Kenya’s county governments are failing to collect billions in potential revenue due to outdated practices, stalled automation, and poor enforcement, a new review by the Controller of Budget (CoB) has shown. The report covering the financial year ending June 30, 2025, reveals that counties missed their own-source revenue targets by 23 per cent.
According to the CoB, “In FY 2024-25, county governments missed the Sh87.67 billion OSR target by Sh20.37 billion (23 per cent).” This shortfall has left many local administrations unable to carry out all the activities they had planned.
The Commission on Revenue Allocation (CRA) has previously assessed that counties could raise as much as Sh250 billion every year from their own resources.
Yet the review shows several counties performed far below expectation.
Siaya collected only 47 per cent of its target, Kajiado 55 per cent, Machakos 56 per cent, and Isiolo 58 per cent. Others that underperformed included Taita Taveta (64 per cent), Bungoma (65 per cent), Kisumu (65 per cent), Kakamega (65 per cent) and Nairobi (66 per cent).
The report points to continued use of manual collection methods that are vulnerable to fraud, leakage, and underreporting as a key weakness. Attempts at automation have in many places either stagnated or been left incomplete, resulting in fragmented systems. Baringo, Garissa, and Lamu were identified as counties where these gaps have undermined efficiency and accountability.
“County governments should prioritise complete automation of all revenue streams through robust, integrated systems that guarantee real-time collection, reconciliation, and reporting,” the report recommends.
Another problem is reliance on old and incomplete taxpayer databases and valuation rolls, which limits accurate billing and the ability to grow revenue streams such as property rates. Counties like Baringo, Kajiado, and Lamu have not updated their valuation rolls, constraining collection.
Weak enforcement of revenue laws has also been cited. In many counties, penalties for defaulting are unclear or rarely applied, resulting in widespread non-compliance. The CoB noted that Baringo, Garissa, and Makueni suffer from weak monitoring and low staff capacity.
“County treasuries should institute clear penalties, strengthen compliance monitoring frameworks, and invest in capacity building and modern tools for revenue staff,” the CoB advised.
The report further highlights risks arising from continued cash transactions, poor reconciliation practices, and delays in banking daily collections. These loopholes expose county funds to mismanagement and losses. To reduce such risks, the CoB has recommended a shift to cashless systems, timely banking, and stronger internal controls.
Most counties, the CRA observed, still depend on a few traditional streams such as parking charges, business permits, market fees, and property rates. Newer opportunities, including outdoor advertising, natural resource cess, quarry royalties, liquor licensing, entertainment taxes, and income from county-owned assets like bus parks, remain poorly exploited.
There is also untapped potential in tourism, fishing, mining, and waste management, but outdated records, weak oversight, and lack of innovation have held counties back from fully benefiting.
Because of these shortcomings, counties remain heavily dependent on the national equitable share for survival, limiting their financial independence and slowing down their capacity to drive local development.
