Controller of Budget Margaret Nyakang'o.
The Controller of Budget has faulted county governments for failure to diversify their revenue streams amid perennial underperformance in collections and heavy reliance on the National Treasury for cash.
Controller of Budget Margaret Nyakang’o cited natural resource cess, quarry royalties, regional tourism, fish landing sites, mining and solid waste management as some of the streams that remain untapped.
Counties largely rely on a few streams to drive the bulk of their own source revenue collections. These include parking fees, business permits, market rates and land rates. A lack of updated valuation rolls has dimmed prospects of growing collections from land rates.
Dismal collections of own source revenue has forced the 47 counties to rely heavily on the National Treasury for the equitable share of revenue, which they use to pay salaries and deliver critical services such as healthcare.
Counties raised Sh67.3 billion as own source revenue against a target of Sh87.67 billion in the financial year ended June 2025. Only 12 counties either met or exceeded their own source revenue targets in the period under review.
“Potential local levies on emerging economic activities, such as regional tourism, fish landing sites, mining, and solid waste management, remain underexploited. These counties include Turkana, Baringo and West Pokot,” Dr Nyakang’o says in her review on the budget performance by counties in the 2024/25 period.
Turkana County had targeted to raise Sh241 million as own source revenue for the year ended June 2025 but ended up collecting Sh171.14 million. Baringo County raised Sh250.26 million against a target of Sh380.1 million while West Pokot targeted to collect Sh97.2 million but raised Sh85.67 million in the period under review.
“CRA’s (Commission of Revenue Administration) studies highlight that most counties rely heavily on a few traditional revenue streams such as property rates, single business permits, market fees, and parking fees. At the same time, substantial opportunities in other areas remain largely untapped,” Dr Nyakang’o said.
The studies by CRA revealed that counties have the potential to collect Sh250 billion as own source revenue per year. This means that the devolved units are collecting slightly above a quarter of this.
Counties have on many occasions faced a near paralysis of key services such as healthcare and delayed payment of salaries whenever the National Treasury delays in disbursing equitable share to them.
For example, in the current financial year ending June 2026, several counties are yet to pay staff salaries for August due to delays in release of equitable share of revenue by the National Treasury.
Dr Nyakang’o says that lack of innovation, failure to embrace modern revenue administration methods and outdated valuation rolls as key hurdles, hampering counties from growing their own source revenue collections.
Treasury has over the years unsuccessfully sought to compel counties to automate their revenue mobilisation streams or tap the services of Kenya Revenue Authority to help them grow their own source revenue collections.
