Revenue from non-tax streams, such as fees on government services, grew by more than half in the financial year that ended June 30, 2024, on the back of increased digitalisation and mopping up of surplus funds in parastatals.
The National Treasury data shows non-tax cash receipts amounted to Sh129.27 billion during the year ended June 2024, a 57.65 percent jump over Sh82 billion in the prior year.
The revenue was largely boosted by flows from “surplus funds from Semi-autonomous Government Agencies, revenues arising from service provision collected through e-citizen and investment income [dividends], according to a senior official at the Treasury.
The non-tax revenue for the review period was Sh53.94 billion more than the original projections of Sh75.33 billion at the beginning of the last fiscal year.
The receipts form part of the government’s appropriations-in-aid funding — revenues collected directly by agencies through service fees as well as donor grants.
Services such as transportation permits like driving licences, land titling, and registration of persons are key sources of non-tax revenue. The other sources are royalties, investment income as well as fines and forfeitures.
The government has in recent years been moving services to the online portal, the e-Citizen, to improve efficiency and seal loopholes for bribery and other forms of corruption.
Some of the key State departments and agencies that have moved most of their services to e-Citizen are Immigration and Citizen Services Department, Kenya Revenue Authority, the Business Registration Service, National Safety and Transport Authority, C ompetition Authority of Kenya and Kenya Ports Authority.
The non-tax wallet was further boosted by dividend payouts from firms where the government has a shareholding. These include Safaricom — where the Treasury controls 35 percent shareholding— and Kenya Electricity Generating Company, which is 70 percent State-owned.
Other firms where the Treasury draws dividends are KCB Group (about 17 percent stake), Kenya Reinsurance Corporation (60 percent shareholding), HF Group and NSE Plc.
Treasury also receives dividends from cash-rich agencies such as the Central Bank of Kenya, Communications Authority of Kenya, Capital Markets Authority, Competition Authority of Kenya, Kenya Pipeline Company, and Kenya Ports Authority.
President William Ruto has also been adamant that State-owned entities must surrender idle cash in their accounts to the exchequer.
The President followed this up with a directive in March that commercial State corporations should wire up to 80 percent of net profit to the Treasury, an order that has now been included as one of the performance indicators for chief executives this financial year ending June 2025.
“The money that some parastatals make does not belong to their boards or management. It belongs to the people of Kenya as returns on investment,” Dr Ruto told parastatal chiefs.
The mop-up of excess cash in the parastatals is expected to partly ease liquidity woes the Treasury faces in some months, prompting it to borrow through T-bills and bond sales. The surpluses are comparable to profits by the State-owned entities and represent the balance between their revenues and expenses after tax.
