Kenya’s 47 county governments are forfeiting tens of billions of shillings annually in own-source revenue (OSR) due to porous collection systems, political waivers, massive unpaid arrears, and persistent governance failures, according to successive audits by Auditor General Nancy Gathungu.
These leakages—estimated at over Sh20 billion in shortfalls for recent financial years alone—undermine devolution, fuel dependency on national transfers, and starve essential services like healthcare, roads, and water provision.
In the financial year 2023/2024 (ended June 2024), counties budgeted for Sh74.2 billion in OSR but collected only Sh53.1 billion—achieving just 72% of their target. This left a staggering shortfall of Sh21.15 billion.
Performance improved slightly in FY 2024/2025, with collections rising to Sh67.3 billion, but counties still fell far short of potential estimates that experts place as high as Sh260 billion annually if systems were optimized.
Nairobi City County led in absolute collections with approximately Sh12.9 billion in FY 2023/2024, yet achieved only 64% of its ambitious target. Other high performers included Narok (Sh4.78 billion collected, 95% of target).
Seven counties exceeded their targets that year, led by Turkana at 200% achievement, followed by Lamu (119%) and Kirinyaga (118%). In contrast, 40 counties underperformed, with Machakos (46%), Bungoma (42%), and Nyandarua (42%) at the bottom.
Audits reveal a cocktail of systemic and deliberate failures driving these losses:
1. Massive Arrears and Poor Recovery Efforts
Counties sit on billions in unpaid fees. Nakuru is owed over Sh7.9 billion in arrears, including Sh4.3 billion from Kenya Railways and Sh3.7 billion from Lake Nakuru National Park. Kajiado has Sh11.98 billion outstanding in land rates, rent, and royalties—with little evidence of pursuit.
2. Political Waivers and Selective Collection
Governors often grant “expensive” waivers to court political favor, stalling revenue growth. In Nakuru, a Sh693 million waiver on rent arrears for county housing crippled potential income.
3. Manual and Opaque Systems Prone to Theft
Many counties rely on manual invoicing without electronic records, creating no audit trail. In Kisii, manual property rates billing led to unaccounted revenues. Porous systems allow unscrupulous officials to exploit leakages.
4. Lack of Automation and Enforcement
Few counties have fully automated collection platforms, leading to daily cash handling vulnerabilities. Liquor licensing, parking fees, and market cess often go uncollected or underreported due to weak enforcement.
These revenue shortfalls force counties into heavy reliance on equitable share transfers from the national government, which are often delayed. The result: mounting pending bills, delayed salaries, and stalled development projects.
Counties like Siaya have ranked among the lowest performers in recent assessments, while arid regions like Mandera and Wajir have shown surprising strength—suggesting that political will and targeted streams (like royalties) can make a difference.
Yet the overall picture remains grim: With potential collections triple the current haul, optimized OSR could transform devolution, funding better hospitals, schools, and infrastructure without constant bailouts from Nairobi.
Gathungu’s reports repeatedly call for:
– Full automation of revenue streams to seal leakages.
– Aggressive recovery of arrears through legal action.
– Strict limits on waivers and enhanced internal controls.
– Capacity building for revenue departments.
Some counties are moving forward—Nairobi has reported revenue gains through digital platforms—but widespread adoption lags.
As Kenya marks over a decade of devolution, the persistent hemorrhage of own-source revenue raises fundamental questions: Are counties committed to fiscal independence, or content with dependency?
Until leaders plug these holes, billions will continue to slip away, and citizens will bear the cost.
