Own Source Revenue (OSR) is anchored by the 2010 Constitution, the 2012 Public Finance Management Act, the County Government Act of 2012 and the 2011 Urban Areas and Cities Act 2011. Together, these allow counties to impose property tax, entertainment taxes and any other tax authorized by an Act of Parliament, as well as charges for the services they provide.

Improved OSR not only increases absolute revenues for a county but also improves the fiscal autonomy of county governments and allows them to better manage their public finances in manner more appropriate to their own economies. However, increasingly, the need for counties to generate more of their own revenue has been clear with the COVID-19 induced downturn exacerbating this situation. Studies by the National Treasury and reports by the Office of the Controller of Budget the Commission on Revenue Allocation (CRA) have established that most counties raise less than 40 per cent of their estimated revenue potential. The joint devolution programme is working with partner counties and CRA to address this issue.

CRA has developed Own Sources Revenue Training Guidelines for counties that provide a tool for strengthening their technical capacity on OSR administration to improve performance. Through training programmes and ongoing assessments the programme, together with CRA, is enhancing the technical capacity of county government revenue staff, supervisors, management and policymakers on the process of revenue collection, management and enhancement.

The Joint Devolution Programme aims to reduce the gap between potential and actual OSR from 47% to 40% in partner counties. Seven partner counties were among the 13 counties nationally that recorded increase in OSR in FY 19/20 and OSR increased by 33% for Lamu and Mandera counties in 2019/20 compared to 2018/19 while more modest increased were attained in Tana River, Marsabit, Garissa, Turkana and Wajir Counties as a result of targeted OSR capacity building. Working with UN Women, gender components have been built into this support and Turkana County has incorporated gender issues in revenue administration’s legal framework.

As part of the joint programme’s support to counties on OSR, the United Nations Capital Development Fund (UNCDF) is working with counties on their tax administration policies by providing assessments and recommendation on global best practices. Proper administration of county taxes is critical not only towards maximizing revenue but doing so in an accountable and transparent manner that encourages investment and allows for progressive social budgeting. 

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