Counties lose Sh47 billion in local revenue

Counties lost about Sh47 billion in projected local revenue in the first quarter of the 2020/2021 financial year, a report by the Controller of Budget reveals.

The report released by Controller of Budget Margaret Nyakang’o mirrors the devastating effects Covid-19 had on the economy when the government introduced restrictions to curb spread of the virus.

It indicates that local revenue dropped significantly between July and September 2020, with counties collecting Sh5.8 billion against a target of Sh53 billion.

The national government had projected the devolved units would generate about Sh53 billion during the period to help complement the Sh316.5 billion equitable share disbursed to counties.

According to Ms Nyakang’o, counties struggled to meet their revenue targets during the period under review, thereby impeding execution of their budgets.

Nairobi County, which has been rocked with controversies, recorded the highest amount of locally generated revenue at Sh1.54 billion.

The development mirrors the gaping hole the pandemic left on the economy as businesses and residents struggled to cope with the containment measures.

Dubbed “County Governments Budget Implementation Review Report for the first quarter 2020/2021”, it shows some Sh69.84 billion was available for counties to use during the period under review.

Some counties recorded as low as below Sh10 million in revenue during the first quarter of the financial year, with Nandi recording a dismal Sh4.5 million against a target of Sh405.4 million.

Only three counties defied the challenges to record high proportions of percentages with Tana River, Kirinyaga and Migori recording 26.2 per cent, 23 per cent and 20.6 per cent respectively.

“During the reporting period, county governments generated Sh5.85 billion, which was 11 per cent of the annual target of Sh53.02 billion,” said Nyakang’o.

The counties that recorded the lowest collections against the annual target included Nandi (Sh4.5 million), Samburu (Sh8.1 million) and Homa Bay (Sh15.1 million).

The report shows seven counties did not hit the Sh20 million mark in revenue collections, heaping blame on Covid-19 for the low income.

Besides low generation of local revenue, counties are also on the spot over failure to absorb their budgets and implement development projects.

Although several counties are still dotted with stalled and abandoned projects, some dating back to 2013/2014 financial year, the report indicates that absorption of development budget is still low.

The development budget for the financial year had been capped at Sh159.3 billion but within the first quarter, counties spent a dismal Sh2.3 billion. According to CoB office, during the period under review, some 20 counties did not report any expenditure on development projects.

This is likely to open a fresh debate on whether counties need more funding, with the report bringing to fore their failure to utilise development funds.

Absorption rate, a vital tool in determining efficiency and performance of counties on use of funds, indicates that majority of counties absorbed less than 15 per cent of their budgets in the first three months of 2020/2021 fiscal year.

Although the law also stipulates that counties should allocate about 35 per cent of their budget for growth, others violated this rule with Nairobi County only allocating 20 per cent of its budget for development.

CoB office urged counties to execute their development budgets to benefit citizens.

“We recommend that counties prioritise implementation of development projects to improve the standard of living for their citizens,” said Nyakang’o.