Financial Struggles Continue in Kenya’s Counties

Kenya’s county governments are facing significant financial challenges. A recent report shows that counties face challenges in generating enough revenue, leading to unpaid bills, mismanaged funds, and poor service delivery.

Financial Challenges in Revenue Collection

Many counties are failing to meet their revenue collection targets. In the 2023/24 financial year, county governments collected Ksh 58.9 billion against a target of Ksh 80.9 billion. The figures represent only 72.8% of the expected revenue. Some counties exceeded their targets, but many fell far below expectations.

The shortfall in revenue collection has led to increasing financial instability. Some counties, including Bungoma, Bomet, and Trans-Nzoia, saw their revenue decline. The poor performance is due to outdated tax policies, weak enforcement, and low levels of automation in revenue collection.

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Mismanagement and Rising Debt

Another significant financial issue is the growing number of pending bills. As of June 2024, county governments owed Ksh 181.98 billion in unpaid bills. These include debts to suppliers, pension funds, and utility providers. For example, counties owe Kenya Power over Ksh 4.3 billion, with Nairobi County alone responsible for Ksh 3 billion of this debt.

Overspending on Salaries

Many counties are spending too much on salaries instead of development projects. The law requires counties to spend no more than 35% of their revenue on wages. But in 2023/24, counties spent 47.6% of their total revenue on salaries. The decision leaves little room for investment in infrastructure and public services, hurting economic growth.

Solutions for a Stable Future

The national government has introduced measures to address these financial failures. Counties will soon have access to a new revenue forecasting model to help them accurately predict future income and set practical revenue targets. Additionally, the government is pushing for better financial management through stricter auditing and automation of revenue collection.

Counties must adopt these changes to improve financial stability. Without reforms, they risk falling deeper into debt and failing to provide essential services to citizens. The focus now is on improving accountability, increasing revenue collection, and cutting unnecessary spending.

Kenya’s county governments must act fast to fix their financial problems. Proper financial management is crucial for economic development and better service delivery to the people.