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Nairobi
August 2, 2021
Market Information Reports

Agriculture still is the cash cow for counties

Agriculture has been widely regarded as a fundamental pillar of the Kenyan economy since independence, with one in every two Kenyans employed in the field, according to the World Bank. 

At least 22% of the country’s gross domestic product is generated by the industry (GDP). 

In the past two decades, Kenya’s position as a regional hub in global trade has led to diversification, with sectors such as finance, technology, real estate and retail emerging as key economic drivers in job and wealth creation. 

However, a new report by the Commission on Revenue Allocation (CRA) indicates that Kenya’s economy remains tightly bound to the agriculture sector, which has remained a lifesaver for millions of Kenyans.  

According to the report, agriculture accounted for more than 40 percent of locally generated revenue in 34 out of 47 counties between 2013 and 2019. Only Nairobi and Mombasa had the sector’s revenue contribution at below 20 percent. 

In rural counties such as Elgeyo Marakwet and Nyandarua, agriculture accounted for up to 80 percent of the revenue collected over the past six years. 

This translated to an average of Sh1.8 billion collected in the two counties from agricultural, forestry and fishing activities between 2013 and 2019, according to the CRA data. 

“Agriculture is the mainstay sector for counties that collect less than Sh200 million annually in own-source revenue,” the report said. 

“Agriculture contributes more than 60 per cent of the gross county product for Bomet and Elgeyo Marakwet.” 

According to CRA, these counties generate hundreds of millions each year from economic activities related to agriculture, including land rates on agricultural property as well as levies on produce and livestock. 

Similarly, heavy reliance on agriculture was recorded in arid counties and those with much smaller landmasses fit for arable farming. 

Agriculture contributed for more than half of all revenue collected in Wajir, Turkana, Lamu, and Tana River between 2013 and 2019, amounting to Sh945 million in the six years under consideration. 

  

Despite considerable problems over the last two decades, the data present a picture of a resilient sector that remains the economy’s backbone. 

The agricultural index is ranked third at 10 percent in the counties’ equitable revenue share allocation formula. 

However, annual budgetary allocation to key functions such as crop production and livestock, value chain support and irrigation has been low. 

In the 2020-21 financial year, Treasury has allocated Sh54.2 billion to food security, which includes Sh29 billion for crop development and research and Sh7.7 billion for fisheries, aquaculture and blue economy. 

This is lower than the Sh59 billion allocated in the 2019/2020 financial year. 

Kenya’s agricultural industry requires Sh97.7 billion in annual financial allocation, this is according to the Route to Food Foundation, a lobby that pushes for equitable resource allocation to food production. 

  

According to CRA data, despite having enormous fertile land and being Kenya’s traditional breadbasket, several counties are underperforming in agricultural output. 

Counties such as Uasin Gishu, Trans Nzoia and Kirinyaga collected about Sh261 million, Sh127 million and Sh133 million respectively from agriculture in the past six years.  

These counties have the potential to collect Sh891 million, Sh467 million and Sh831 million respectively each year from their agricultural sectors. 

CRA Commissioner Irene Asienga says sources of local revenue collection are limited and diversification is key. 

 

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