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Only six out of the 47 counties generate over Sh1 billion annually in own-source revenue, raising fears that the devolved units could be over-relying on the exchequer for survival. 

A report by Commission for Revenue Allocation (CRA), shows that Nairobi, Mombasa, Kiambu, Narok, Nakuru and Machakos are the only counties that collect an average of Sh1 billion from own sources per year. 

The remaining counties collect below Sh600 million annually from own sources except Kisumu, Uasin Gishu and Nyeri which collect between Sh601 and Sh900 million per year.

Of the 47 counties, only Samburu has surpassed its potential as per the CRA estimations while the rest perform below their potential in terms of own-source revenue generation. Own-source revenue refers to money generated by the counties themselves, mostly from taxes and charges. 

Business permit

They include rates, single business permits, parking fees, building permits, fees from billboards and advertisements and profits from county investments. It, however, does not include monies such as equitable share, conditional grants, loans, and donor funds. 

“All counties are raising less than 40 per cent of their estimated revenue potential except counties with game parks. Management of game parks appears to advantage counties assigned the function,” the report reads in part.

“Nairobi County, although raising the highest own-source revenue has lackadaisically grown by less than one per cent after six years and is able to finance 40 per cent of its budget,” it adds.

The report says that half of the county governments are collecting above 20 per cent but below 42 per cent of their potential while another 17 county governments are collecting less than 20 per cent of their estimated revenue potential. All counties in the former North Eastern Province and most of the counties in Northern Kenya are collecting below Sh200 million annually. On average, counties finance 7.7 per cent of their budget using own source revenue, according to the report.

It also shows that 15 counties have doubled their revenue in the last six years with Embu and Garissa tripling theirs. 

Unlike the other 44 counties, which registered growth, Busia, Wajir, Homa Bay and Mandera registered declining revenue collection over the six-year period.

The CRA report which covers the six-year period beginning 2013/2014, further indicates that urban and peri-urban counties have more diverse economies enabling them collect property taxes, single business permit, and vehicle parking, which constitute 40 per cent of counties revenue.

Most counties lack diversified sources of own revenue with the main streams being business permits, property-related revenue and vehicle parking fees.

The report adds that counties with diverse sources of revenue, for instance Nairobi and Mombasa, collect more revenue than those that are less diversified.

Game parks, as a source of revenue, also confer an advantage to the counties in which they are found.

While agricultural cess is a significant stream of revenue for the predominantly agricultural economies, it contributes only three per cent of the total county revenue. 

Economic  size

 “It should be noted that agriculture-dominated counties under-perform. Elgeyo-Marakwet, Bomet and Nyandarua agriculture contributes more than 60 per cent to their economies. For these counties despite their relatively larger economic size they are collecting below Sh28 for every 10,000 increase in the economic size,” says the report.

Agriculture is the mainstay sector for counties that collect own source revenue of less than Sh200 million annually.