DR DANIEL MUTEGI GITI:Our counties can do much more to generate own source revenue, drive growth

The Own Source Revenue (OSR) is anchored by the 2010 Constitution, which assigns 14 functions to counties, and the functions are broad- based and require innovative and diversified means and methods of funding them; the 2012 Public Finance Management Act, the County Government Act of 2012 and the 2011 Urban Areas and Cities Act 2011. Urban areas are important because of the known fact that they are engines of growth and development and hence more activities can be aggregated and concentrated therein and the same should increase the revenue bases for counties. 

Our counties should expand, plan and accelerate the growth and development of urban areas since the future is urban. 

Own source revenues for counties are an important form and source of money through which counties can generate additional capital beyond the allocations from the national government, and be able to use the same to fund their operations, in addition to what they fund using the traditional allocations. Own source revenue can be sourced from imposition of property tax, entertainment taxes, other taxes authorized by an Act of Parliament, charges for services provided by counties, which calls for the creation and provision of more broad range of services for increased revenue generation.

Our counties have the potential to increase the range of charges and levies by leveraging on their natural resource base and potential. This would require more awareness creation and promotion of the counties as investment destinations to tap into the untapped potential found within the counties. 

The Controller Of Budget  also sought to evaluate how counties spend their collections and allocations, where Tharaka Nithi county topped the list of counties that absorbed the development budget as would be expected.  The report found out that Tharaka Nithi absorbed 49 per cent of its budget on the development vote. It was followed by the counties of Samburu, Narok and Nyeri with each of these counties absorbing 40 per cent of their revenue on the development projects.

The Controller of Budget has always advised counties to spend at least 30 per cent of their annual allocations to development programmes and projects financing. Development financing has direct benefits to the citizens and residents since it goes to critical projects like infrastructure, education, social programmes and sustainable development issues at the core of the grassroots people lives. 

Issues of revenue sharing between counties and national government is always contentious and it can be cured through enhanced own source revenue and also absorption of collected and allocated funds to viable development projects. Kenyan counties can draw lessons from the Nigerian State of Lagos which underwent massive transformation under the leadership of Governors Ahmed Bola Tinubu (who has just been elected the Nigerian president) and Fashola. These governors inherited a stated that had an increase of 600,000 persons per year without commensurate improvements in social services like housing, water and transportation. Under these transformative governors, who were able to develop the Lagos State through enhanced own source revenue, the state developed the “Manhattan of Africa”, consisting of 10 million square meters of land reclaimed from the sea and protected by 8.5 km seawall. Such programmes and projects created massive jobs and as such, our counties should think of employment creation ventures that benefit the locals and hence become attractions for diverse set of skills and expertise. 

The transformation of governor Tinubu made approximately 72 per cent of Lagos State residents to revert to use of government solid waste management systems by 2016 compared to 42 per cent by 2005. 

This shows that our counties can increase the trust and uptake of county services and programmes and hence grow own source revenue. Lagos State became one of the richest States in Nigeria, producing almost US dollars 90 billion a year in goods and services, making its economy bigger than most African countries. Lesson, good projects in the counties must be initiated and supported even if they were done by the predecessors, so that our counties become attractive and magnets of innovation, tourism, manufacturing, industry and development centres, which increases our own source revenue targets.

Governor Fashola used three strategies to grow own revenues. First, he solicited and engaged the Lagos residents to buy into the new vision through slogans like “Lagos must not spoil”, which was embraced by residents to undo the status quo. Governors should clearly communicate their vision and engage the residents to succeed. 

Secondly, Fashola reformed the taxation system, resulting in increases in tax revenues to US dollars 115 million per month in 2016 from US dollars 3.2 million in 1999. Tax compliance increased to 80 per cent from 30 per cent in 2005. Governors should ensure verifiable and transparent revenue reforms to ensure citizen support.

Thirdly, the governor used accrued tax revenues to undertake ambitious public transportation and sanitation projects like railways network, bus lanes, waste collection system and massive road rehabilitation. This made the residents to see the need for increased own source revenue and hence support the initiatives. 

Counties should cultivate more private sector support and collaboration, including use of Public Private Partnerships (PPPs) to deliver, because the design of the Kenya Vision 2030 and the County Integrated Development Plans (CIDPs) is that the government funds 30 per cent and private sector funds the 70 per cent of development plans.

Governor Tinubu was later was appointed the Federal Minister for Energy, Works and Housing, and he recently got elected as the President of the Federal Republic of Nigeria.

Twitter:@DanielGiti.