Executive Summary
- The budget for financial year 2018/2019 will be lower than the proposed budget for FY 2017/2018 by Ksh. 215 million.
- No Programme Based Budget was made available to the members of the public as required by law before budget participation.
- Kwale County Assembly had approved a local revenue collection target at Ksh. 275 million in FY 2017/2018. The County Fiscal Strategy Paper (CFSP) 2018 set the ceiling at Ksh. 243.1 million but at the budget estimates this ceiling was violated by setting the target higher at Ksh. 303.1 million.
- Kwale County has never achieved her set targets for local revenue collection over the years. This is a pointer towards a problem that needs to be solved. It’s either the targets are set too high or there is laxity in local revenue collection.
- Kwale County was planning to raise Ksh. 261.05 million or 3.3% of the total budget in FY 2016/2017 but ended up raising Ksh. 221.01 million.
- In 2015/2016, Kwale County collected Ksh. 31.8 million from royalties and Cess[1]. It is not clear what the county refers to as cess.
- If the budget estimates for FY 2018/2019 is enacted without changes, there will be a decline in total proposed budget by Ksh. 215 million from Ksh. 9.3 billion in FY 2017/2018 to Ksh. 9.1 billion in FY 2018/2019
SUMMARY 2018/2019
Kwale County is expecting to receive Ksh. 7,536,000,000 from the national government (2018/2019) as equitable share. These are resources which are collected by the national government from sources such income tax (also called Pay As You Earn- PAYE), excise duty, import and export taxes among others. In FY 2017/2018, Kwale County received Ksh. 7,248,000,000 as equitable share of revenues.
Conditional Grants
Apart from receiving money from equitable share, Kwale County just like other counties will receive conditional grants. First, all counties will each receive Ksh. 200 million in the form of leasing of Medical Equipment. Others are: compensation for User Fees Forgone (Ksh. 15,209,593); Road Levy Fund (Ksh. 198,416,317) and Rehabilitation of Village Polytechnics (Ksh. 41,860,000). This translates to total grants amounting to Ksh. 455.4 million. The total allocation towards Kwale County is Ksh. 8.4 billion and the Per capita allocation is Ksh. 12,925.
In the Kwale County Fiscal Strategy Paper (CFSP) 2018 ceilings, the local sources of revenue collection was set at Ksh. 243.1 million. This budget was increased to Ksh. 303.1 million. This is a Ksh. 60 million increase in target for local revenues. When the target is compared to that of Financial Year 2017/2018, there is a Ksh. 28.1 million increase.
Ask: What strategies have been put in place to guarantee the increased target in local revenue collection?
Performance
Local Revenue Collection
Kwale County Assembly had approved a local revenue collection target at Ksh. 275 million in FY 2017/2018. The County Fiscal Strategy Paper (CFSP) 2018 set the ceiling at Ksh. 243.1 million but at the budget estimates this ceiling was violated by setting the target higher at Ksh. 303.1 million.
To understand whether these targets are realistic, we need to have a look at Kwale County’s previous performance in collection of local revenue.
Since we do not have performance data or information from Kwale County Treasury, let’s visit the Office of Controller of Budget. Here we will get some insights on what is happening and whether the targets are realistic.
The most recent annual report on budget implementation is that of Financial Year 2016/2017. This is because the Financial Year 2017/2018 is still ongoing.
According the budget implementation review reports, from the Office of Controller of Budget (CoB), Kwale County was planning to raise Ksh. 261.05 million or 3.3% of the total budget in FY 2016/2017 but ended up raising Ksh. 221.01 million. The county missed the local revenue target by Ksh. 40.04 million. This was an 84.7% performance on local revenue collection.
| Financial Year (FY) | Target (Millions) | Actual (Millions) | Deviation (Millions) | Main sources |
| 2013/2014 | 427 M | 208.5 | 218.5 | |
| 2014/2015 | 500 | 253.97 | 246.03 | |
| 2015/2016 | 300 | 248.62 | 51.38 | Single business permits; land rates; revenues from hospitals and royalties &Cess. |
| 2016/2017 | 261.05 | 221.01 | 40.04 | |
| 2017/2018 | 275 | – | – | |
| 2018/2019 | 303.1 | – | – |
In 2015/2016, Kwale County collected Ksh. 31.8 million from royalties and Cess[1]. It is not clear what the county refers to as cess.
PRIORITIES
Priorities in County Budgeting can be determined in two main ways:
- The sectors/departments receiving the largest portions of Kwale County budget.
In this case, Health Services with an allocation of Ksh. 2.5 billion is receiving a lion’s share of 27.9% of the total Kwale County budget in FY 2018/2019. It is closely followed by Education Sector which is receiving Ksh. 1.3 billion which is equivalent to 14.6 % of the total county budget. Finally, Water Services with a share of 13.2% or Ksh. 1.2 billion crowns off the top three sectors receiving a lion’s share of the total budget. Some times using this indicator to determine priorities of county government may be misleading because some sectors such as health and education are naturally expensive to offer. This is usually the case the world over. This takes us to our second consideration.
2. Checking where additional funds are going
It is important to note that if the budget estimates for FY 2018/2019 is enacted without changes, there will be a decline in total proposed budget by Ksh. 215 million from Ksh. 9.3 billion in FY 2017/2018 to Ksh. 9.1 billion in FY 2018/2019. Once, we get the Kwale County Program Based Budget (PBB), we will be able to find out where are the priorities of Kwale County Budget FY 2018/2019. Till then, keep it here.
[1] Annual County Governments Implementation Review Reports FY 2015/2016 (Page 134).
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