Fears counties’ plans may stall as revenue falls short

Most counties are lagging behind in revenue collection. Only a handful are on course to meet targets set for the 2018/19 financial year going by the collections they had as of March this year.

This puts at risk the socio-economic projects the counties set out to deliver in the course of the just ended financial year.

The devolved units had as of March 31 collected just half of the amount they expected to collect in the 2018/19 financial year, meaning they needed to achieve the unlikely task of collecting the remaining half in the three months between April and June.

According to a new report by the Office of the Controller of Budget, the counties had collected Sh28.92 billion in the course of the nine months to March, translating to 55.5 per cent of the Sh52.8 billion that they had said they would collect during the financial year.

The low revenue mobilisation is despite the counties imposing different levies on the residents and businesses, some of which have been termed punitive and making doing business within counties difficult.

“During the reporting period, the county governments generated a total of Sh28.92 billion, which was 55.4 per cent of the annual target of Sh52.18 billion... it is below the expected prorated target of 75 per cent in the first nine months of the year,” said the COB report tracking budget implementation by county governments in the first nine months of the 2018/19 financial year.

“Underperformance in own-source revenue collection implies that some planned activities may not be implemented in the financial year due to lack of funds.”

“Section 107 of the PFM Act, 2012 outlines fiscal responsibility principles, which among others require county governments to prepare balanced budgets in the sense that expenditure estimates shall not exceed total revenue. Therefore, under-performance in own revenue performance may imply that County Government Budgets had hidden deficits.”

The own-source of revenues for counties include property tax, business licences, vehicle parking fees, liquor licences, outdoor advertising fees and building permits.

Meru County

Majority of the counties posted a below average performance in revenue collection, with the major underperformers that missed the 75 per cent mark by miles include Meru that managed just Sh361 million, which is 29.4 per cent of the Sh1.2 billion it hoped to collect in 2017.

Others at the bottom of the rank are Kisii (27.4 per cent) and Wajir (22.9 per cent). Nairobi County, also missed the mark, with its revenue collection at 53 per cent over the period despite having generated the highest amount of own-source revenue in nominal terms at Sh8.24 billion.

The report cites Narok, Migori and Isiolo Counties as among those that are on course to meeting their revenue collection targets for the financial year. As of March, Narok County, which is the host county to the world famous Masai Mara, had collected Sh2.66 billion, which is 93 per cent of the Sh2.86 billion it had targeted to collect during the year.

Migori had collected 86 per cent while Isiolo had reached 84 per cent.

Other Counties that had reached the recommended proportion of 75 per cent are Elgeyo Marakwet (81 per cent) and Vihiga (79 per cent).

The Kenya Revenue Authority (KRA) has previously said it is ready to work with the counties in assisting them collect taxes.