Nairobi misses revenue target by over Sh8bn as financial year ends
What you need to know:
- This comes as KRA netted Sh1.87 billion in four months since taking charge of tax collection in the city county.
- Revenue performance in Nairobi has been below par since Governor Mike Sonko assumed leadership.
- Before KRA took over revenue collection in Nairobi, the county government had only collected slightly over Sh6 billion.
City Hall has missed its annual own-source revenue target by over Sh8 billion, posting the worst ever revenue collection since advent of devolution in 2013.
The county government posted Sh8.36 billion in the financial year ending June 30, 2020 against a target of Sh17.05 billion despite introducing a raft of new taxes and levies.
This comes as Kenya Revenue Authority (KRA) netted Sh1.87 billion in four months since taking charge of tax collection in the city county.
Before KRA took over revenue collection in Nairobi, the county government had only collected slightly over Sh6 billion.
FOUR MONTHS REVENUE
As at January 31, 2020, City Hall had only collected Sh4.7 billion against a target of Sh9.9 billion. This means that only Sh3.06 billion has been collected in the four months between February and May.
In the first quarter, City Hall missed its quarter by Sh1.7 billion, collecting only Sh1.5 billion against a target of Sh3.2 billion. In the second quarter of October, November and December, the county collected Sh1.6 billion.
The taxman netted Sh495.4 million in March, the month it was appointed as the principal agent for overall revenue collection by Nairobi City County government.
UPWARD TRAJECTORY
This then dipped to Sh368.8 million in April before increasing to Sh412.1 million the following month, carrying the trajectory to the last month of the financial year where it recorded Sh588.8 million.
“The global Covid-19 pandemic greatly hampered revenue collection and enhancement initiatives due to business closures and lockdowns across the country.
“Despite this, consistently, KRA improved revenue collection from month to month and was able to grow revenue by 33 percent in June, 2020 compared to June 2019,” read the report.
The dismal revenue performance coincided with City Hall’s severing ties with JamboPay, which had been collecting revenue for the county government since 2014, in June last year and contracting National Bank of Kenya and Noveta to collect the money.
CUT PRIORITIES
Last month, former Nairobi County Assembly Budget and Appropriations chairman Robert Mbatia warned that the county government could be forced to cut its priorities for the current financial year by half.
This is after he revealed that the county was set to record its lowest ever own-source revenue in a financial year with the collection to be lower than Sh8.5 billion, pointing out that the county government had only realised Sh7.76 billion at the end of May.
Revenue performance in Nairobi has been below par since Governor Mike Sonko assumed leadership of the county government.
In the financial year ended June 30, 2019, Nairobi County government recorded Sh10.25 billion in internal revenue against a target of Sh15.5 billion.
This represented a paltry Sh148 million increase from the previous year when the county government recorded Sh10.1 billion in internal revenue against a target of Sh15.2 billion in the first financial year 2017/2018 of Governor Sonko’s regime.
The performance pales when compared to the previous regime which, according to consolidated annual reports for counties by the Controller of Budget, collected a total of Sh45.24 billion between the financial year 2013/2014 and the financial year 2016/2017 at an average of Sh11.3 billion per year with the financial year ended June 30, 2017 topping with Sh12 billion collected.
