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Counties should be able to generate own revenue

Thursday August 22 2019

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When the Office of the Controller of Budget was created eight years ago in fulfilment of the 2010 Constitution, the objective was to have a structure to oversee budget utilisation at the national and county governments. This was the first time the country was experimenting with devolution that involved creating 47 counties, each organised as independent entity to manage own affairs. An oversight of their financial operation was inevitable.

After eight years, it is paramount to look back and ascertain whether or not the office has served its purpose and what else can be done to empower it to deliver on its mandates.

This comes against the backdrop of the exit of the founding chief executive of the office, Ms Agnes Odhiambo, whose term has ended after serving for eight years as decried in law.

For its pioneering role, the office has set up structures and systems for monitoring expenditures of national and county governments, with the accent being on fidelity to financial prudence and accountability. However, questions abound.

As she leaves office, Ms Odhiambo has brought to light critical issues that must be addressed. First, she has raised the red flag over ballooning public expenditures driven largely by salaries, itself a consequence of bloated national and county governments.

The government is top heavy and deploys so much resources to keep inordinately large numbers of people in employment.


Earlier in his administration, President Uhuru Kenyatta announced salary cuts for himself, Deputy President William Ruto, Cabinet Secretaries, principal secretaries, parastatal heads and other top government officials to curtail government spending. But nothing ever came out of it. The officials still earn huge salaries while MPs have routinely raised their remuneration package, pushing the wage bill to the sky. At this time of economic depression and rising debt burden, we must squarely look at the wage bill and cut on excess employees and emoluments.

Second, Ms Odhiambo faulted counties over poor revenue collection. Consequently, she proposed that the Kenya Revenue Authority should take over the role of collecting taxes for the counties. This is practical solution to an endemic problem. As currently constituted, the counties do not have the capacity to collect all revenues due to them. Moreover, they live under the illusion of getting endless capitation from the Treasury, which in itself, is underfunded and overwhelmed with budgetary demands.

When the cash delays, as has happened now in view of the stalemate between the National Assembly and the Senate, the counties find themselves in a fix. They cannot pay salaries and their operations are paralysed. Ideally, counties should generate own incomes to keep themselves and stop relying on the National Treasury for sustenance.

In sum, government revenue base and spending must be rationalised.