County governments are beginning to loosen their dependence
on the National Treasury as improved local revenue collection signals a
possible turning point for devolution.
Fresh data from the Controller of Budget shows counties
collected Sh53.88 billion in own-source revenue in the last nine months, up
from Sh45.91 billion collected over a similar period last year.
While the amount still represents only 54 per cent of the
annual target of Sh100.13 billion, observers say the steady growth demonstrates
that counties are gradually unlocking their own economic potential.
The move could shield them from the perennial cash
crises caused by delayed exchequer releases.
The gains come at a time when many devolved units have
struggled to pay salaries, clear pending bills and fund development projects due
to erratic disbursements from the Treasury.
County leaders and financial experts now argue that
strengthening own-source revenue could fundamentally change the fortunes of
devolution.
"For a long time, counties have relied almost
exclusively on the National Treasury for funding, yet many of them have
enormous untapped revenue potential," Kitui Senator Enoch Wambua said.
Nandi Senator Samson Cherargei said counties that
generate more revenue will be able to finance projects without waiting for
delayed allocations from Nairobi
"The competition we are now seeing among counties is
healthy because it creates more financial headroom for development,” he said.
Article 209(3) and (4) of the Constitution empowers county
governments to impose property rates, entertainment taxes and other taxes
authorised by Parliament, besides charging fees for services they provide.
Despite these constitutional powers, most counties continue
to depend almost entirely on equitable share allocations from the national
government, leaving them vulnerable whenever the Treasury delays disbursements.
The Controller of Budget's latest County Governments Budget
Implementation Review Report indicates that counties are increasingly making
deliberate efforts to widen their revenue base through digitisation, improved
enforcement, expansion of valuation rolls and better collection systems.
One of the biggest benefits of enhanced local revenue,
experts say, is that counties would significantly reduce their overreliance on
national transfers, giving governors greater financial certainty when planning
development programmes.
The increased collections could also help counties comply
with legal spending limits on personnel emoluments.
More than 41 counties have breached the legal threshold
requiring personnel emoluments to remain below 35 per cent of total revenue.
Higher own-source revenue would expand the overall revenue
envelope, reduce the wage bill-to-revenue ratio, and create additional
resources for capital investment.
The report further shows that revenue collection is no
longer confined to Kenya's largest urban counties.
Several counties traditionally viewed as rural economies
have crossed the Sh1 billion mark in local revenue collection during the nine
months, highlighting the untapped potential outside major cities.
Counties including Homa Bay, Makueni, Bungoma, Kakamega,
Kilifi, Kisii, Meru and Nyeri all generated more than Sh1 billion in own-source
revenue, reflecting significant improvements in local revenue mobilisation.
Kisumu, which for years struggled with modest collections,
has also joined the billion-shilling league, signalling the impact of reforms
introduced by county administrations.
The report also highlights impressive performances by
smaller counties.
Samburu emerged as the country's best performer after
collecting Sh389.82 million against a target of Sh282.37 million, translating
to a remarkable 138 per cent performance.
Garissa exceeded its annual target by achieving 109 per
cent, while Kirinyaga attained 102 per cent.
Their performance demonstrates that county size does not
necessarily determine revenue success.
Instead, efficient administration, proper enforcement and
strategic exploitation of local economic activities can substantially improve
collections.
Tourism continues to provide a major boost for counties such
as Samburu and Narok, while hospital-generated revenue under Facility
Improvement Financing has significantly boosted collections in counties
including Garissa and Kirinyaga.
Among the traditional revenue giants, Nairobi retained its
position as the country's largest own-source revenue collector after raising
Sh10.79 billion between July and March.
The capital city accounted for nearly one-fifth of all
county-generated revenue nationally.
Mombasa followed with Sh3.91 billion, narrowly ahead of
Kiambu's Sh3.9 billion.
Narok collected Sh3.44 billion, Nakuru raised Sh2.82 billion
while Machakos generated Sh2.62 billion.
Although these counties collected the highest amounts,
several still fell short of their ambitious annual targets.
Nairobi achieved only 51 per cent of its Sh21.18 billion
target, while Kiambu attained just 39 per cent.
Mombasa posted one of the strongest performances among the
top revenue earners after achieving 77 per cent of its target.
The Controller of Budget notes that counties generated
Sh30.43 billion from ordinary revenue sources and an additional Sh23.45 billion
from hospitals through Facility Improvement Financing.
However, not all counties are recording progress.
Turkana posted the weakest performance nationally after
collecting only Sh162.92 million against a target of Sh1.2 billion, translating
to just 14 per cent achievement.
Siaya achieved only 20 per cent of its annual target, while
Kisumu and Kisii attained 31 per cent and 37 per cent, respectively.
The mixed performance underscores the wide disparities in
counties' capacity to mobilise local revenue.
Even so, the overall national improvement is being viewed as
an encouraging sign that devolution can gradually become more financially
sustainable.
