Revenue leakages attributed to weak enforcement and controls have reduced counties to ‘beggars’, Controller of Budget Margaret Nyakang’o has said.
Nyakang’o said low automation and unrealistic targets have made the devolved units entirely depend on the exchequer for survival.
“Since 2013, the counties’ source revenue has only contributed to eight per cent of their total budgets, with 92 per cent being plugged on the releases from the National Treasury,” she said.
In documents tabled before the Senate’s ICT Committee, Nyakang’o said over the past 10 years, the counties locally raised Sh344.41 billion which was 63 per cent of the aggregate target of Sh542.23 billion.
“Such underperformance of revenue collection can be attributed to a lack of capacity to prepare credible revenue projections,” she said.
The Committee chaired by TransNzoia Senator Allan Chesang’ is inquiring into the effectiveness of the Integrated Financial Management Information System and other county revenue collection and management systems.
Chesang said automated revenue systems in counties need to be closely monitored as some are using systems incompatible with Ifmis.
“We would like to know the revenue collection systems used in counties and who are the vendors,” Vihiga Senator Godfrey Osotsi said.
In 2013-14, OSR contributed to 10.1 per cent of the county budgets while in 2014-15, the revenue accounted for 10.4 per cent of the budgets.
Contribution of OSR to the county budgets reduced to 9.5 percent in 2015-16 before slumping further to 8.1 per cent the following year.
In 2017-18, OSR accounted for 7.9per cent of county budgets before increasing slightly to 8.3 per cent in 2018-19.OSR contribution to the budgets stood at 7.2 per cent, 6.9 per cent,6.7 per cent and 7.3 per cent in 2019-20, 2020-21, 2021-22 and 2022-23 respectively.
In her submission, Nyakang’o said the lack of basic skills by revenue administrators in some counties and poor enforcement are denying the devolved units millions of shillings in revenue.
She said the skills and knowledge deficit come to bear in all revenue-related operations, but most dramatically, where collection and enforcement are concerned.
Most counties have failed to automate revenue collections and have decided to retain the manual system, which is prone to abuse.
“Generally, progress has been slow toward automation and integration. Even counties with more advanced ICT systems have not fully deployed them towards revenue collection and management,” Nyakang’o said.
According to Nyakang’o, some counties are also setting unrealistic revenue targets, which leave a huge hole in their budgets.
“Since revenue projections form part of counties’ expected resources, failure to realise the projects implies budget deficits,” she said.
The Controller of Budget said some county governments are operating multiple revenue collection accounts, a major cause of leakages including collection being spent at source – not banked in the revenue account.
Many counties have failed to disclose the number of commercial bank accounts they operate and the amounts deposited therein.
She said the lack of effective controls and audit mechanisms by the county governments has contributed to massive loss of revenue.
