15 counties double revenue after six years of devolution

Friday, May 28th, 2021 00:00 |
From left: CRA chair Jane Kiringai, Senate Speaker Kenneth Lusaka and Deputy Resident representative Mandisa Mashologu engage during the launch of counties Own Source Revenue Report and Training Guideline in Nairobi, yesterday. PD/ALICE MBURU

A total of 15 counties more than doubled their revenue collection targets since the advent of devolution more than six years ago, a report by the Commission of Revenue Allocation reveals.

Singled out for commendation were Embu and Garissa counties, which surpassed their revenue collection by more than 200 per cent.

Although the devolved units are raising less own source revenue (OSR) far below their potential, the two counties grew their collection by 274 and 202 per cent respectively.

The report titled ‘Counties’ Efforts Towards Revenue Mobilisation, A Stock of the Last Six Years, shows some counties dramatically increased their revenue collections up to more than 200 per cent, while others have been collecting less than one per cent over in the 2013/14-2018/19 financial years.

Tana River, West Pokot, Lamu, Kirinyaga, Mombasa, Nandi, Kiambu, Elgeyo-Marakwet, Laikipia, Taita-Taveta, Marsabit, Makueni, Kakamega, Tharaka-Nithi, and Nyandarua doubled their revenue collection in the last six years. 

In contrast, five counties including Busia, Wajir, Homa Bay, Nairobi and Mandera recorded declining revenue growth by less than one per cent over the same period. 

Considerable concern

“The key highlight issue of concern is the five counties that have seen a reduction or stagnation in OSR performance compared to 2013/14 revenue collection. Of considerable concern is Nairobi City County with the highest OSR that falls in this category,” said CRS chairperson Jane Kiringai.

Report also shows Nairobi county, while raising the highest OSR and having the highest estimated potential of Sh77 billion per annum, has grown by less than one per cent over the same period. 

The report established that 41 counties were raising less than 40 per cent of their estimated revenue potential, while six collect between 50-88 per cent of the estimated revenue potential.

“Based on a study on counties’ OSR potential undertaken by the National Treasury in 2018, the report established that most devolved units raised less than 40 per cent of their estimated revenue potential except counties with game reserves,” reads the report launched in Nairobi yesterday. 

The report showed that Nairobi has an estimated potential to collect Sh77 billion, Kiambu Sh12.8 billion, Mombasa Sh10 billion, Kisumu Sh7.1 billion, Nakuru Sh6.9 billion, Kajiado Sh6.7 billion, Machakos Sh6.1 billion and Kakamega Sh2.9 billion, respectively, annually.

Meru has a potential of collecting up to Sh2.6 billion, Uasin Gishu Sh2.54 billion, Kilifi Sh2.5 billion, Narok Sh2.1 billion, Makueni Sh2.07 billion and Nyeri Sh2.06 billion.

However, in the 2018-19 financial year, in OSR, Nairobi collected Sh10.03 billion, Mombasa Sh3.7 billion, Narok Sh2.9 billion, Nakuru Sh2.8 billion, Kiambu Sh2.7 billion, Machakos Sh2.2 billion and Uasin Gishu Sh918 million.

Economic activity

In the same period under review, Kakamega collected Sh896 million, Kajiado Sh883 million, Kisumu Sh842 million, Nyeri Sh837 million and Laikipia Sh815 million respectively. 

On the other hand, Wajir, Tana River, Lamu, Mandera, Homa Bay, Garissa, collected Sh60 million, Sh63 million, Sh71 million, Sh89 million, Sh93 million and Sh108 million respectively on OSR.

The report further shows that predominantly agricultural counties, cess collection explains the low revenue performance of such counties.

Hospital fees contribute 11 per cent to the overall county own source revenue while natural resources contribute six per cent.

The revenue commission, in its first report on OSR, shows that a majority of devolved units that collect low revenue have agriculture as their main economic activity and collects below Sh200 million annually on average.

“Counties that have more diverse economic activities collect more own sources. Revenue management of game by devolved units confer a comparative advantage to county own source revenue,” said Kiringai.

On average annually, Nairobi collects Sh10 billion, followed by Mombasa Sh2. 8 billion, Nakuru Sh2. 1 billion, Kiambu Sh2 billion and Narok Sh1.9 billion on Actual OSR collection 2013/14-2018/19 financial years.

Of the 47 counties, Samburu has the least potential on OSR at Sh164 million, West Pokot Sh164.9 million, Tana River Sh173 million, Wajir Sh230.4 million and Isiolo Sh245 million respectively.  Narok county, for instance, collects more than Sh1 billion annually largely from revenues collected from the Maasai Mara game reserve. 

“Management of game reserves appears to confer certain advantages to counties in terms of OSR collection,” reads the report. 

Also worth noting is that Samburu had surpassed its estimated potential while Isiolo, Laikipia and Baringo are among the counties that collect more than 40 per cent of their estimated revenue potential. 

“All these counties are collecting a substantial amount of their OSR from game reserves,” the report.

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