Alarm as counties register drop in revenue collection

Counties lost nearly Sh2 billion in projected revenue collection in the three months preceding the October 2017 repeat presidential polls, the Controller of Budget has said.

According to a report by Ms Agnes Odhiambo's office, only four counties improved their collections between July and September 2017 compared to a similar period in 2016.

Those that grew their revenue were Makueni (Sh22.5 million), Laikipia (Sh21 million), Baringo (Sh600,000) and Samburu (Sh300,000).

The Controller of Budget has questioned the sharp decline in revenue collection, from Sh7 billion to Sh5 billion, during this period, despite automation of collection systems.

Revenue fall

Forty two counties performed poorly in revenue collection. Overall, locally collected revenue in counties fell by more than a 25 per cent

Bomet and Nandi led in the slump, with Bomet collecting a paltry Sh16 million, compared to Sh100 million the previous year.

The period under review covered a time when intense political activity took centre stage across the country, with business activity disrupted in several counties

Locally collected revenue in counties fell below the expected performance of 25 per cent of the annual target, recording only a dismal 8.8 per cent.

According to Ms Odhiambo, the drop is likely to have adverse effects on county operations.

The dip in Bomet came amid a rise in expenditure on salaries by about 11 per cent. The county spent about Sh560 million on wages and another Sh32 million on domestic and foreign travel.

Foreign travel

Among the counties that generated the least revenue were Tharaka Nithi (Sh6.14 million), Lamu (Sh5.45 million), and Tana River (Sh3.95 million)

While Nairobi generated the highest amount of revenue at Sh1.4 billion, the county registered a drop of about 27 per cent. During a similar period during the 2016/2017 financial year, Nairobi raised about Sh2.2 billion.

The Controller of Budget said under-performance during this financial year was affecting budget implementation.

On August 23, last year, a month after the financial year began, Nairobi Governor Mike Sonko conducted a raid at City Hall as he sought to seal loopholes that he said were affecting revenue collection.

Sonko claimed that there were cartels denying the city the necessary revenue to finance its operations.

Another top revenue generator, Narok County, managed to raise Sh692.38 million.

Coast region

In the coast region, Mombasa county generated the highest amount of revenue at Sh307 million. Still, this was a decrease of about 12.3 per cent compared to the Sh351.34 million it generated in a similar period in 2016.

The county ranked third nationally in revenue collection, after making significant progress to address issues bedevilling budget implementation.

In western Kenya, all the 10 counties registered a drop in revenue collection, with Migori registering a dip of about 71 per cent.

Kisumu, Homa Bay, Migori, Nyamira, Siaya, Vihiga, Kakamega, Bungoma, Busia, and Kisii did not undertake any development projects during the period under review.

The region witnessed protests for three months against the Jubilee administration and the Independent Electoral and Boundaries Commission (IEBC). This affected businesses and revenue collection.

Counties in the larger Nyanza region recorded between 60 and 70 per cent drop in revenue collection between July and September 2017.

The statistics indicate that revenue collection in most of the counties has been fluctuating since the 2014/2015 financial year.

Migori and Homa Bay topped the list, registering a decline of 71 per cent and 60 per cent respectively.

In the first quarter of the 2016/2017 financial year, Migori collected Sh93 million. In the first quarter of the current financial year, it only managed to collect Sh27 million.

Homa Bay raised only Sh15 million compared to the Sh40 million that was collected the previous year.

The statistics indicated that revenue collection at the county has been irregular since the 2014/2015 financial year. It only performed well during the 2015/2016 financial year when it collected Sh39 million.

Ms Odhiambo, however, noted that the county had made progress in sealing loopholes that had affected revenue collection in the past.

Some progress

“Some of the progress that was made included the development and commissioning of an automated revenue collection system which is expected to enhance local revenue collection,” said Odhiambo.

Homa Bay is ranked third nationally in expenditure on domestic and foreign travel after Narok and Kiambu counties, after spending about Sh53 million on trips.

Last year, the Controller of Budget also placed the county on the spot for irregular expenditure of revenue, pointing out that some of it was spent at the point of collection, with some departments failing to file receipts.

Kisumu, which bore the brunt of the political stalemate, has also recorded a steady decrease in revenue collection despite automating its systems under former governor Jack Ranguma.

The county only raised Sh123 million compared to the Sh211 million generated in a similar period in 2016.

Several sectors in the county were affected by political activity as protesters barricaded roads, hampering business activities. The hotel industry reporting losses in revenue of up to Sh700 million.

Wage bill

In Gusii region, both Nyamira and Kisii counties recorded a decline in revenue collection even as their wage bill continued to skyrocket.

In Nyamira, revenue collection declined by 44.3 per cent from Sh26.66 million in the first quarter of the 2016/17 financial year to Sh14.86 million between July and September 2017.

The county's wage bill increased by about 52 per cent from Sh372 million to Sh570 million. It did not report any expenditure on development activities during the three months.

Kisii County recorded the lowest figure in revenue collection since its inception, collecting Sh36.5 million compared to the Sh73 million that was raised during the first quarter of the 2016/2017 financial year.

But four counties - Laikipia, Baringo, Makueni, and Samburu - defied all odds to register an increase in locally collected revenue.

Makueni was the best performer after registering an increase of 51 per cent followed by Laikipia, which recorded an increase of 23 per cent.

Makueni collected Sh66.27 million compared to Sh43.74 million generated in a similar period in 2016.

Tabling the report, Odhiambo urged all counties to develop and implement strategies to enhance revenue collection