Treasury defies governors, set to roll out single revenue system for all counties

Governors have suffered a major setback after the National Treasury confirmed it will proceed with the rollout of a unified revenue collection system for all counties, effectively replacing the diverse platforms currently in use.

Appearing before the Senate County Public Accounts Committee on Thursday, Treasury Cabinet Secretary John Mbadi said the integrated county revenue management system is ready for implementation and will resolve inefficiencies caused by the existing patchwork of platforms.

“We are rolling out an integrated county revenue management system. It is going to replace this fragmented county revenue management framework,” Mbadi stated.

The Council of Governors (CoG) has strongly opposed the plan, arguing it undermines devolution by imposing a single system on counties. In 2023, governors rejected a Bill that sought to have counties develop revenue systems in partnership with the Kenya Revenue Authority (KRA), insisting that many had already invested significant public funds into their platforms.

“A significant number of counties are already implementing revenue collection systems that ought to be recognised by law, as public resources have been used to develop them,” CoG said then.

Mbadi, however, maintained that running dozens of separate systems for the same function was wasteful.

“We cannot have 47 or 48 systems in a country dealing with revenue collection. We should have at most two or three,” he emphasised.

He added that the Treasury had engaged governors and other stakeholders through the Intergovernmental Budget and Economic Council to prepare for the rollout, noting that earlier resistance was partly due to a “misunderstanding.”

Currently, many counties rely on private financial technology firms to operate their revenue collection systems, incurring high procurement fees and commission charges. In 2023, KRA Commissioner General Humphrey Wattanga warned senators that the use of different vendors and non-standardised processes was eroding county revenues. He cited vendor-driven contracts, unclear technical specifications and excessive commission rates as key concerns.

Some counties have yet to automate their systems, still using outdated manual processes inherited from defunct local authorities, such as the Local Authority Integrated Financial Operations Management System.

In 2024, senators tasked Auditor General Nancy Gathungu with auditing all external firms contracted to collect county revenue, citing fears that billions were being siphoned from devolved units. Gathungu reported that some vendors existed only on paper and stressed that while the Treasury has the legal authority to prescribe revenue systems, governors had entered contracts without proper oversight, resulting in widely varying and costly commission rates.