KRA Achieves Historic One Trillion Shilling Collection Despite Economic Challenges

Kenya Revenue Authority (KRA) announced a record-high collection of one trillion Kenyan Shillings (Ksh1.030 trillion) as of December 8, 2023.

Despite the prevailing challenging economic conditions, this achievement marks a remarkable 15.8% growth in revenue for the month of November, compared to Ksh156.096 billion collected in the same month last year.

Over the past five months (July – November 2023/24), revenue collection has demonstrated a consistent upward trajectory.

KRA collected Ksh963.746 billion during this period, reflecting a substantial 12.5% growth compared to Ksh856.646 billion collected in the corresponding period of the previous financial year.

“In spite of the progressive growth, the collection was affected by performance of key economic indicators that directly drive revenue collection. These key indicators that significantly impact on revenue performance have generally moved contrary to expectations, with adverse impact on revenue mobilization,” KRA said.

KRA acknowledged that despite the positive trend, several key economic indicators have posed challenges to revenue mobilization. N

The significant depreciation of the Kenyan Shilling against the US Dollar by 24.7% in November 2023 and 22.0% in July – November 2023 has adversely affected import demand, particularly for key products like oil.

While import values in Kenyan Shilling terms demonstrated growth, the same was subdued in dollar terms, recording a 9.0% growth for the month and a cumulative decline of 9.2%.

Low domestic demand, reflected in the slowed Purchasing Managers Index (PMI), has further impacted revenue performance.

The PMI averaged at 47.18 points in July – November 2023, down from 48.66 points in the same period of the previous year. Depressed aggregate demand is also evident in what seems to be a sluggish GDP growth.

The tightening of financial markets, marked by an increase in lending rates and interbank rates, has contributed to a slowdown in credit extension, particularly to the private sector. This has resulted in a decline in bank profitability by 4.9% as of September 2023.

Despite these challenges, the Customs division of KRA achieved the second-highest monthly collection in its history, totaling Ksh72.116 billion, reflecting a notable growth of 17.6% over the previous year. The impressive performance is attributed to oil taxes, which collected Ksh27.943 billion, indicating a growth rate of 42.5% driven by increased oil volumes and values, along with positive impacts of tax policy changes introduced in the Finance Act 2023.

Domestic taxes also showed robust performance, amounting to Ksh108.174 billion in November 2023, marking a 14.7% growth over the same period in 2022 when Ksh94.331 billion was collected.

KRA maintains its target to collect 2.787 trillion by the end of the Financial Year 2023/2024. With confidence in sustaining the upward trajectory, KRA aims to contribute to the government’s efforts in bolstering the country’s economy.