Kiambu targets to collect Sh8 billion revenue locally in new financial year

Kiambu Governor Kimani Wamatangi when appeared before the Senate Health Committee at County Hall in Nairobi on November 8, 2022. [Elvis Ogina, Standard]

The county government of Kiambu is hoping to collect close to Sh8 billion in revenue locally in the next financial year.

This will be the largest Own Source Revenue (OSR) target for a county which has been grappling with underperformance in local revenue mobilisation since the advent of devolution.

OSR refers to the funds generated by the county through various sources such as taxes, fees, licenses, and other income-generating activities.

The poor revenue collection has been attributed to weak systems prone to manipulation, theft by unscrupulous revenue officers and top county officials, and failure to exploit available revenue streams.

According to the projections now before the county assembly, Governor Kimani Wamatangi has proposed a budget of Sh21 billion for the 2023/2024 fiscal year.

The Sh7.9 billion local revenue target, which presents almost a 100 per cent increment from the current financial year of Sh4.1 billion, will be realised without increasing the existing license fees and levies, the documents show.

The 2022/2023 budget was Sh16.4 billion.

Public participation

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Over the last two weeks, the County Assembly Committee on Budget has been conducting public participation sessions to educate residents and gather their views on the proposed 2023/2024 budget.

Besides the local revenue mobilisation, the county is hoping to receive Sh13 billion, as an equitable share, from the national government. The rest of the budget will be funded by other partners, including the World Bank.

The Executive is also banking on an Enterprise Resource System (ERP), a holistic system that covers the management of finances in all the sectors such as hospital management, building approvals, business permits and other revenue charges while exploring more revenue streams.

"I have embarked on a deliberate mission to ensure prudence, not only on the expenditure but also on the collection of our revenue. For impactful development, Kiambu County can no longer rely only on the exchequer. It is for this reason that my administration is installing an enterprise resource planning system," Wamatangi said.

Counties collect revenue from several streams, as guided by the respective Finance Acts and Bills. These include property rates, building permits, agricultural transportation fees, business licenses, liquor licensing fees, vehicle parking fees, hospital fees and public health services.

Outdoor advertising, county housing rent, fines, penalties, and forfeitures, environment and conservancy administration fees, game reserve fees and game reserve fees are other sources.

An aerial view of Ruaka town in Kiambu County. [Wilberforce Okwiri, Standard]

"With such mechanisms of accountability and systems, I envisage a two or three-fold increase in our revenue. To this effect, I have set to collect about Sh7.9 billion in the next financial year which will be achieved without increasing the existing license fees and levies," Wamatangi said.

A recent report, by the Commission on Revenue Allocation (CRA) and World Bank, said counties have the potential to collect up to Sh216 billion annually from their key revenue streams. However, the devolved units are only collecting Sh31 billion, according to the report.

The report dubbed; "Comprehensive Own Source Revenue Potential and Tax Gap Study of County Governments" was released on October 5, 2022.

The report said Kiambu can raise over Sh13 billion, with the ability to collect between Sh7 billion and Sh9.3 billion from the property rates alone.

It says that business licenses fetched just Sh617 million when the potential is Sh1 billion. From parking fees, some Sh279 million was realised against the potential of Sh1.19 billion.

Construction and maintenance

If the budget is passed, the Health Department will be allocated Sh7.69 billion, and the Roads and Transport docket which deals with among other works, construction and maintenance of roads, will get Sh2.569 billion. Others are Finance (Sh1.7 billion), Education (1.54 billion), Agriculture (1.4 billion), Trade (Sh996 million), Administration (Sh949 million), Water and Environment (Sh890 million), Land and Housing (Sh858 million), and Youth and Sport (Sh331 million).

The county assembly has proposed that it should be allocated Sh1.567 billion.

Finance and Planning executive Nancy Kirumba said the Sh7.9 billion OSR target has been informed by an ongoing Rapid Response Initiative on revenue.

She said it is a friendly exercise meant to monitor compliance on revenue payment and campaigning on the need for locals to pay revenue.

The exercise, she said, unearthed gaps which have been denying the county billions of shillings. They include outright theft where fake payment slips are used by some revenue officers, and weak revenue systems that delay payments leading to non-payment.

Already, a case is under investigation by detectives at Thika Police Stations where unscrupulous finance officers were found to have used payments made by a leading poultry producer to generate single business permit licenses for several traders whose payments were diverted.

Managing funds

"The exercise allowed us to understand the needs and the challenges of our people, and persuade them on the importance of paying levies and also most importantly, monitor how revenue officers conduct themselves when interacting with clients and managing funds," said Kirumba

She added: "We have initiated reforms such as turning to technology to eliminate theft of revenue by embracing cashless, being innovative by exploring new tax areas, and coming up with targets and tracking systems regularly."

Lands and Housing Minister Salome Wainaina said once the county installs the new ERP system, which will also incorporate the building approval system and land rate platform, they will be able to raise more revenue from the property sector.

Initially, the county was using Electronic Development Application System (EDAMs) for building approvals but it was terminated following concerns that developers were making applications but would get frustrated due to regular downtime of the system.

Some developers had stayed for up to three years without their applications being processed, with the governor's rogue officials would then demand bribes to process them outside the system, leading to substandard buildings that have been collapsing.