The Commission on Revenue Allocation (CRA) has advised county governments to roll out integrated county revenue management systems, including digitising of land and property records.
Mr Humphrey Wattanga, the commission’s vice-chairperson, said the incoming commissioners and the Council of Governors need to take up the idea to improve county revenue collection and management.
“... digitising of land and property records, and updating valuation rolls also remain critical and integral components in enabling counties to optimise their revenue potential,” said Mr Wattanga.
He explained that counties should use resources prudently and improve on their own-source revenue collection.
“The CRA has further collaborated with the National Treasury and the Capital Markets Authority to enhance the capacity of rated counties to gain access to development funding through the capital market. To this end, in June, Laikipia County received Cabinet and Parliamentary approval to issue a Sh1.16 billion infrastructure bond,” said Mr Wattanga.
Mr Wattanga stated that from 2016, the commission oversaw the increase in the total revenue collected by the national government from Sh1.1 trillion in the 2016/2017 financial year to Sh2.03 trillion in 2021/2022.
In the same period, county governments received more allocations from the national government – from Sh302 billion in 2017/2018 to the Sh407 billion expected to be disbursed in the next financial year.
CRA noted that since the beginning of devolution, counties have been doing poorly at collecting their own-source revenue. Compared to a total of Sh3 trillion coming from the equitable share, counties have only raised Sh306 billion.
To nudge the counties towards finacial prudence, the CRA partnered with the World Bank to roll out a County Creditworthiness Initiative aimed at enhancing revenue collection and strengthening financial management. Laikipia, Bungoma, Makueni, Kisumu, Mombasa and Nyandarua counties have since benefited.
The devolved units have also failed to reduce their wage bill to the maximum 35 percent of the budget and increase their development expenditure to at least 30 per cent. This has largely been due to county leaders inheriting excess staff members from their predecessors and going on their own hiring sprees.
“There is need to re-look this area and pursue some meaningful differentiation in the profiling of counties and even in the definition of development expenditure. We believe that if counties optimised their revenue potential, they can achieve their financial goals, however aggressive,” said Mr Wattanga.
On the Equalisation Fund, Mr Wattanga noted that it “was to exist and achieve its mandate in 20 years’ time from the promulgation of the constitution. A dozen years have passed. The need to act with immediacy and urgency cannot be gained.”
