The Kenya Revenue Authority (KRA) has collected Ksh.1.030 trillion as of December 8, 2023, marking a historic achievement despite economic shocks and declines in key indicators.
In November, the KRA recorded a 15.8% increase in revenue collection, reaching Ksh.180.714 billion, a significant increase from the previous month’s Ksh.156.095 billion.
KRA’s revenue collection has consistently increased over the past five months (July-November 2023/24).
The Authority’s revenue increased by 12.5% to Ksh.963.746 billion from Ksh.856.646 billion in the previous financial year.
Oil taxes contributed to the performance, collecting Ksh.27.943 billion, a 42.5% growth from the previous year, driven by increased oil volumes and values.
Tax policy changes, including VAT rate adjustment, contributed to growth, resulting in a 14.7% increase in domestic taxes to Ksh.8.174 billion in November 2023.
Weaker Shilling Effects
The collection was, however, affected by the performance of key economic indicators that directly drive revenue collection.
The Kenya shilling’s depreciation against the US dollar, which reached 24.7% in November 2023 and 22.0% in July-November 2023, has deviated from expectations, negatively impacting revenue mobilization.
Import values in Kenya Shilling increased by 36.0% and 11.0% in November 2023 and July – November 2023, respectively, but dollar terms saw a subdued growth of 9.0%.
Low domestic demand negatively impacted revenue performance, as indicated by a slowed Purchasing Managers Index (PMI), with an average of 47.18 points in July-November 2023.
The tight financial markets, characterized by increased lending and interbank rates, have slowed down credit extension, particularly to the private sector, leading to a 4.9% decline in bank profitability as of September 2023.
KRA’s one trillion mark achievement demonstrates resilience and strategic revenue collection, highlighting potential growth amidst economic challenges.
