In Kenya, counties generate revenue from two primary sources: allocations from the national government and their own source revenue (OSR). Own source revenue refers to the funds counties collect independently through taxes, fees, licenses, and other locally generated income streams. For the financial year 2023/2024, several counties demonstrated remarkable revenue collection, reflecting their efforts to boost local economies and enhance service delivery. Below is an analysis of OSR collection by county, as well as trends, challenges, and opportunities for improvement.
Top 5 Counties by Own Source Revenue (2023/2024)
- Nairobi County – Ksh 12.54 billion
As expected, Nairobi leads the pack in revenue collection, generating over Ksh 12.5 billion in own source revenue. The capital city, with its large population, thriving businesses, and real estate market, consistently brings in the highest revenues from property rates, parking fees, business licenses, and other streams. - Mombasa County – Ksh 5.59 billion
Mombasa comes in second, collecting Ksh 5.59 billion. The county’s strategic position as a coastal city and a commercial hub contributes to its substantial revenue from port-related services, tourism, and real estate. - Narok County – Ksh 4.75 billion
Narok is notable for its revenue performance, largely driven by its tourism sector, particularly from the Maasai Mara Game Reserve, which attracts thousands of international visitors annually. Conservation fees and tourism-related taxes form a significant portion of its revenue. - Kiambu County – Ksh 4.58 billion
Kiambu ranks fourth, collecting Ksh 4.58 billion. The county benefits from its proximity to Nairobi, leading to rapid urbanization, real estate development, and the growth of commercial activities. Revenues are generated from business licenses, property rates, and market fees. - Nakuru County – Ksh 3.32 billion
Nakuru’s revenue collection is buoyed by its diversified economy, which includes agriculture, tourism, and manufacturing. As a county with rich farmlands and major tourist attractions like Lake Nakuru, the local economy contributes significantly to its revenue.
Mid-Tier Performers: Counties Collecting Between Ksh 1 Billion and Ksh 3 Billion
Several counties performed well, collecting between Ksh 1 billion and Ksh 3 billion in OSR. These include:
- Machakos (Ksh 1.55 billion): Machakos has seen steady growth in commercial activities and urbanization, boosting its revenue.
- Kisumu (Ksh 1.44 billion): Kisumu’s status as a lakeside city with growing trade and real estate sectors has contributed to its revenue collection.
- Uasin Gishu (Ksh 1.42 billion): This county benefits from its role as a hub for agricultural trade and the presence of Eldoret International Airport.
- Nyeri (Ksh 1.41 billion) and Kakamega (Ksh 1.35 billion): Both counties leverage agriculture and trade to drive revenue collection.
Counties Below Ksh 1 Billion in OSR
Several counties collected less than Ksh 1 billion, highlighting potential challenges in revenue generation. Some of these include:
- Meru (Ksh 961 million): Though Meru is an agricultural powerhouse, the county needs to explore more revenue-generating activities, especially in tourism and trade.
- Kericho (Ksh 841 million): Known for its tea plantations, Kericho’s OSR could improve with better exploitation of agro-tourism and value-added agricultural products.
- Embu (Ksh 746 million) and Kirinyaga (Ksh 651 million): Both counties are agriculturally rich but need to expand revenue streams through industrialization and infrastructure development.
- Turkana (Ksh 530 million) and Kitui (Ksh 517 million): These counties face challenges related to their vast geographical areas and underdeveloped infrastructure, which hinder optimal revenue collection.
Low Performers: Counties Collecting Less Than Ksh 500 Million
Some counties, especially those in arid and semi-arid regions, collected less than Ksh 500 million in OSR. These include:
- Baringo (Ksh 378 million) and Samburu (Ksh 266 million): These counties rely heavily on pastoralism, with limited economic diversification, making revenue collection difficult.
- Lamu (Ksh 209 million): Despite Lamu’s potential as a tourism destination and its position in the LAPSSET corridor, revenue collection remains low.
- Tana River (Ksh 92 million): Tana River collected the least amount of OSR, reflecting challenges related to infrastructure and economic development in the region.
Full List of Own Source Revenue by County (2023/2024)
| Rank | County | Revenue Collected (Ksh) |
|---|---|---|
| 1 | Nairobi | 12,542,094,418 |
| 2 | Mombasa | 5,585,024,010 |
| 3 | Narok | 4,753,670,486 |
| 4 | Kiambu | 4,575,831,607 |
| 5 | Nakuru | 3,321,300,479 |
| 6 | Machakos | 1,549,348,477 |
| 7 | Kisumu | 1,443,607,988 |
| 8 | Uasin Gishu | 1,421,327,951 |
| 9 | Nyeri | 1,407,546,107 |
| 10 | Kakamega | 1,347,833,279 |
| 11 | Kilifi | 1,208,619,997 |
| 12 | Homa Bay | 1,200,495,831 |
| 13 | Kisii | 1,180,162,037 |
| 14 | Bungoma | 1,120,909,349 |
| 15 | Murang’a | 1,116,795,730 |
| 16 | Laikipia | 1,061,020,098 |
| 17 | Kajiado | 1,048,356,435 |
| 18 | Makueni | 1,044,674,948 |
| 19 | Meru | 961,934,279 |
| 20 | Kericho | 841,927,978 |
| 21 | Embu | 746,494,074 |
| 22 | Kirinyaga | 651,105,565 |
| 23 | Nandi | 630,727,156 |
| 24 | Siaya | 610,737,745 |
| 25 | Turkana | 530,645,056 |
| 26 | Kitui | 517,049,816 |
| 27 | Nyandarua | 515,740,772 |
| 28 | Migori | 512,566,310 |
| 29 | Trans Nzoia | 476,638,172 |
| 30 | Taita Taveta | 461,186,652 |
| 31 | Kwale | 427,377,928 |
| 32 | Tharaka Nithi | 417,346,035 |
| 33 | Baringo | 378,201,635 |
| 34 | Nyamira | 369,796,343 |
| 35 | Busia | 369,203,975 |
| 36 | Vihiga | 338,057,178 |
| 37 | Isiolo | 285,197,344 |
| 38 | Samburu | 266,583,924 |
| 39 | Elgeyo-Marakwet | 258,505,138 |
| 40 | Garissa | 248,969,049 |
| 41 | Bomet | 238,930,420 |
| 42 | Lamu | 209,102,758 |
| 43 | West Pokot | 185,294,701 |
| 44 | Mandera | 168,047,287 |
| 45 | Wajir | 164,953,671 |
| 46 | Marsabit | 145,092,550 |
| 47 | Tana River | 92,568,520 |
Trends and Opportunities in Own Source Revenue Collection
1. Urbanization and Real Estate Growth
Counties such as Nairobi, Kiambu, and Nakuru benefit significantly from real estate development. Property rates, rental income taxes, and construction permits are major revenue sources. Urban counties should continue leveraging the demand for housing and commercial spaces to increase their OSR.
2. Tourism and Conservation
Narok’s success shows the potential of tourism in generating revenue. Other counties with untapped tourism potential, such as Kilifi, Kajiado, and Meru, should invest in developing their tourist attractions, improving infrastructure, and marketing their destinations.
3. Agriculture and Agro-processing
Counties like Uasin Gishu, Kericho, and Nyeri, which have strong agricultural sectors, could further increase revenue by encouraging agro-processing industries, which would create jobs and increase tax revenues. Adding value to agricultural products before they are sold would enhance OSR collection.
4. Expanding Local Taxes and Fees
Counties should focus on expanding revenue streams by introducing or better enforcing local taxes, fees, and licenses. For instance, market fees, parking fees, and business licenses can be increased through improved tax administration systems.
5. Public-Private Partnerships (PPPs)
Counties can explore public-private partnerships (PPPs) to develop infrastructure and services, which in turn can generate additional revenue. Investments in energy, water, and road infrastructure can boost economic activity, leading to higher OSR.
The 2023/2024 fiscal year demonstrated that counties with strong economic sectors, such as Nairobi, Mombasa, and Narok, consistently lead in own source revenue collection. However, many counties still struggle to generate significant revenue, particularly those in underdeveloped regions. By tapping into tourism, agriculture, real estate, and industrialization, counties can improve their financial independence and enhance service delivery.
For counties to increase their OSR, they need to invest in revenue-generating projects, improve infrastructure, and enforce efficient revenue collection mechanisms. With the right strategies in place, counties can reduce their reliance on national government allocations and become more self-sufficient.
