The 8th devolution conference will be held between 15th to 19th August 2023 in Eldoret, Uasin Gishu county under the theme “10 years of devolution: The present and the future” and under a sub-theme “driving transformation from the local level: county Governments as the centre of economic development”. It is now accepted in Kenya that counties are the next frontiers of development and their effective performance is central to the realization of the Kenya vision 2030 goals of a middle-income country providing a high quality of life for its citizens in a clean and secure environment. One of the challenges that faces the counties and which much has been said and continues to elicit mixed reactions is the issue of generation of own source revenues (OSR).
Own Source Revenue (OSR) is anchored in the 2010 Constitution, the 2012 Public Finance Management Act, the County Government Act of 2012 and the Urban Areas and Cities Act, 2011. Own source revenues are an important source of money through which counties can generate additional capital and use the same to fund their operations. According to the United Nations Development Programme (UNDP), own source revenue comes from imposition of property tax, entertainment taxes, other taxes authorized by an Act of Parliament, charges for services and levies that can be attained by leveraging on natural resource bases among others.
Counties have been assigned fourteen functions as per schedule IV part II of the Constitution, and funding the same requires additional funding beyond the national government allocations. The Commission for Revenue Allocation (CRA) concluded that between the financial year of 2013/2014 and 2018/2019, counties raised between 9 to 12 percent of own sources of revenue to finance their activities. This implies that there is low own source revenue generation by counties. This situation needs to change because the national government that forms the bedrock of support through annual allocation faces a myriad of challenges like prevailing financial crisis, high food prices, inflation, debt and disruption of global supply chains nationally and globally.
The challenge of low own source of revenue is further exacerbated by the tendency by counties to undertake and project unrealistic revenue forecasting. According to CRA, over the past five years for example, the revenue collected by devolved units in Kenya ranged between 49 to 75 percent of the projected revenue collections. This contrast sharply with the best practice where public entities should be able to collect between 85 to 115 percent of the projected revenue collections. Dr Giti is an urban management, public – private partnerships (PPP) and environment specialist. mutegigiti@gmail.com , @danielgiti
Dr. Daniel Mutegi Giti 