Nairobi Kenya,March 21st 2022 - Today marks the launch of phase 3 of the training and assessment of the County revenue administration systems in three Kenyan Counties – Narok, Nairobi and Wajir.

Participants in Wajir County during Phase 3 TADAT training and assessment

This third phase comes in the wake of the first and second phase completed in December 2020 and July 2021, respectively in eight Counties – Kilifi, Kisumu, Makueni, Garissa, Mombasa, Lamu, Isiolo and Busia. This initiative is supported and led by UNCDF and feeds into the evolving Kenya’s devolution process delivered through the UN Joint Programme on Devolution in Kenya and other UNCDF programme vehicles. Currently, UNCDF is supporting the 8 County governments previously subjected to TADAT assessments, to develop medium-term revenue enhancement action plans.

To this end, UNCDF in cooperation the Kenya School of Revenue Administration (KESRA) and supported by the International Monetary Fund’s TADAT Secretariat plans to conduct TADAT training and assessments using the Tax Administration Diagnostic Assessment Tool to achieve the following objectives:

• Capacity building for the County officers on what constitutes international best practice for a tax administration/County revenue administration for the various performance outcome areas
• Identify the relative strengths and weaknesses of the County revenue administration system by reference to each indicator.
• Provide baseline and set the reform agenda for the County revenue administration by focusing on the key initiatives which can enhance revenue administration at County level.

The lessons learnt during Phase 1 and 2 of the TADAT training and assessments in the 8 Counties, underscored the need for more conducive legal and regulatory environment for Counties to be able to improve their revenue generation, increase compliance levels to proactively engage taxpayers, simplify tax legislations and explore partnership for better engagement, comprehensive revenue automation for revenue collection is paramount, coupled with better administrative capacity and cost-effective collection practices.

According to the recent revenue gap analysis completed by the Commission on Revenue Allocation, over one third of Kenyan Counties collect only 20% of their revenue potential. Revenue enhancement actions to be implemented as part of a comprehensive planning system are designed to help Counties to close this gap and transform into effective agents of local development.

The Tax Administration Diagnostic Assessment Tool (TADAT) used for the assessment is an internationally recognized tool developed by the International Monetary Fund (IMF) and its partners and applied by tax administrations globally to establish the strengths and weaknesses in revenue administration to guide their reform agenda. Initially designed for assessments at the national level, a version relevant for the subnational level was developed, has been applied internationally and is also applicable to the Kenya context.

The outcome of such an assessment would act as a guide to counties on functional areas requiring improvement for enhanced revenue mobilization and accountability to achieve the development agenda of the Counties, including further policy advice and support to tap into alternative revenue sources.
UNCDF is very grateful to the Council of Governors, Controller of Budget, Commission on Revenue Allocation and the respective County governments for their support to this initiative and looks forward to working closely with the Counties (Nairobi, Wajir and Narok) on these assessments as well as on developing work plans to prioritize and address in areas in need of reform while at the same time fortifying areas of strength.

ABOUT UNCDF
The UN Capital Development Fund makes public and private finance work for the poor in the world's 46 least developed countries (LDCs). UNCDF offers "last mile" finance models that unlock public and private resources, especially at the domestic level, to reduce poverty and support local economic development. UNCDF's financing models work through three channels: (1) inclusive digital economies, which connect individuals, households, and small businesses with financial ecosystems that catalyse participation in the local economy, and provide tools to climb out of poverty and manage financial lives; (2) local development finance, which capacitates localities through fiscal decentralisation, innovative municipal finance, and structured project finance to drive local economic expansion and sustainable development; and (3) investment finance, which provides catalytic financial structuring, de-risking, and capital deployment to drive SDG impact and domestic resource mobilisation.