The Council of Governors (CoG), supported by the Commission on Revenue Allocation (CRA) has rejected a proposal to deduct counties equitable share from Ksh. 400 billion to 380 billion. Stakeholders and counties note three things about the conflict over the allocation. First, the national government has a myriad of issues to deal with, including the debt crisis. Secondly, the national government like other governments is facing the fiscal pressure that has engulfed governments through many global financial crises, starting with the 33 BC in the Roman empire, during the reign of Tiberius caused by the shift in government policy, series of confiscations and early recalls of loans, leading to reduced money supply, cash/credit crunch and crash of real estate’s prices. The conclusion is that if counties overly rely on the equitable share, they will face budget deficits, pending bills, service inadequacies, and hindered overall development.
Two things that should be the main areas of discussion and of great concern to counties including the National Assembly and the Senate and other professionals and experts are, one, they have to generate more OSR because according to Article 209 and 210 of the Constitution of Kenya 2010, they have the authority to impose levies, property rates, entertainment charges, and other taxes or fees as authorized by an Act of Parliament. This is in addition to the funds received through the Equitable Share of Revenue raised nationally and donors/conditional grants. The discussion should centre on exploring ways of generating their OSR revenue to support operations and fund local development initiatives through taxation, fees, and other charges for services provided to citizens. Multiple studies conducted by the World Bank, National Treasury, and the Commission on Revenue Allocation (CRA) have revealed that there exists untapped revenue sources and potential in the counties. For example, the 2018 National Treasury study showed that nearly 90 percent of counties had not fully utilized their potential for OSR, and were collecting less than 40 percent of their estimated revenue potential.
Further, a CRA 2022 report suggested that if optimal fiscal instruments were used at their full potential, counties would be able to generate Ksh. 260.6 billion OSR. The discussions should focus on ways of enacting and implementing effective policies, collection systems, accountability and monitoring of the process to unlock this untapped revenue potential, which allocates more resources to development and to be less dependent on the equitable share of revenue. Two: counties need effective mechanisms to engage and facilitate the private sector to partner and invest in counties to solve the many challenges they face. Dr. Giti is an urban management, public – private partnerships (PPP) and environment specialist. mutegigiti@gmail.com , @danielgiti
Dr. Daniel Mutegi Giti 