Counties perform dismally in local revenue collection

Controller of Budget Agnes Odhiambo. Photo: Boniface Okendo, Standard

Counties may have closed the 2016-2017 financial year with high pending bills after failing to collect even half of the local revenue targets in the first nine months of the year.

The latest report by the Controller of Budget shows that counties have a long way to go in reducing reliance on national government funds.

The budget implementation review report for the nine months to March 2017 says that only eight of the 47 counties managed to collect half of the full-year revenue targets set in the 2016-2017 budget.

County governments generated a total of Sh24.71 billion, which was 41.4 per cent of the Sh59.71 billion annual local revenue target for the devolved units.

At a similar period the previous financial year, counties were better off having collected Sh25.89 billion, or 46.9 per cent of the revenue target.

Controller of Budget Agnes Odhiambo has recommended that counties should develop and implement strategies to mobilise local revenue collection such as automation and enhanced enforcement.

“The under-performance in local revenue collection implies that some planned activities may not be implemented or, if implemented, counties will accumulate pending bills by close of the financial year,” she cautioned.

Many businesses have been cautious in dealing with counties because of delays in payments, which strain their cash flow management.

Of the 11 counties with targets above Sh1 billion, none had crossed the halfway mark by March. Nairobi, for example, had collected only Sh8.7 billion (44.5 per cent) of the Sh19.6 billion target after nine months.

This represented a decline of 9.4 per cent from Sh9.62 billion collected in a corresponding period of the 2015/16 financial year.

Revenue shortfalls

On the flipside, Bomet County led in the league of eight best local revenue collecting counties. Against a full-year target of Sh207.7 million, it collected Sh197.1 million, or 94.9 per cent of the target.

The Isaac Ruto-led county looks set to achieve the target with collections during the year showing that the least it bagged per quarter was Sh37.1 million, which came in the second quarter.

Marsabit County, which set out to collect Sh120 million for the year, had managed Sh89.8 million, or 74.8 per cent, by close of the third quarter.

Ms Odhiambo said despite the shortfalls in revenue, some counties’ expenditure exceeded the funds authorised by her office, including Nairobi, Isiolo, Wajir, Kilifi and Kiambu.

“This may be attributed to spending of local revenue at source, contrary to Section 109 of the Public Finance Management Act, 2012,” she said.

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