Win-Win for Devolution

The advent of devolution is considered a major milestone in the development of all regions in the Country. Take a trip round the country, and it will be obvious to you that the dividend of devolution is being realized; from infrastructure, to agriculture to expansion of health facilities as well as street lighting, just to name but a few. This emboldens the case for sustainability of the momentum already gained. It is without a doubt that more could have been achieved if more funding was availed to the County governments. Question is how will more funding be generated for County governments?

Whereas the County governments are largely financed from the exchequer, the scope of growth for this source of funding is limited due to other national priorities as well as international commitments that the Country undertakes. It is therefore imperative for County governments to generate additional financial resources from their own base. Evidence of great potential has been cited in many forums including the County Revenue Baseline study conducted by the Commission on Revenue Allocation, which concluded that in the FY 2014/15, County governments collectively raised Kshs. 33.8B against the potential of Kshs. 40.8B. This points to revenue mobilization challenge at the County level, requiring urgent attention.

The capacity challenge (identifying optimal revenue streams, projecting potential revenue from such streams, determination of optimal levels (rates) applicable to respective levies and managing County debt), is clearly demonstrable by reviewing the revenue performance by County governments against their own set targets for the FY 2015/16. A total of Kshs. 35B was realized against a target of Kshs. 50.5B, translating into a performance rating of 69.3%. It is my submission that such performance can be greatly enhanced by leveraging on the expertise that the KRA has developed through experience and adoption of best practice accessed over time.

The conversation that County governments should give prominence now is how to tap into ?KRA?s experience repository? which unwaveringly KRA will provide as a patriotic duty. The other key area is policy definition of regulations and laws that will be enacted at the County level. In support of devolution, KRA devolved its structure and established semi-autonomous Regional offices. This was to ensure a viable ground presence in all Regions so as to respond to the County-specific needs. In addition, heavy automation investments by KRA would serve County governments well noting that KRA?s taxpayer database inevitably covers a large majority of rate payers and single business permit payers at the County level.

In furthering this agenda, the County governments of Laikipia and Kiambu signed Memorandums of Understanding with the KRA for collection of Land Rates and Single Business Permits fee. The partnership shall leverage on KRA?s iTax platform thereby availing the advantage of making payment through any of the 37 banks in the payment gateway, as well as through mobile telephony. Its implementation shall also include a joint enforcement approach by both KRA and respective County governments, thereby making it very difficult for defaulters to operate undetected.

In conclusion, the current business trend of specialization (pursuing the core mandate) frees organizations from handling other essential but time and resource intensive activities. This is efficiency, which a partnership with KRA on revenue mobilization shall accord the County governments.

BLOG 28/05/2018

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Win-Win for Devolution