Narok, Samburu and Isiolo recorded the best performance in own-source-revenue (OSR) collection in the first-half of 2018/19, latest data by the Controller of Budget Office (CoB) shows, revealing an overall trend of improvement by all the 47 counties.
Analysis of OSR as a proportion of the annual revenue target showed that, Narok, Samburu, and Isiolo recorded the highest proportions at 74.1 percent, 68.7 percent and 57.8 percent respectively.
Narok netted Sh1.84 billion for the period July-December 2018 against an annual target of Sh2.48billion. Samburu realised Sh174.4 million against a goal of Sh254.03 million while Isiolo had a collection of Sh87.25 million against a target of Sh150.86 million.
On the opposite side, Kisii at 12.7 percent, Wajir (13.1 percent) and Kericho at 13.5 percent recorded the lowest proportion of OSR against their respective annual target.
The CoB said overall OSR by counties improved in the first-half of 2018/19, raising hopes of reduced dependence on the Exchequer releases and conditional grants.
“During the reporting period, county governments generated a total of Sh15.37 billion, which was 29.9 percent of the annual target. This was an increase of 54.5 per cent compared to Sh9.95 billion generated in a similar period of the financial year 2017/18, which was 18.1 per cent of the annual revenue target” the CoB said.
The aggregate annual own source revenue target for counties in the fiscal year 2018/19 is Sh51.32 billion.
During the period under review, the Nairobi generated the highest amount of OSR at Sh3.88 billion, followed by Narok and Nakuru at Sh1.84 billion and Sh1.55 billion respectively.
Wajir, Tana River and Lamu at Sh26.21 million, Sh20.78 million, and Sh17.39 million respectively generated the lowest.
A study released in February by the National Treasury showed that OSR collections by counties are up to four times below the minimum potential, turning focus on inefficiencies by the devolved units.
The OSR potential and tax gap study revealed that the 47 county governments can raise a minimum Sh124.7 billion annually.
In 2017/18, county governments targeted to raise Sh49.2 billion in OSR but only collected Sh32.5 billion, similar to collections in 2016/17. This was a massive Sh92.2 billion below the potential. Nevertheless, OSR performance in the financial year 2017/18 was better (66 percent) than in 2016/17 (56.4 percent), which had a higher target (Sh57.7 billion).
“The study’s main policy finding is that counties should focus revenue improvement efforts on streams with a strong policy rationale, significant revenue potential and cost-effective to collect,” the Treasury said in its report from the study which followed a worrying trend where OSR performance has continued to deteriorate since the inception of the devolved system.
“Not all revenue streams are suitable for revenue enhancement effort. In general, user charges are based on fee payment for accessing a service, and health services, for instance, should not be targeted for revenue enhancement in case they make crucial healthcare inaccessible,” it noted.
According to the study, property taxes hold the biggest potential for OSR collections in counties, estimated at Sh66.2 billion annually. Other prospective OSR sources include business licences (Sh23.4bn); vehicle parking fees (Sh12.6bn); liquor licences (Sh10.2bn); outdoor advertising charges (Sh6.3bn) and Sh6bn from building permits.
Data showed that over the years OSR has been financing an increasingly smaller proportion of the county governments’ spending. For instance, it financed 15.5 percent in 2013/14; 13.1 percent in 2014/15; 11.9 percent in 2015/16; 10.2 percent in 2016/17; and, 10.7 percent in 2017/18.
“This trend confirms growing reliance by the counties on transfers from the National Government. Globally, locally-generated revenue is a key indicator of subnational governments’ fiscal autonomy, and hence the need to strengthen contribution of OSR to budgets of Kenya’s counties,” the Treasury added.
The dip in OSR collection over the years has meant that conditional grants and Exchequer releases to county governments have been climbing from 2013/14 to cover for the shortfall.
Official data showed that dependence on transfers from the Exchequer climbed to a record high in the 2016/17 financial year — an indication of flaws in collection and management of their own revenue collections.
The Treasury in 2018 developed a policy to enhance the county revenue collections.
The policy targets assisting the devolved units to determine their revenue potential and improve revenue forecasting; supporting developing laws to anchor their revenue measures; and, ensuring that all counties established institutional arrangements for collecting OSR, and revamped revenue management systems.
World Bank pushes G-20 to extend debt relief to 2021
World Bank Group President David Malpass has urged the Group of 20 rich countries to extend the time frame of the Debt Service Suspension Initiative(DSSI) through the end of 2021, calling it one of the key factors in strengthening global recovery.
“I urge you to extend the time frame of the DSSI through the end of 2021 and commit to giving the initiative as broad a scope as possible,” said Malpass.
He made these remarks at last week’s virtual G20 Finance Ministers and Central Bank Governors Meeting.
The World Bank Chief said the COVID-19 pandemic has triggered the deepest global recession in decades and what may turn out to be one of the most unequal in terms of impact.
People in developing countries are particularly hard hit by capital outflows, declines in remittances, the collapse of informal labor markets, and social safety nets that are much less robust than in the advanced economies.
For the poorest countries, poverty is rising rapidly, median incomes are falling and growth is deeply negative.
Debt burdens, already unsustainable for many countries, are rising to crisis levels.
“The situation in developing countries is increasingly desperate. Time is short. We need to take action quickly on debt suspension, debt reduction, debt resolution mechanisms and debt transparency,” said Malpass.
Kenya’s Central Bank Drafts New Laws to Regulate Non-Bank Digital Loans
The Central Bank of Kenya (CBK) will regulate interest rates charged on mobile loans by digital lending platforms if amendments on the Central bank of Kenya Act pass to law. The amendments will require digital lenders to seek approval from CBK before launching new products or changing interest rates on loans among other charges, just like commercial banks.
“The principal objective of this bill is to amend the Central bank of Kenya Act to regulate the conduct of providers of digital financial products and services,” reads a notice on the bill. “CBK will have an obligation of ensuring that there is fair and non-discriminatory marketplace access to credit.”
According to Business Daily, the legislation will also enable the Central Bank to monitor non-performing loans, capping the limit at not twice the amount of the defaulted loan while protecting consumers from predatory lending by digital loan platforms.
Tighter Reins on Platforms for Mobile Loans
The legislation will boost efforts to protect customers, building upon a previous gazette notice that blocked lenders from blacklisting non-performing loans below Ksh 1000. The CBK also withdrew submissions of unregulated mobile loan platforms into Credit Reference Bureau. The withdrawal came after complaints of misuse over data in the Credit Information Sharing (CIS) System available for lenders.
Last year, Kenya had over 49 platforms providing mobile loans, taking advantage of regulation gaps to charge obscene rates as high as 150% a year. While most platforms allow borrowers to prepay within a month, creditors still pay the full amount plus interest.
Amendments in the CBK Act will help shield consumers from high-interest rates as well as offer transparency on terms of digital loans.
Scope Markets Kenya customers to have instant access to global financial markets
NAIROBI, Kenya, Jul 20 – Clients trading through the Scope Markets Kenya trading platform will get instant access to global financial markets and wider investment options.
This follows the launch of a new Scope Markets app, available on both the Google PlayStore and IOS Apple Store.
The Scope Markets app offers clients over 500 investment opportunities across global financial markets.
The Scope Markets app has a brand new user interface that is very user friendly, following feedback from customers.
The application offers real-time quotes; newsfeeds; research facilities, and a chat feature which enables a customer to make direct contact with the Customer Service Team during trading days (Monday to Friday).
The platform also offers an enhanced client interface including catering for those who trade at night.
The client will get instant access to several asset classes in the global financial markets including; Single Stocks CFDs (US, UK, EU) such as Facebook, Amazon, Apple, Netflix and Google, BP, Carrefour; Indices (Nasdaq, FTSE UK), Metals (Gold, Silver); Currencies (60+ Pairs), Commodities (Oil, Natural Gas).
The launch is part of Scope Markets Kenya strategy of enriching the customer experience while offering clients access to global trading opportunities.
Scope Markets Kenya CEO, Kevin Ng’ang’a observed, “the Sope Markets app is very easy to use especially when executing trades. Customers are at the heart of everything we do. We designed the Scope Markets app with the customer experience in mind as we seek to respond to feedback from our customers.”
He added that enhancing the client experience builds upon the robust trading platform, Meta Trader 5, unveiled in 2019, enabling Scope Markets Kenya to broaden the asset classes available on the trading platform.