A lack of laws on county revenue administration and streams is giving rogue officials multiple ways to steal from devolved units, a circular by the Ethics and Anti-Corruption Commission (EACC) has revealed.
The document shows that revenue collection in some counties is done by unauthorised staff and casual workers, which has a large impact on the effectiveness of revenue collection.
Titled ‘Advisory on Revenue Management in County Governments’ and signed by EACC chief executive Twalib Mbarak, the circular cites “generic loopholes in revenue management” in counties, saying there are numerous weak links in the fight against graft.
It is based on a corruption risk assessment that the EACC conducted in several counties. One of the findings was that the Public Financial Management (PFM) Act 2012 is greatly abused, with several of its provisions largely contravened.
“Varying fees and charges levied for various services without the backing of an Act of Parliament or county legislation as required by section of the PFM Act 2012,” says the anti-graft watchdog in the April 12 circular.
Signed into law by President Mwai Kibaki in 2012, the PFM Act dictates how the national and county governments raise and share revenue, and promotes transparency and accountability in the management of public finances.
The Act was meant to provide for the effective management of public finances by two governments and the oversight responsibility of Parliament and county assemblies. But the devolved unit, the report revealed, was not keen on it.
The EACC is concerned that counties are still using manual systems of revenue collection, which lead to leakage of earnings, non-receipting, issuance of unofficial revenue receipts and theft.
“Valuation rolls in most counties have either not been developed or are outdated contrary to the Valuation for Rating Act, cap 266,” says the document.
Teething challenges were expected with the devolution of services. But ever since they came into operation, over a decade ago, most of the counties were yet to develop or create databases of traders and businesses operating within the devolved units to guide revenue collection, the report shows.
The circular, sent to all county secretaries and chief officers, advises that failure to prepare reconciliation reports of daily revenue collections and banking is causing revenue losses.
The circular warns counties against using revenue collectors that are not easily identifiable, especially in open areas such as markets and car parks. It recommends that the revenue collectors should “put on official uniform or name tags”.
From the graft risk assessments, EACC found out that counties have weak revenue administration channels, which limit their ability to collect all taxes and provide services envisioned with the devolution.
“Revenue allocation in some of the devolved units is done by unauthorised staff,” reads the circular.
The purpose of the advisory, the commission said, was to bring to the counties’ attention the findings of the “malpractices” which it said were rampant in the administration of revenue management.
“The commission advises and cautions the county governments to develop and operationalise systems and procedures to streamline integrity and transparency in revenue management,” says the communication.
“This is to be done in line with relevant provisions of the Constitution, Public Finance Management Act 2012, and the Public Finance Management (County Governments) Regulations, 2015.”
The circular further notes: “Any such loopholes and incidents of malpractices should be addressed or dealt with expeditiously whenever they occur, in line with disciplinary administrative procedures, and where necessary, referred to the commission for investigation.”
