State’s non-tax revenue doubles to Sh25 billion

Cabinet Secretary Ukur Yatani at Treasury building in Nairobi. [Wilberforce Okwiri] 

Kenya’s income from sources other than tax more than doubled in the first quarter of this financial year (FY) compared to a similar period in the FY2018/2019.

This is as tax revenue fell 14.6 per cent, attributed to the hit by the Covid-19 pandemic that plunged Kenya into recession levels last seen 60 years ago.

The increase in non-tax revenue by Sh12.7 billion to stand at Sh24.9 billion as of end of September highlights government’s pressure to rely on other revenue sources such as income from parastatals, ministerial appropriations in aid, property income and income from lending and on-lending.

Official data from the National Treasury shows that total tax revenue stood at Sh317.67 billion at the end of September, compared to Sh372.3 billion in quarter one of 2019/2020, a Sh54.7 billion decline.

Last year, Treasury directed State firms to hand over surplus cash in their bank accounts in a move intended to reduce cost of borrowing for government.

Parastatals are on the top list of buyers of government papers - meaning the State ends up borrowing its own money. 

In the period under review, the government raised Sh200 billion from the domestic market compared to Sh144 billion in the previous financial year, and Sh10 billion from external loans and grants. 

Revenue drop

Overall, total government revenue fell by Sh35.4 billion to stand at Sh602 billion compared to Sh637.4 billion realised in the first quarter of the 2019/2020 financial year. 

The government spent Sh144.69 billion on loan repayments and Sh20.4 billion on pensions and gratuities, with exchequer issues accounting for a total of Sh166.9 billion. 

The State spent a further Sh222.8 billion on recurrent expenditure, with the Interior  Ministry and Citizen Services taking up the bulk of spending at Sh30 billion, Sh3.4 billion higher than a similar period last year. 

The additional cost is said to be for managing and enforcing Covid-19 measures, including the mounting of barricades and enforcement of curfews among others.

The Ministry of Defence was also among the top spenders accounting for Sh24.7 billion. The Ministry of Education and the Teachers’ Service Commission spent Sh19.7 billion and Sh67.45 billion respectively. 

The State’s intelligence service was also a top spender, accounting for Sh9.4 billion. The Ministry of Health which provided critical services in mitigating against the spread of the virus spent a total of Sh9.2 billion. In regard to development expenditure, the government spent a total of Sh79.8 billion with the bulk of the funds spent by the State departments of Infrastructure and Transport which used Sh22.8 billion.

Treasury and the State department of Planning spent Sh8.4 billion while the Ministry of Water and Sanitation used Sh6.4 billion. The education ministry spent Sh4 billion through the State Departments of Vocational Training, University Education and Early Learning and Basic Education, while the Ministry of Health spent Sh2.9 billion.

County governments received a total of Sh26.2 billion during the three months.