Controller of Budget alarmed by low revenue collections

The Controller of Budget Agnes Odhiambo has raised the alarm over low revenue collection by the counties.

Ms Odhiambo warned the emerging trend risks stalling development projects.

She said the 47 devolved units have yet again failed to meet their annual revenue collection target by more than 50 per cent.

Instead of collecting Sh41.37 billion in the first nine months of the 2015/16 financial year, counties collected Sh25.89 billion. This, she said, represents 46.9 per cent of the Sh55.16 billion annual target by the counties.

In her Third Quarter Report, Ms Odhiambo warned that the under performance by counties in generating revenue exposed a majority of the counties to acute budget deficits, thus threatening to stall implementation of development projects. And the office now wants the county governments to automate revenue collection as well as put in place reinforcement mechanisms to achieve their set revenue targets.

“The office, therefore, recommends that counties should devise strategies to enhance revenue collection such as automation and reinforcement mechanisms,” reads the report.

The revenue collected by the counties this year is, however, slightly above the money generated in the same period during 2014/2015 fiscal year.

“In the reporting period, local revenue collection in the counties amounted to Sh25.89 billion against a set annual target of Sh55.16 billion. This performance represented 46.9 per cent of the target, which is a slightly improvement from 44.0 per cent in a similar period in the 2014/2015 financial year,” says the report.

Odhiambo noted: “The low performance on local revenue, if not addressed, might lead to non-implementation of planned activities for FY 2015/16.”

The report further indicates that Nairobi County generated the highest absolute collection at Sh9.62 billion, representing 54.9 per cent of its annual target.

Kiambu and Mombasa counties followed by collecting Sh1.82 billion and Sh1.58 billion respectively. Mandera, Lamu and Tana River counties recorded the lowest local revenue at Sh59.65 billion, Sh45.18 billion and Sh18.26 billion.

Kisumu County, which is one of the country’s major towns, managed to collect Sh776.45 million, representing 41.5 per cent of its annual target.

Nairobi City County last year launched an online payment system known as eJijipay pay for parking.

However, the Controller of Budget warned the county government against spending some of the locally raised revenue at source.

She said this practice is against the Public Finance Management Act, 2012, which requires that revenue raised on behalf of a county government should be deposited into the County Revenue Fund (CRF).