sources.

It was guided by the Statistical (Amendment) Act 2019-First Schedule Section 4 and complied with the code of ethics, practice and standards of ESOMAR.

The key research question was how much revenue do county governments generate on their own? And the percentage of total revenue.

The research also sought to find out the other factors considered when setting annual own source revenue targets.

Official data relating to revenue was collected from County Governments Budget Implementation Review Reports (Office of the Controller of Budget), summary report of the Auditor General for county governments 2017/2018, recommendation on the basis for Equitable Sharing of Revenue between national and county (Commission on Revenue Allocation -20182019), Economic Survey 2019 (Kenya National Bureau of Statistics) and Annual Development Plans and County Budgets.