You drive into a shopping mall in Gigiri on a cold morning to park your car as you are headed for a visa appointment at the neighboring US Embassy. The guard asks you where you are going. You say you are going to the US Embassy. As you drive out of the mall after your visa appointment you find the guard waiting for you with a receipt book to charge you the princely sum of Kes 300/- for three hours of parking. You grit your teeth, pay and leave. This is called income collection. You drive into a shopping mall in Gigiri on a cold morning to park your car as you are headed for a visa appointment at the neighboring US Embassy. The guard asks you where you are going. You remember the last Kes 300/- that you paid so you say that you are going to the new outpatient hospital within the mall. You park your car, sneak past the guard who is busy asking another driver where he is going, and go to the US Embassy. As you drive out of the mall after your visa appointment you find the guard waiting for you. You tell him you were at the Nairobi Hospital “ala!” He lets you drive off since you used the parking to visit a tenant. This is called income leakage.

You drive into Warwick Centre on a cold morning to park your car as you are headed for a visa appointment at the neighboring US Embassy. You know the drill by now. As you leave, you tell the guard “why don’t I give you Kes 100/- and we kill this story?” The guard accepts your offer, puts the money into his pocket and cheerfully waves goodbye to you. This is called income redistribution.

The Daily Nation on October 8th last week ran with an interesting headline: “Counties face Shs 133 bn budget crisis, MPs warn”. The report was issued by the Parliamentary Budget Office and essentially highlighted what we have always known. The counties cannot sustain themselves in the short term with their own county generated revenues. The report says that on average, counties need to raise between two and seventy times their current revenue potential. On the lower side of two times is Nairobi which, according to the report, has a revenue capacity of Kes 6.9 billion but requires Kes 12.8 billion to serve its 3 million residents. On the higher side of seventy times is Tana River County which has a revenue potential of Kes 25.5 million but requires Kes 1.8 billion to run.

No way! There is no way the chaps who sneakily awarded themselves an obscene it-was-nice-doing-business-with-you-folks bonus could come up with a rational document that questions how revenue (read: blood, sweat and tears of the mwananchi) can be collected and distributed (read: into-the-big-fat-stomach of the MP). So I did a little bit of a fishing expedition of my own. First off, not a single MP wrote the report by the Parliamentary Budget Office. The Parliamentary Budget Office describes itself in the report as a non-partisan professional office of the Kenya National Assembly whose primary function is to provide timely and objective information and analysis concerning the national budget and the economy. In the acknowledgements section of the report the core team of writers and junior fellows who contributed to the report are dutifully named.

Secondly, delving into a little bit of semantics, these hard working professionals interchangeably use the words revenue potential and revenue collected. The mixed, and therefore erroneous, use of the terms should be amended. Revenue Potential means what can “possibly be raised” while Revenue Collected means what has “actually been paid” to the Collector. The report then publishes a table attributed to the Ministry of Finance and Commission on Revenue Allocation that shows actual revenue collections from the counties. So I will safely state that according to this table, revenue collected in Nairobi is Kes 6.9 billion, rather than conjecture as the newspaper article did, that Nairobi has a potential of the same.

Nairobi’s revenue potential, quite simply, cannot be quantified. Why you ask? Well, we know what the total land under the county is and, subsequently, the potential rates that can be collected therefrom. Easy as pie. What we don’t know are the numbers of businesses that are in existence and the potential licence fees that can be collected. We can hazard a guess, obviously, but in an environment where what we pay for is not translated into what we should be getting, licence fee evaders in the form of informal businesses will continue to flourish. In an environment where Lucifer’s sidekicks – sorry – City Council askaris are loathed, abhorred and detested in equal measure rather than viewed as enforcers of the law, local tax evasion will continue to flourish.

More importantly, how much income leakage occurs within the offices of revenue collection at City Hall? You know what I am talking about: income that is not collected because the “collectors” have been asked to look the other way and appropriately rewarded for their blindness. How much income is “redistributed” to pockets other than the rightful institutional ones: income that never finds its way into City Hall’s accounts and is never reconciled during the monthly reconciliation cycle. It is highly likely that because of the income leakage and redistribution, Nairobi’s actual revenue potential is double the actual revenue collection. If we turned the screws more tightly to seal the income gaps, Nairobi – and other counties as well – could raise sufficient revenue without reaching out to the Central Government. The irony is that the report by the Parliamentary Budget Office, if used appropriately by members of parliament, could actually force greater scrutiny on the checks and balances within future county governments as far as revenue collection is concerned and maybe leave more money on the table at Central Government level for worthy redistribution as end-of-service-bonuses for members of parliament! How’s that for income redistribution?

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Twitter: @carolmusyoka