Siaya County recorded the lowest performance in own-source revenue collection in the 2024/2025 financial year, a new report by the Controller of Budget (CoB) Margaret Nyakang’o shows.
The county led by Governor James Orengo registered 47 percent of its local revenue collection, making it the worst-performing county in Own-Source Revenue (OSR) collection for the year ending June 30, 2024.
According to the COB’s report, Siaya County generated a total of Sh436.68 million in the 2024/2025 financial year, with over half of it comprising the hospital’s Facility Improvement Fund (FIF) at 67 percent.
The highest revenue stream was single business permits which generated Sh90.6 million, with other revenue sources drawing in Sh55.8 million (8 percent), and market fees Sh34.69 million (5 percent).
Bus park of Sh15.74 million and advertisement charges (Sh13.94) contributed two percent of the revenue respectively, while parking and kiosk stalls fees managed one percent each.
Despite the low performance, the county’s local revenue in the 2024/2025 budget was an increase of two percent compared to the same period in the 2023/2024 financial year when its revenue collection totalled Sh427.97.
“At the beginning of the financial year, the County had outstanding revenue arrears of Sh363 million,” explained the CoB in the report.
“This amount decreased to Sh290 million as of June 30, 2025, indicating that the County had reduced its arrears by Sh73 million.”
In the 2024/2025, Siaya County’s approved budget was Sh10.94 billion, which comprised allocations for development Sh4.87 billion (45 percent) and recurrent programmes Sh6.07 billion (55 percent).
According to the CoB, the budget estimates exceeded the 2023/2024 budget by Sh1.19 billion comprising Sh3.85 billion (development and Sh5.91 billion (recurrent), of which 10 percent (Sh1.04 billion) was meant to be financed locally through the county’s OSR.
“The own-source revenue comprised Sh643 million (62 percent) deposited into the County Revenue Fund and Sh400 million (38 percent) as Appropriations-in-Aid (A-I-A) spent at source,” explained the CoB.
Nairobi County, at 66 percent, was also among the nine counties that registered subpar local revenue performance of below 70 percent in the 2024/2025 financial year.
Further, despite reporting Sh1.34 billion collections, the county failed to set an annual target for FIF.
Others are Kajiado (55 percent), Machakos (56 percent), Isiolo (58 percent), Taita Taveta (64 percent), Bungoma, Kisumu and Kakamega at 65 percent respectively.
Significant underperformance in 2024/2025 financial year OSR was highlighted in the report as one of the key impediments to effective budget execution across county governments where in overall, counties missed their Sh87.67 billion target by 23 percent.
Underperformance in OSR collection, the CoB explains,” indicates that county governments could not implement all planned activities due to budget deficits.”
To address the issue, Ms Nyakang’o advises county governments to develop revenue enhancement strategies and set realistic, achievable targets for the current financial year 2025/2026 to avoid accumulating pending bills.
She warned that counties’ financial sustainability hangs in the balance, particularly from FIF overreliance, which accounted for over half of OSR for many counties, coupled with high revenue arrears amounting to Sh124.95 billion, exacerbating fiscal pressures.
At the same time, the analyses showed that 12 counties successfully achieved or even exceeded 100 percent of their annual revenue targets.
While Kisii County led the list of the best-performing counties in OSR gathering Sh982.09 (178 percent) as FIF, it did not have an annual target for the fund.
It was followed by Tana River (133 percent), Mandera and Wajir (123 percent), Kirinyaga (122 percent), Garissa (120 percent), Vihiga (117 percent), and Samburu at 110 percent.
Meru County also posted notable performances at 106 percent, Elgeyo-Marakwet (104 percent), Homa Bay (101 percent), and Turkana, which achieved 100 percent of its target.
However, the CoB attributed this performance to the myriad of factors, key among them being instances of under-budgeting or total absence of the FIF budget.
“Revamped revenue streams, such as gypsum extraction in Tana River and tourism revenue from the Samburu National Reserve, contributed substantially to County revenues,” the report read.
“Furthermore, the increased automation of revenue collection processes and improvement in local infrastructure have also bolstered revenue performance.”
The CoB encouraged counties that posted improvement to set higher revenue targets across the performing revenue streams for the current financial year 2025/26.
This is in line with the World Bank and the Commission on Revenue Allocation June 2022 study on Own Source Revenue Potential and Tax Gap Study of County governments.
Article 209(3) of the Constitution permits county governments to impose property rates, entertainment taxes, and any other taxes authorised by an Act of Parliament to augment the other resources available for budget implementation.
The CoB raised concerns that county governments have continued to face challenges in local revenue collection since devolution began, even though OSR is a critical source of counties' revenue to finance their budgets.
Further, the poor OSR performance has been identified as a significant contributor to the accumulation of pending bills.
The report showed that pending bills soared to Sh176.80 billion, with over half being under three years old.
On the other hand, development expenditures remained alarmingly low, as 23 out of the 47 counties failed to meet the 30 percent threshold.
On revenue arrears, county governments reported arrears amounting to Sh1.57 trillion as of July 1, 2025 which had significantly reduced to Sh124.95 billion by June 30, 2025.
This was mainly because of the downward reconciliation of Nairobi’s revenue arrears by Sh1.45 trillion, explained Ms Nyakang’o.
These outstanding arrears comprised Ordinary OSR arrears Sh112.14 billion (90 percent), FIF arrears related to SHA/SHIF and defunct NHIF claims Sh12.47 billion (10 percent and Sh331.3 (less than one percent) in other revenue arrears, as of July 1, 2025.
As of June 30, 2025, the outstanding arrears included ordinary OSR arrears of Sh112.14 billion (90 percent), FIF arrears (related to SHA/SHIF and defunct NHIF claims) Sh12.47 billion (10 percent), and other revenue arrears Sh331.3 (less than one percent).
At least seven counties contributed to about Sh22 billion of the total development spending by all 47 devolved units in the 2024/2025 financial year.
According to the County Governments Implementation Review Report for the 2024/2025 financial year by Ms Nyakang'o, Nandi, Trans Nzoia, Narok, Meru, Kericho, Mandera and Kirinyaga counties achieved the highest absorption rates of development expenditure.
The latest report shows Nandi had a 90 percent development absorption rate, Trans Nzoia (77 percent), Narok (74 percent), Meru (73 percent), as well as Kericho, Mandera and Kirinyaga, all at 72 percent each.
"During the period under review, all county governments spent Sh123.76 billion on development activities, representing an absorption rate of 57 percent of the annual development budget of Sh218.99 billion," reads part of the report.
It reveals that Nandi spent Sh3.3 billion on development out of a Sh3.6 billion development budget, Trans Nzoia spent Sh3.4 billion out of a development budget of Sh4.3 billion.
Narok spent Sh4 billion out of Sh 5.3 set aside for development during the year, whereas Meru spent Sh2.8 billion, Kericho(Sh2.6 billion), Mandera(Sh4billion) and Kirinyaga Sh 2.1 billion, closing the list of the top spenders in development during the period.
In contrast ,the counties with the lowest development absorption rates were Kisii (40 percent), Elgeyo Marakwet (39 percent),Kiambu and Nyamira (37 percent) and Kisumu and Nairobi at 29 percent.
Governor Johnson Sakaja’s administration spent only Sh4 billion on development out of the Sh14.2 billion development budget, while Governor Simba Arati spent Sh2.4 billion out of Sh6.1 billion development budget.
“The total expenditure by county governments in the 2024/2025 financial year was Sh470.74billion, representing an overall absorption rate of 78 per cent of the total annual county governments’ budget of Sh601.69 billion,” further reads the report.
A review of cumulative expenditure by economic classification showed that Sh220.64 billion was spent on personnel emoluments, Sh126.34 billion on operations and maintenance, and Sh123.76 billion on development. However, during the period, 12 counties reached or exceeded 100 percent of their annual revenue targets.
These were Kisii (178 percent) ,Tana River (133), Mandera and Wajir at 123, Kirinyaga at 122, Garissa at 120, Vihiga (117 ) and Samburu at 110 percent.
The CoB now recommends that to improve budget implementation, county governments should ensure that expenditure on personnel emoluments is contained at sustainable levels and in compliance with Regulation 25 (1) (b) of the Public Finance Management (County Governments) Regulations, 2015.
The Nation established that most of the governors have been held back from initiating meaningful development projects by high wage bills gobbling more than half of their counties' annual budgets, unpaid debts- some dating back to the defunct local authorities and stalled projects they inherited from their predecessors.
Majority of the 47 counties enlisted the services of audit committees to scrutinise the pending bills, before they embarked on making payments. As of June 30, 2025, counties had reported outstanding bills of Sh176.90billion.
The CoB and the auditor-general in their latest reports have flagged several other county governments for using huge amounts of money in payment of salaries.
