Business Models for Revenue Generation and Enhancement Adopted by County Governments in Kenya

Abstract

As part of reforms, many countries are devolving responsibilities to local governments which face the challenges of mobilizing appropriate levels of revenue to enable effective service provision and address poverty and inequality issues. After the 4th march, 2013 general elections in Kenya, 47 county governments were established as per constitutional requirements. Several factors in each county's political, administrative, cultural, social and economic history are expected to affect the relationship of local government and the citizenry, and hence its ability to generate revenues and administer services. Taking cognizance that there is a completely deliberate strategy or a completely emergent strategy, this study sought to foremost establish business models adopted by county governments for revenue generation and enhancement. Secondly, to identify factors influencing revenue generation and enhancement among the counties in Kenya. Out of the target 47 counties, 39 counties participated in the study. Study results indicate that to a very great extent, counties have provided public land for entrepreneurs as a revenue generation model. The counties to a great extent also seek external funding from the central government and development partners alongside developing economic linkages with business community, developing of tailor made flexible economic development incentive policies, encouraging investors to establish and expand businesses at the county, providing suitable tax treatment to encourage entrepreneurs and encouraging sustainable tourism within the jurisdiction of the county. There are also counties which have encouraged establishment of research and development parks in the county, developed revenue management capacity by training qualified personnel, trained staff in efficient budgetary and financial management systems, established proper revenue management mechanisms and implemented fiscal policy measures. There is however an identified need for these devolved government units to innovate new models of attracting, maintaining and retaining county individual attractiveness for investments, revenue enhancement and revenue generation.