Revenue Sharing Formula A Wakeup Call For Counties To Be Innovative In Service Delivery

Counties will finally know the amount of funding that they will receive from the National Government, of the total available 316 billion in the 2020-2021 FY. In contention is how the proposed formula creates losers of huge revenue sources and how it benefits the traditionally well off regions. However, I find this panic mode of counties baffling since this is our 7^th year since the onset of devolution in 2013. It would be expected that by this time, counties should have been so well managed that they no longer see the revenues allocated from the national point as a big issue, after all, we have been on a pandemic and our revenue sources have taken a hit from such an occurrence. We have seen leaders from all political persuasions calling for their regions to be treated in a way that makes them not lose what they have been accustomed to receiving from the national coffers.

What the stalemate on the proposed revenue sharing formula should teach us is that we need ingenuous ways of growing county own sources of revenue and utilizing the same for effective and increased service delivery to the citizenry. Counties are supposed to supplement what they get from the national government with own sources of revenue, but it has been observed that they have been underperforming on this front. They have been collecting an average of 63.7% of all targeted revenues for the last 6 years. Counties have experienced poor revenue mobilization and leakages of what is collected, use of outdated property valuation rolls, where for example, Nairobi last updated its valuation roll in 1982, there is lack of comprehensive databases of businesses and properties to tax, according to the Development Initiatives, 2018. It is important that counties leverage on their business permits, parking fees, land rates and rent fees, cess and administrative fees from hospitals and other services that citizens seek.

Counties must improve the business environment and allow for the formation of businesses from which to levy taxes from. They must improve infrastructure to incentivize traders to promptly pay their taxes and rates. At one time, Lagos state governor used Public Private Partnerships (PPPs) to develop massive infrastructure and created enabling business environment, which saw citizens compete in paying their taxes and rates and which saw the overreliance on government financing decrease.