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Revenue test for counties



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The over-reliance by the 47 counties on the National Treasury for funding remains the Achilles heel of devolution, which has been lauded as the most drastic rearrangement of governance since Independence more than 50 years ago.

There has been remarkable progress in almost every county, including the traditionally marginalised.

The future of the counties lies in prudent management. Some governors with a bit more ingenuity have outshone their colleagues in implementing projects.

But the counties are often hampered by delays by the Treasury to release their allocations.

The story of huge pending bills is often told and the victims are suppliers and contractors, who borrow to meet their commitments but are not paid on time.

A good thing becomes the cause of agony.

The findings of a public think tank that poor legislation and policies are making it difficult for county governments to collect more revenue from small- and medium-sized businesses is food for thought.

The “Medium-Sized Enterprises County Business Environment Index” by the Kenya Institute of Public Policy and Research cites limited access to credit, electricity and internet connection as key challenges that stifle private sector growth, denying county governments revenue.

The counties will not be able to stand on their own feet if they cannot generate revenue to complement the resources from the national government.

Therefore, they must create an enabling environment for micro and small enterprises.

This, as the think tank has pointed out, will enhance the ease of doing business and attract investors.

Interestingly, the National Treasury estimates the counties’ revenue potential at Sh124.7 billion annually.

Counties must identify areas in which they have greater advantages and fully exploit those to boost their revenue collection.