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Of long but blunt knives: Counties' revenue struggles.

Counties are complaining they do not get enough cash and the national government claims that they have given counties far much more.

The constitution of Kenya provides that at least 15 per cent of national revenue shall be allocated to county governments. This minimum threshold was deemed necessary to ensure that counties can function.

In the last five years, counties have on average received about 20 per cent of the national revenues. They have also received funds restricted for various services such as leasing of medical equipment, maternal health care and construction of select county headquarters.

The law provides counties to collect own revenues to fund their budgets. These sources include property taxes, entertainment, business permit and other licenses. Counties have performed poorly in this end. With 90 percent coming from the national government, it is difficult to talk of the independence of counties.

Counties performed dismally in mobilizing their own source revenues because of concern of no political will and leadership to ensure that revenue enhancement efforts are started, implemented and sustained. Such revenue measures are not always politically correct. This could well explain why 2017 recorded the highest decline of own source revenue falling from Sh35 billion in 2015/16 to Sh24 billion in 2016/17.

Second,lack of capacity to set, review and report on realistic targets. Various reports have confirmed that as opposed to proper forecasting, revenue targets are mostly the amount required to have a balanced budget on paper. Beyond setting targets is the lack of efficient systems of collecting and recording revenues and the information management. There have been complaints revenue is lost in loopholes in the collection and reconciliation process.

Thirdly is the culture of workers in counties and especially the revenue collection departments. Culture in any environment either drives or impedes any change efforts. Most of the officers were inherited from the defunct local authorities where they were underpaid and used the revenues to reward themselves. Did we retrain and reorient county revenue managers and officers? Do they see the new way of doing things and how it connects to their work? Are they just brick layers or do they themselves as building the county? Do they know targets and what is their part in achieving the same?

County heads and their revenue officers should pay attention to at least two things: They should diversify and develop their sources. People should be given a reason to live, do business and thus contribute to the revenues of the county. Are services being improved? Is doing business easier in that county than in neighbouring? It is unthinkable to imagine improvements in revenues when service delivery on basics like water, waste management, and security continue to be uncertain.

Secondly is the need for proper clarity on the baseline and hence projections of what can actually be achieved. Targets based on budget deficit gap continue to create poor results as they are unrealistic. A key source for counties is property rates.The targets need be realistic but also compelling to inspire action. Someone should held responsible for their achievement and rewarded or sanctioned for the same. A rethinking of the revenue raising strategy would be a beneficial use of new county administrations time. The process of developing the county integrated development plans and the county fiscal strategy papers for 2018/2019 provides this opportunity.

The writer works at the International Budget Partnership-Kenya. Opinions are his.
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Publication:The Star (Nairobi, Kenya)
Date:Mar 3, 2018
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