Nairobi, Kenya| The Kenya Revenue Authority (KRA) has reported a 4.5% growth in revenue collection for the first half of the 2024/25 financial year, amassing Ksh 1.243 trillion as of December 31, 2024.
This marks an increase from the Ksh 1.189 trillion collected during the same period in the previous financial year.
KRA’s Acting Commissioner for Strategy, Innovation, and Risk Management, Alex Mwangi, attributed the revenue growth to continued compliance enforcement and strategic revenue mobilization efforts.
Despite this progress, he noted that economic factors had influenced the overall revenue collection performance.
Revenue Breakdown and Performance
According to Mwangi, exchequer revenue collected on behalf of the National Treasury amounted to Ksh 1.120 trillion, while agency revenue collected on behalf of other government entities reached Ksh 122.872 billion.
The agency revenue surpassed its target of Ksh 101.316 billion, registering an impressive performance rate of 121.3%.
Customs revenue collection for the period (July–December 2024) totaled Ksh 429.127 billion, reflecting a 4.8% growth compared to the Ksh 409.548 billion collected in the same period of the 2023/24 financial year.
Similarly, domestic taxes amounted to Ksh 811.847 billion, representing a 4.4% increase over the Ksh 777.617 billion collected in the previous year.
Economic Factors Affecting Revenue Collection
Mwangi pointed out that revenue collection was impacted by key economic indicators, including a slowdown in Gross Domestic Product (GDP) growth.
Kenya’s GDP growth dropped to 4% in the third quarter of 2024, down from 6.1% in the same period of 2023 and 4.6% in the second quarter of 2024.
Another significant challenge was reduced domestic demand, as reflected in the Purchasing Managers Index (PMI), which averaged 49.2 points between July and December 2024—indicating a contraction in economic activity.
Additionally, import values declined by 0.6% during the first half of the financial year, affecting revenue collection from customs duties.
The most notable drops were recorded in food and beverages (down by 21.5%) and fuels and lubricants (down by 17.7%).
These two categories account for over a third of total import values, making their decline a significant concern for revenue performance.
Mwangi also cited government austerity measures that curtailed spending on VATable goods, further impacting tax revenue from key sectors.
Revenue Outlook and Future Targets
Despite these economic headwinds, KRA remains optimistic about meeting its revenue target of Ksh 2.684 trillion for the full 2024/25 financial year.
Mwangi reaffirmed the authority’s commitment to sustaining revenue growth through enhanced compliance measures, policy enforcement, and economic recovery initiatives.
“The KRA is confident that we will continue with this upward trajectory and achieve the set revenue target to support the government’s economic agenda,” he said.
As the country navigates economic uncertainties, the revenue authority is expected to implement more strategic measures to ensure continued tax compliance and optimal revenue collection.
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