Kenyan counties are grappling with significant revenue shortfalls as they struggle to meet a Sh50 billion target for own-source revenue in the 2018-19 financial year, according to a Controller of Budget report. The shortfall threatens to exacerbate fiscal challenges as counties rely on a mix of national revenue shares, donor funds, and internal collections to finance development and operational costs.
Revenue Collection Gaps ¶
The report revealed that counties had collected only Sh7.41 billion—14.8% of the Sh50.06 billion target—during the first quarter of the fiscal year, marking a 55% increase from the Sh4.82 billion collected in the same period of 2017-18. While Controller of Budget Agnes Odhiambo noted progress, she emphasized the gap between current collections and the annual goal, warning of exposure to financial risks without improved strategies.
County-Specific Challenges ¶
Kirinyaga Governor Anne Waiguru highlighted systemic barriers, including outdated revenue collection systems and an aging workforce. She advocated for automation, hiring new staff, and exploring borrowing mechanisms using county assets, provided regulations ensure compliance with national debt limits. Waiguru also stressed the need for clearer frameworks to leverage county resources effectively.
Debt and Alternative Financing ¶
The Constitution permits counties to borrow with approval from local assemblies and the national government. Laikipia County, for instance, proposed a Sh5 billion infrastructure bond in 2018, aiming to finance projects through capital markets. Governor Ndiritu Muriithi emphasized the importance of financial transparency to meet bond issuance criteria, positioning counties as sub-sovereign entities capable of attracting investment.
Consultant Kibe Mwangi suggested land value capture mechanisms as a sustainable solution, enabling revenue sharing from private development of county-owned assets. However, he cautioned against overreliance on debt given national fiscal constraints.
Big Four Agenda Pressures ¶
Counties must also support President Uhuru Kenyatta’s Big Four Agenda—manufacturing, healthcare, food security, and housing—further straining resources. Officials called for policy reforms to diversify revenue streams and reduce dependence on national allocations.
