Nairobi: The 47 County Governments in Kenya have been encouraged to fully exploit their potential for generating revenue, with the promise of raising Sh260 billion annually through their own sources, according to the Commission on Revenue Allocation (CRA).
According to Kenya News Agency, the CRA Vice Chairman, Commissioner Koitamet Ole Kina, highlighted that a 2022 study by the Commission revealed that counties could significantly boost their revenue through efficient collection of land rates, business permits, parking fees, and market charges. He urged county governments to undertake comprehensive revenue mapping to identify and enhance their revenue streams. Despite the significant potential for own source revenue, counties have been underperforming due to inefficient collection methods, weak enforcement, and unrealistic projections.
Ole Kina noted that the average national collection of Own Source Revenue (OSR) stands at only 65 percent of its potential. He emphasized the importance of focusing on domestic revenue mobilization to enhance service delivery, reducing dependence on national funding. Article 209 (3) of the Constitution empowers counties to impose taxes on property and entertainment, and Ole Kina urged counties to fully exploit these avenues.
Commissioner Ole Kina made these remarks during a validation workshop organized by the CRA to review the Draft County Own Source Revenue Guidelines. These guidelines aim to provide counties with a framework for better revenue management, including training programs and model policies to improve fiscal autonomy.
The Commissioner highlighted that counties such as Mombasa, Murang’a, Homa Bay, and Nakuru have shown significant improvements in OSR through effective policies, digitalization, and strategic enforcement. Nakuru County, for instance, has been lauded for its strides in digitalizing services, which has strengthened its financial stability. In the Financial Year 2023/24, Nakuru County generated Sh3.3 billion in OSR, accounting for 5.6 percent of the total revenue collected by all counties.
Ole Kina stressed the need for counties to become financially self-reliant, noting that equitable share transfers from the national government currently make up 80 percent of county budgets, while OSR comprises only 13 percent. He encouraged counties to adopt digital platforms and cashless payment systems to enhance revenue collection efficiency and reduce leakages.
The Commissioner also emphasized the importance of enforcement and compliance to minimize revenue losses and urged counties to set realistic revenue targets. He called for intergovernmental collaboration and encouraged counties to work closely with the National Treasury, CRA, KRA, and development partners to adopt best practices in revenue administration.
Nakuru County Director for Housing, Engineer Maruhi Maina, confirmed the successful adoption of the County Integrated Financial Operations Management System (CIFOMS) to streamline revenue collection processes. He noted that Governor Susan Kihika’s administration is committed to enforcing accountability and fiscal discipline to enhance service delivery and equitable economic development.
The Director mentioned ongoing efforts to implement policies that facilitate smooth business operations and enhance revenue generation, including the enactment of the Nakuru County Finance Act 2023 and the passing of the Valuation and Rating Bill by the County Assembly to support OSR enhancement.