Governor Barasa urges Counties to Diversify Revenue Sources

Kakamega Governor Fernandes Barasa addressing the press after a meeting between governors and Commission for Revenue Allocation in Nairobi on June 20, 2023. [Wesley Koech, Standard]

Kakamega Governor Fernandes Barasa has urged counties to diversify revenue sources to complement the equitable share of revenue by the National Government.

Governor Barasa noted that funds allocated to counties for the past years have not been adequate to meet the cost of performing functions.

He said this has necessitated the need to find innovative and creative ways for their own sources of funding.

"To enhance fiscal decentralization, there is need for diversification of revenue sources in a manner that offers a long-term solution, which is why we are looking forward to this initiative," Barasa said.

He was speaking on Tuesday during a meeting between Governors and the Commission for Revenue Allocation (CRA) held in Nairobi.

"County governments have been reliant on the conventional sources of revenue such as equitable share, conditional and unconditional grants and revenue from own sources to finance their operations," said Barasa.

Barasa is also the Chair of the Finance and Economic Planning committee in the Council of Governors.

The county boss added that over the past decade of devolution, counties have demonstrated good governance and effective management of public funds.

He however said that leading source of revenues has faced consistent delays hampering funding for development as well as operations at the grassroots.

"There is need for development of a long-term, sustainable, and affordable financing solution and identification of opportunities for County Governments to raise funds through capital markets to meet their development needs," said Barasa.

Barasa argued that diversification of revenue will help achieve a long-term solution to the challenges affecting counties and will enhance fiscal decentralisation.

He added that the initiative will help in collective debate to sort the possible channels that the county may engage in to raise the funds.

"County Creditworthiness Initiative which gives us an opportunity to chart a way forward on how to assist our County Governments access financing through the capital market for purposes of infrastructural development and service delivery," said Barasa.

Among issues discussed by Barasa is developing a long-term, sustainable, and affordable financing solution and identifying opportunities for County Governments to raise funds through capital markets to meet their development needs.

He said that providing assistance on technical know-how to the county governments will ease the process of accessing funds to develop infrastructure and development needs.

Barasa proposed the Documentation of learning points to help in sharing practices, ideas and knowledge as well as Peer-to-peer learning initiatives with the pilot Counties to be followed by the government

CRA's new initiative on the creditworthiness initiative seeks to get counties rated for purposes of credit financing to fund critical services in the devolved units.

"If borrowing is well managed it can unlock the potential of devolved governance in Kenya," said James Katule, CRA chief executive.