Nairobi, 19th October 2024
County Executive for Finance and Economic Affairs, Charles Kerich, highlighted the significance of the County Budget Review and Outlook Paper (CBROP) during a workshop for County Budget and Economic Forum (CBEF) members and county officers. The session focused on leveraging the CBROP for effective fiscal planning and revenue mobilization.
He explained that the CBROP reviews past fiscal performance, particularly revenue versus expenditure, to predict trends for current and mid-term periods, which is crucial for informed economic planning.
He highlighted revenue as a key factor in the CBROP analysis, stating, “In the last financial year, we collected KES 12.8 billion. While this is a record since the advent of devolution, it falls significantly short of our potential target of Kshs 20B, and far below the Kshs 67B estimated by the Commission on Revenue Allocation (CRA).”
Mr. Kerich urged participants to focus not only on analyzing the numbers but also on identifying strategies to increase revenue and reduce recurrent expenditure. He explained that looking at revenue trends over the past three to five years provides a solid projection of what the county is likely to collect in the current and upcoming financial years, assuming constant conditions.
However, he emphasized the need to explore initiatives that could break from past trends and significantly boost revenue. “Our commitments are based on the budgeted figures, not the actual collections. Each sector has been given provisional ceilings in the CBROP, and they will need to use these to prepare their respective budgets before we consolidate the overall county budget.”
Mr. Kerich concluded by stressing the importance of sector ceilings in forming a realistic, program-based budget. “Sectors must prioritize development, as the core purpose of devolution is to bring services closer to the people and foster development.”
Chief Finance Officer Asha Abdi said “This document allows us to assess our performance and find solutions collectively. Achieving our full potential in revenue mobilization is critical for realizing H.E Governor Sakaja’s manifesto programs and projects.”
Ms. Abdi acknowledged that the county had made significant strides in revenue collection over the past two years, increasing collections from Kshs 8 billion to Kshs 13B. “This growth is the result of the critical steps currently being undertaken to ensure sustained progress,” she added.
She pointed out that the county’s budget has consistently shown Kshs 20B for the past decade. The county has been presenting a total budget of Kshs 42B to the Controller of Budget; Kshs 20B is funded through equitable share, a small percentage on grants from partners, with the rest reliant on Own Source Revenue (OSR).
“As Nairobi County, we rely heavily on OSR to fund our operations, keep essential services running, and support development projects. Therefore, we cannot afford to achieve only 50-60% of our Kshs 20B target,” Ms. Abdi emphasized.
She further explained that the financial year started with a strategic meeting from Revenue Administration to review underperforming streams and identify areas for improvement. She stressed the need for continued fiscal discipline, stating, “We cannot sustain a Kes.42 billion budget with a revenue performance history of 50-60%. Proper cash flow management practices must be instituted to align spending with revenue collection.”
Ms. Abdi also emphasized the need for realistic budgeting, especially with the upcoming supplementary budget. “This is our chance to break the 10-year trend of unrealistic budget projections,” she said.
On expenditure management, Ms. Abdi noted that while overall budget absorption had improved, certain areas, such as development spending, required further attention. Regarding debt management, she put emphasis on moving beyond strategy formulation and focusing on implementation.
Chief Officer for Economic Planning, John Lintari stated that the forum was designed to engage on several key county initiatives. “The CBROP presentation provides an overview of the county’s performance, particularly in terms of the budget matrix, in line with the fiscal responsibility principles we adhere to. We need to examine how we have managed expenditure and revenue while also addressing the challenges we face in meeting some of the fiscal responsibility thresholds”.
He said, “A key focus on the discussions will be identifying strategies to meet these thresholds, especially in light of our limitations with own-source revenue and the equitable share allocations.”
County Head of Budget, Nancy Kiruri presented the CBROP presentation that featured fiscal performance in the FY 2023/2024, challenges faced in achieving revenue target such as ;loss of perishable revenue due to demonstrations against finance bill, inadequate and inaccurate database on property rates, business licenses and house rent; Revenue raising measures 2024/2025 such as educating public on importance of timely payment of county dues, enforce regulations on sectional titles; Expenditure performance by economic items, Challenges affecting budget implementation among others.
The participants were also taken through presentations on debt management and microeconomic performance and outlook.
CBEF Members led by their Secretary Steven Mwaura emphasized the need to interrogate County’s OSR and explore areas that CBEF members can inject fresh perspectives to what the county is doing in its budgeting and planning processes “We are ready to work together to unlock Nairobi County’s full potential.”
Present were County Executives Committee Members; Built Environment and Urban Planning, Patrick Mbogo, Business Hustlers and Opportunities, Dr. Anastasia Nyalita, Talent, Skills Development and Care, Brian Mulama, Green Nairobi, Maureen Njeri, Boroughs, Administration and Personnel, S.G Mwangi, Chief Officer for Revenue Administration and Acting Chief Officer for ICT Infrastructure, Tiras Njoroge, Head of County Treasury Martha Wambugu, Directors; Joshua Kimeu (Debt Management), Patrick Wanjohi (Accounting Services), Asset Management, George Mwariri, Ward Development Fund CEO Eng. Eston Njiru, Debt management, Joshua Kimeu, Supply chain management, Richard Mogoko, Deputy Director Economic Planning, Grace Chabari, and other county officers.
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