Counties must find new revenue streams

Wednesday, May 24th, 2023 01:18 | By

A cash crunch has led to a four-month delay in releasing the Equitable Share of Revenue to counties and governors are now threatening a countrywide shutdown to force the National government to act.

Governors say Treasury reneged on promises to release Sh94.4 billion, monies owed for the period between March and May 2023, confirming tough times ahead.

Much as this is wrong, it however unveils the sad reality of Kenya’s dwindling economic fortunes, and should the threat come to pass it will be a blow to the spirit of devolution, which is conceived to be the pillar of economic growth.

That is why county bosses must quickly learn how to cushion their counties from such shocks, lest the economy grinds to a halt as they look up to Treasury for revenue.

It must concern governors that up to June 30, 2022, for example, they collected a meagre Sh35.9 billion against a set target of Sh60.4 billion representing 59.4 per cent. Maybe they should just allow Kenya Revenue Authority (KRA) to help them collect revenue on their behalf.

To begin with, they must seal leakages so as to cushion the little funds they have. This calls for efficient systems, investing in technology and trained personnel. They must also deepen enforcement and compliance to help reduce revenue leakage and increase overall collection.

It should not be business as usual, counties must step out of the comfort zone of the equitable fund and start exploring various revenue streams beyond traditional sources like taxes and fees, they should be in the market for tools like county bonds to keep them moving when they need it most.

All counties are richly endowed in different ways, and they must start investing in income-generating projects in sectors like agriculture, tourism and infrastructure development to diversify their revenue sources and end reliance on a single major income stream.

This can be fast-tracked through partnerships with the private sector to develop and manage public infrastructure projects, industries and other initiatives to generate revenue from within.

Only then will they be in a position to spur growth and increase taxes because as commerce increases so will taxes.

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