Parliament has opened an inquiry into multimillion-shilling deals counties have signed with financial technology firms for automation of revenue collection.
The development comes amid concerns of massive graft in the award of tenders, collusion between the counties and the firms to defraud taxpayers and exploitation by the service providers.
In the inquiry being undertaken by Senate Finance and Budget committee, the lawmakers seek to establish whether the counties are getting the value for money in the automation deals.
“The committee should cause the office of the Auditor General to assess and report on the value for money,” nominated Senator Raphael Chimera said in his petition seeking the probe.
In the petition sanctioned by speaker Amason Kingi, Chimera wants the committee to establish the impact of the systems on the own source revenue in the respective counties.
The committee will undertake a comprehensive systems audit of all the revenue systems across the 47 counties.
This includes a detailed database level audit, a data storage infrastructure audit, a network security audit, a detailed application system audit and a systems administration mechanisms audit.
“The committee should clarify whether the Commission on Revenue Allocation was involved in the assessment of the suitability of the respective systems,” the petition reads.
It adds, “If so, highlight the recommendations made by the commission pursuant to Article 216 (2) of the Constitution.”
Currently, nearly all counties have contracted financial technology firms to collect revenues on their behalf.
The counties spend millions to procure the systems besides the commission they charge for every coin they collect.
However, despite spending the millions, reports by Controller of Budget and Auditor General show that nearly all the 47 counties are still missing their own source revenue targets.
In the Senate probe, the committee seeks to establish a status update on the implementation of automated revenue collection and management systems in all 47 counties.
The inquiry will disclose the details on the nature and cost of systems, the respective vendors and total revenue collected by the systems so far.
If need be, the committee will cause the Public Procurement Regulatory Authority to assess and report on the adherence of the tendering process, contractual and service level agreements to applicable laws and regulations.
Currently, there is no law that provides for uniform revenue collection system for the counties.
However, a bill has been tabled in the Senate to compel the devolved units to develop their own revenue collection systems.
But the Council of Governors has opposed the bill.
“We wish to note that a significant number of counties are already implementing revenue collection systems that ought to be recognised by the law as public resources have been used,” the council said in a submission to the Senate.
The Public Finance Management (Amendment) Bill, 2023 compels the devolved units to develop own revenue systems in collaboration with the Kenya Revenue Authority.
The bill is sponsored by nominated Senator Hamida Kibwana.
“The principal object of this bill is to amend the Public Finance Management Act, No. 18 of 2012 to require county governments to develop and implement a county revenue collection system,” it states.
The bill introduces a new section to the principal Act to provide for mandatory establishment of a revenue system.
“A county treasury shall, in consultation with the National Treasury and the Kenya Revenue Authority, design, develop and implement a county revenue collection system within one year of the coming into force of this Act,” it states.
The system, the bill states, shall be transparent, efficient, effective, verifiable, simple and adequately secure to prevent any fraud and losses.
The bill shall respect and promote the distinctiveness of the national government and the county government and provide for separate accounting and reporting.
“A county treasury shall prepare and submit a quarterly statement and report on the performance of the county revenue collection,” it adds.
"The county treasury shall submit copies of the quarterly statement and report to the Senate and the National Treasury."