The 47 county governments have been in existence since after the 2013 general elections. To support their ability to provide services, the Constitution came up with supporting mechanisms.
The Constitution provides the sources of county governments’ revenue in Kenya.
When it comes to local revenue, Article 209 of the Constitution identifies two main sources of county revenue. They are property rates and entertainment taxes (and a number of service charges such as parking fees and single business license fees).
Any additional revenue sources for county governments can only occur through an Act of Parliament.
The Constitution and the Public Finance Management Act provide some mechanisms for reporting on county governments’ expenditure. The county governments should provide quarterly budget expenditure reports, which many of them have failed to provide. This is in clear violation of the law.
The other mechanism is through the Office of the Controller of Budget in Kenya.
The Controller of Budget should prepare quarterly budget implementation reports for the 47 county governments. The reports present an overall review of revenue and expenditure performance by the 47 county governments.
The law requires the Controller of Budget to table the reports in Parliament and then publicize them.
County revenue performance
The Annual County Governments Budget Implementation Report FY 2016/17 (2 downloads) shows the 47 county governments collected KSh32.52 billion in total revenue for the financial year (FY) 2016/2017. This was 56.4 per cent of the annual local revenue target of KSh57.66 billion. (The report covers the period from 1st July 2016 to 30th June 2017).
However, this was a decline in performance of 7.1 per cent compared to what was raised in the 2015/16 financial year. In 2015/16, the 47 county governments collected KSh35.02 billion in local revenue or about 69.3 per cent of the annual revenue target for that year.
In the FY 2016/17, the highest collection of local revenue for all the counties came from Nairobi City County. The county collected KSh10.93 billion, followed by Mombasa at KSh3.17 billion, then Kiambu at KSh2.03 billion.
The Counties that collected the least amount of local revenue were Wajir, Mandera and Tana River at KSh75.91 million, KSh55.84 million and KSh27.42 million respectively.
For more about the revenue performance of the 47 counties, see how the county governments spent your money in the FY 2016/17.
Which counties met their revenue targets in the FY 2016/17?
Only two counties met their revenue targets in the financial year 2016/17. Not only that, both counties surpassed their revenue targets by 107 per cent and 104 per cent respectively. The counties are Marsabit and Turkana.
Kisii, Wajir, Garissa, and Mandera recorded the lowest performance in local revenue collection at 37.5 per cent, 33 per cent, 23.4 per cent, and 21 per cent respectively.
Turkana County saw an improvement in local revenue collection from KSh134.02 million against a target of KSh200 million in FY 2015/16 to KSh186.32 million against a target of KSh180 million in FY 2016/17. In FY 2014/15, the county collected KSh126.52 million.
Marsabit County collected KSh128.73 million against a target of KSh120 million in the FY 2016/17. Compared to FY 2015/16, this was an improvement. The county collected KSh111.94 million in 2015/16 against the annual local revenue target of KSh130 million. In FY 2014/15, the county collected KSh99.1 million in local revenue.
The table below shows how the 47 counties performed in terms of revenue targets (what they intended to collect against how much the collected).
Performance in terms of local revenue collection for the 47 counties
Nevertheless, what accounts for the overall revenue change in the FY 2016/17 as compared to FY 2015/16 for the 47 counties?
For one, we already indicated that the revenue collection for the 47 counties fell cumulatively. It went from KSh35.02 billion in 2015/16 to KSh32.52 billion in 2016/17.
Another major factor towards this change is that the counties set unrealistic revenue collection targets. Many of them were unable to meet these revenue targets.
In terms of revenue growth, the actual revenue collection for 28 counties went down in the Financial Year 2016/17 as compared to 2015/16 (See the table below). Taita Taveta County did not record any actual revenue growth.
Only 18 counties improved on their actual revenue collection in FY 2016/17 compared to FY 2015/16.
Some counties reduced their revenue targets
For a further 21 counties, there is an overall drop in their revenue targets in 2016/17 compared to 2015/16. This could have contributed to the overall drop in total county revenue in FY 2016/17 compared to FY 2015/16.
(Thanks to John Kinuthia, IBP Kenya, for assisting with the analysis of this article).