Kenyan senators are pushing for a new audit on private firms contracted by counties for revenue collection, citing concerns over the accuracy and transparency of the figures declared by these companies. The lawmakers have urged Auditor General Nancy Gathungu to scrutinize the external revenue collection firms, arguing that the current lack of oversight has created a loophole that allows these companies to siphon billions of shillings from county coffers.
Appearing before the Senate County Public Investment and Special Funds Committee, chaired by Vihiga Senator Godfrey Osotsi, Gathungu highlighted the proliferation of “briefcase” firms—revenue collection companies that often lack substantial infrastructure or accountability mechanisms. She noted that although the law grants the National Treasury the authority to prescribe revenue collection systems for counties, governors have bypassed due diligence, instead opting to contract various companies at inconsistent rates.
“The rates should be standardized so that the commission charged by the firms does not vary from one county to another,” Gathungu said. “The lack of standard rates is why counties are losing a significant amount of revenue.”
Narok Senator Ledama Olekina emphasized the urgent need to amend the Public Finance Management Act, 2012, to empower the Auditor General to audit the systems of the revenue collection firms. He argued that the current lack of scrutiny allows these companies to operate unchecked, resulting in substantial revenue losses for counties.
“Giving these companies a blank cheque has seen counties lose billions,” Olekina said. “We cannot ascertain the actual amounts they collect. It’s time to fix the loopholes in the management of own-source revenue in the counties.”
Olekina proposed that by granting the Auditor General the authority to audit the firms’ systems, there would be increased accountability and a clear money trail from the service provider to the county, and ultimately, to the County Revenue Fund. He also pointed out that despite the law prohibiting service providers from deducting their commission from the revenue collected at the source, many firms still engage in this practice, exacerbating revenue losses.
“We must tighten these loopholes because if we don’t, we’ll just be receiving arbitrary figures that firms can manipulate,” Olekina added.
Echoing Olekina’s sentiments, Migori Senator Eddy Oketch argued that amending the law to mandate audits of these firms would bolster the integrity of the revenue collection process. The senators’ push follows a report by the Ethics and Anti-Corruption Commission (EACC) last October, which flagged several counties for alleged mismanagement and diversion of revenue collected through private firms.
The EACC report identified Nairobi, Narok, Kajiado, Machakos, and Kilifi as major offenders, with senior officials in these counties accused of colluding with service providers to divert county revenue. The commission highlighted that in some instances, private firms have been given full control over revenue management systems, making it nearly impossible for county governments to maintain oversight or ensure accountability.
Furthermore, the EACC pointed out that senior county officials often have super-user rights on the automated systems, allowing them to delete or edit the amounts of revenue collected, thus enabling the diversion of funds. In other cases, counties lack effective mechanisms to reconcile revenue data when multiple service providers are involved, leading to further discrepancies.
“As a result, many county governments are failing to meet their revenue targets, with some performing worse than the defunct local authorities,” said EACC spokesperson Eric Ngumbi. “Others have stagnated at the same revenue levels despite having increased revenue streams.”
The senators’ proposal to audit the private firms could be a crucial step toward closing the revenue leakages that have plagued county governments, ensuring that public funds are protected and used to improve services for citizens.
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