In this blog article we are going to compare Johannesburg City with Nairobi City and see how we are fairing so far. This comparison aims at creating a picture on how Nairobi fairs in terms of global scales.
| Nairobi City – Kenya | Johannesburg – South Africa |
| Legislature: County Assembly | Legislature: Council |
| Legislation guiding budgeting: PFM Act 2012 | Legislation guiding budgeting: Municipal Finance Management Act 1999. |
| Total Budget: Ksh. 31 Billion (FY 2015/2016) | Total Budget: Ksh. 427 Billion (FY 2015/2016) |
| Local Revenue: Ksh. 19.5 Billion (FY 2014/15) | Local Revenue: Ksh. 35.8 Billion (FY 2014/15) |
| Major source of local revenue: Rates | Major source of local revenue: Sell of electricity from City Power to Eskom. |
| Largest Expenditure: Employee compensation | Largest Expenditure: Interest payments for debts incurred |
| VAT : 16% | Value Added Tax: 35.9% |
Johannesburg City Vs Nairobi City Budget
We visited Johannesburg in Gauteng Province and learnt a few things about their budget. The budgeting process is somewhat similar to that in Kenya but the size is quite massive. Once the proposed budget is tabled at the Council, it may be made available for the public for comments. The Municipal Financial Management Act (MFMA) of 1999 guides the public participation process in Johannesburg.
The city of Jo’burg was allocated a total budget of R 42.7 Billion (equivalent to Ksh. 427 Billion in Kenya) during FY 2015/2016. This is 14 times higher than the budget for Nairobi City.
Local Revenues
In terms of local revenues, Jo’burg raised R 358 Million (Ksh. 35.8 Billion) in FY 2014/2015. The revenue increased to Ksh. 50.2 Billion in 2015/16 reflecting a 40 percent increase.
The city also has emergency housing plans where they provide shelter for evicted persons immediately after evictions. This reduces the instances of homelessness and violation of rights a key model that Kenya can borrow.
Revenue Collection and Tax burden challenges
The South African Revenue Services (SARS) is responsible for collecting revenue across South Africa. Just like Kenya Revenue Authority (KRA) in Kenya, SARS misses the targets despite the fact that South Africa is a major diamond exporter. Missing revenue targets seems to be a global problem. This shortfall ends up producing a larger budget deficits.
The largest source of income for Johannesburg city is sale of electricity from City Power to Eskom (main power utility in South Africa). Interest payments on public debt are now the largest item of government expenditure.
South Africa’s Value Added Tax (VAT) stands at 26.5 percent which is nearly twice the VAT charged in Kenya at 16 percent. The Personal Identification Tax is also higher in South Africa (35.9%) while it is 30% in Kenya. This means that the South Africans bear a larger tax burden than that in Kenya.
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