Role of County Own Source Revenue in the Provision and Management of Markets in Nairobi City County

Abstract

Globally, 'own source revenue' refers to the funds that local governments generate from their own activities and resources, such as taxes, fees, and charges. This revenue collection is used as an important tool for financing social and economic development. In Africa, local governments, through their own sources of revenue, play a crucial role in ensuring the effective improvement of local people’s social services. In Kenya, counties came into being in 2010 with the promulgation of the new constitution. In this new dispensation, counties have their specific mandates, key among them revenue generation from their own source to support service provision to the local people. Infrastructure financing is a big problem for most county governments in Kenya, as they deploy most of the resources at their disposal on recurrent expenditures at the expense of development. The provision of services, development, and maintenance of markets require a steady and guaranteed source of revenue, which only the devolved units can guarantee. In Nairobi, the case study shows that the county government has been able to raise substantial Own Source Revenue, but the potential to raise more is still there. In this regard, this study seeks to fill the existing research gap by investigating the role of the county’s own source revenue in the provision and management of markets in Nairobi City County. The study provides valuable insights into improving market management practices by examining how these revenues are generated, allocated, and utilized. The study’s overall objective was to establish the role of own source revenue in providing and maintaining markets in Nairobi County, focusing on markets in Nairobi’s Eastland area. Specific Objectives of the study were to assess the current state of selected markets in Nairobi County, Kenya; to establish the types and amount of own resource revenue realized from urban markets in Nairobi County, Kenya; to examine the legal framework regulating own resource revenue management in Nairobi County, Kenya and to determine the extent to which own source revenues are being used in the provision and maintenance of markets in the Nairobi County, Kenya. The study employed the Benefit Received Theory, the Theory of Maximum Social Advantage, The decentralization theorem, and the NIE Framework. The study adopted a cross-sectional descriptive survey to collect quantitative data and qualitative information from respondents in Nairobi County. The study’s target population was selected urban markets in Nairobi’s Eastlands area, with respondents being traders/stall owners, customers in the markets, market managers, and suppliers. The sample size calculated and determined from the population size was 385 respondents and 11 key informants. The study employed quantitative and qualitative research methodology with data collected via questionnaires and interview guides and analyzed through Excel, SPSS, and Word. The findings indicated that traders face numerous challenges in the markets. They pay business licenses, levies, market due fees, property taxes, and parking fees for using county government facilities and services. Traders pay the county revenues daily, weekly, monthly, quarterly, and yearly. Customers pay parking fees when accessing the markets. The key legislation the county government uses to raise revenue is the Nairobi County Finance Act of 2013, which provides for the various taxes, fees, and charges for services and other revenues. The collection of revenues is primarily done through the digital revenue collection system that the county has implemented. Despite the revenues being levied from the sampled markets, several challenges, including congestion due to inadequate market spaces, poor infrastructure, and lack of proper waste management systems, poor accessibility, limited parking space, poor sanitation, and occasional conflicts between vendors still obtain. The markets’ security and safety status significantly impact businesses. High crime rates, inadequate security measures, and the associated business constraints hinder growth and development. Most traders struggle with a lack of storage infrastructure. There is no precise mechanism for recouping part of the revenues generated from the markets to provide services. The study has identified several areas where the county government can make significant improvements in service provision in the markets. These improvements can enhance revenue generation and support traders and customers. For instance, installing more streetlights can boost business and security, while addressing cleanliness and functionality issues can mitigate health risks and improve market visitors’ well-being. Implementing effective waste management practices, especially during adverse weather conditions, can help retain customers and prevent economic losses for market vendors. These potential improvements offer a promising outlook for the future of market management in Nairobi County. The county government plays a crucial role in the provision, improvement, and maintenance of infrastructure in these markets. The challenges these markets face hinder their optimal functioning. Inadequate market spaces, poor waste management systems, and lacking basic amenities affect these markets’ safety, cleanliness, and overall efficiency. The county government's commitment to the modernization of market facilities, introduction of digital payment systems, regular garbage collection provision of waste management facilities, implementation of hygiene regulations, and maintaining a safe and secure environment is essential for the well-being of traders and customers within these markets. This underscores the importance of the county government's role in market management and the potential for positive change.