Agriculture remains the cash cow for counties
By Frankline Sunday | June 1st 2021
Since independence, agriculture has broadly been considered the key pillar of the Kenyan economy, with the World Bank noting that one in two Kenyans work in the sector.
The industry contributes at least 22 per cent of the country’s gross domestic product (GDP).
In the past two decades, Kenya’s position as a regional hub in global trade has led to diversification, with sectors such as finance, technology, real estate and retail emerging as key economic drivers in job and wealth creation.
However, a new report by the Commission on Revenue Allocation (CRA) indicates that Kenya’s economy remains tightly bound to the agriculture sector, which has remained a lifesaver for millions of Kenyans.
According to the report, agriculture accounted for more than 40 per cent of locally-generated revenue in 34 out of 47 counties between 2013 and 2019. Only Nairobi and Mombasa had the sector’s revenue contribution at below 20 per cent.
In rural counties such as Elgeyo Marakwet and Nyandarua, agriculture accounted for up to 80 per cent of the revenue collected over the past six years.
This translated to an average of Sh1.8 billion collected in both counties from agricultural, forestry and fishing activities between 2013 and 2019, according to the CRA data.
“Agriculture is the mainstay sector for counties that collect less than Sh200 million annually in own-source revenue,” the report said.
“Agriculture contributes more than 60 per cent of the gross county product for Bomet and Elgeyo Marakwet.”
According to CRA, these counties generate hundreds of millions each year from economic activities related to agriculture, including land rates on agricultural property as well as levies on produce and livestock.
Similarly, heavy reliance on agriculture was recorded in arid counties and those with much smaller landmasses fit for arable farming.
These include Wajir, Turkana, Lamu and Tana River where agriculture accounted for more than 50 per cent of all the revenue collected between 2013 and 2019 - translating to Sh945 million in the six years under review.
The numbers paint a picture of a resilient sector that remains the backbone of the economy despite significant challenges recorded over the past two decades.
The agricultural index is ranked third at 10 per cent in the counties’ equitable revenue share allocation formula.
However, annual budgetary allocation to key functions such as livestock and crop production, value chain support and irrigation has been low.
In the 2020-21 financial year, Treasury has allocated Sh54.2 billion to food security, which includes Sh29 billion for crop development and research and Sh7.7 billion for fisheries, aquaculture and blue economy.
This is lower than the Sh59 billion allocated in the 2019/2020 financial year.
According to Route to Food Foundation, a lobby that advocates for equitable resource allocation to food production, Kenya’s agricultural sector needs Sh97.7 billion in budgetary allocation annually.
CRA data indicates some counties are underperforming in agricultural output despite having vast arable land and being traditionally Kenya’s breadbasket.
Counties such as Uasin Gishu, Trans Nzoia and Kirinyaga collected about Sh261 million, Sh127 million and Sh133 million respectively from agriculture in the past six years.
These counties have the potential to collect Sh891 million, Sh467 million and Sh831 million respectively each year from their agricultural sectors.
CRA Commissioner Irene Asienga says sources of local revenue collection are limited and diversification is key.
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