Tourism slump, insecurity dent Coast counties' revenue growth plans

Naivasha competes with Mombasa as a leading tourist destination in the wake of rampant insecurity at the Coast. [File, Standard]

All the six counties at the Coast seek to raise funds through land rates, royalties, and rolling out austerity measures to plug budget deficits.

An analysis of their fiscal policies paints a picture of counties struggling to raise own-source revenue due to a slump in the tourism sector and insecurity.

After a botched attempt to raise Sh2.3 billion by imposing a levy on cargo passing through the port, Mombasa County hopes that land rates would plug the budget deficit.

The Mombasa 2022-23 financial year budget amounts to 13.7 billion to be financed by the total exchequer issues of Sh8.7 billion and the county's own source revenue of sh5 billion.

In its fiscal policy paper, the county says the locally mobilised revenue will finance 37 per cent of the budget.

In March, Governor Abdulswamad Nassir's administration waived penalties to enable the defaulters to pay the arrears.

Mr Nassir also pushed the zoning of areas for license charges to offer relief to small traders to discourage defaulting.

In a recent interview, he said all county services were online in a move aimed to seal loopholes for corruption and facilitate trade.

The move appears to bore fruit in revenue collection in the first quarter of 2023 improving by Sh78,695,632 or five per cent compared to the similar period of 2022.

Reports indicate that the county collected about Sh1.6 billion in the first quarter of this year against about Sh1.5 billion in the same period in 2022.

"This performance will be underpinned by the ongoing reforms in revenue administration. The revenue directorate will institute stringent measures to expand the revenue base and curb revenue leakages," states the county's fiscal policy paper.

County Secretary Jeizan Faruk recently said the county has also reviewed the Land Valuation Roll. He said the county plans to increase the commercial, industrial property, residential, or agricultural property rates.

"This is very key because it is an initiative to increase the county government's revenue streams," he said.

Proponents defend the move saying it is aimed at reflecting the current property market valuation. Critics, however, say that an increase in the valuation of land could lead to a spike in rental prices.

"We have established a valuation court to hear all the concerns residents have about the new evaluation roll. This will increase revenue collection of land rates that will go into service delivery," said Faruk.

Recurrent expenditure

In the 2023-24 financial year, the total recurrent expenditure is estimated to be Sh8.6 billion, which is a reduction of Sh700 million in 2022-23.

Nassir said his 2023-24 budget is a "social budget" that will focus more on the welfare of the residents and workers.

"The budget will finance mwananchi-related projects, including the unveiling of Mombasa youth service, which will see youths undergo disciplined training before they are engaged and recruited.

"Other programmes include expanding the Mombasa yangu recruitment initiative, airlifting youths for employment abroad, skills mitaani recruitment programme, SME loans to women, NHIF comprehensive Cover, ECD feeding program, and school holidays motivational scheme among others," said Nassir in Changamwe during the disbursement of bursary cheques worth Sh63.7 million.

"Unlike in the past when the focus was to build hospitals we are now focusing on service delivery in the 27 facilities we now have. We will invest in human resources, but development will be there," Farouk added.

In Kilifi, Governor Gideon Munga'ro has also promised to focus on residents' welfare by investing in education and ICT, health, provision of ware, and solid management.

According to the county's fiscal policy paper, Munga'ro will also invest in social services, art and heritage, sports, and talent development.

He said he expects to increase source revalue not only from land rates but also from the mineral resources in the county.

"The Mining Act 2016 stipulates that revenue from mining should be shared; 70 percent national government, 30 percent for the county, and 10 per cent for the community.

"But since 2016, the national government is yet to release Sh950m royalty to Kilifi," said Mung'aro during a meeting with investors in July.

Double revenue

Kilifi plans to double its own-source revenue to Sh2. 5 billion from last year's Sh1.1 billion. The county has a budget of Sh12.1 billion.

In Taita Taveta, Governor Andrew Mwadime hopes the decision by President William Ruto to instruct Kenya Wildlife Services to share revenue collected from Tsavo with the county will help to bridge the shortfalls.

The county's own source revenue has been on a downward spiral. In 2023-24, the devolved unit has set a revenue target of Sh420 million.

"The county targets to raise revenue from licences, parking, mining, and royalties from the Tsavo National Park," said Mwadime recently.

In Lamu, the estimates for the fiscal year 2023-24 are Sh4.6 million. Its biggest revenue stream is from health centres, where it projects to raise Sh150 million, followed by land rates at Sh97.2 million.

Some of its main projects include the promotion of agro-processing and value addition, the provision of water, livestock extension services, and infrastructure projects.

Tana River's budget is estimated at Sh7.98 billion comprising of Sh6.5 million equitable share of the revenue from the national government, Sh283.5 million conditional grants, own source revenue of Sh87.8 million and Sh1 million balance brought forward from 2021-22.

"In 2023-24, the county shall invest in water and health sectors, complete ongoing projects including by settling pending bills and monitoring and evaluation," said Finance and Economic Planning Executive Mathew Babwoya in the fiscal paper.

Kwale County also hopes that the national government will release the mining royalties to continue with its social programme key among them bursaries, and support of small and medium-scale traders.