KRA exceeds revenue target by Sh16 billion

Michael Omondi-KNA

The Kenya Revenue Authority (KRA) surpassed the set revenue target for the Financial Year 2024/2025.

KRA collected Sh2.571 trillion, surpassing the Sh2.555-trillion target. This achievement represents a 6.8 per cent growth of revenue collection and a performance rate of 100.6 per cent, compared with the Sh2.407 trillion collected in the last financial year.

According to KRA Commissioner General Mr. Humphrey Wattanga, the revenue performance reflects the prevailing economic indicators especially the Gross Domestic Product (GDP) growth of 4.7 per cent (Economic Survey) with notable growth recorded in key sectors like agriculture, forestry and fishing, financial and insurance activities, transportation and storage, and real estate.

Further, overall inflation eased to average at 3.6 per cent in 2024/25 compared to 6.3 percent in 2023/24, while exchange rate of the Kenya Shilling against the US Dollar strengthened to an average of Sh129.35/US$ in the year under review, down from Sh144.1 in the previous year.

International oil prices per barrel dropped by 12.5 per cent, with these factors leading to aggregate downward adjustment of local fuel pump prices for both petrol and diesel by 11.8 per cent and 12.2 per cent respectively.

However, Wattanga noted that other factors moved contrary to expectations, thus impacting revenue negatively for instance, the first half of the Financial Year 2024/25 was characterized by numerous economic headwinds, including shelving of the Finance Bill 2024, high bank lending rates, global tariffs war, and international conflicts.

In particular, overall import values recorded weak growth of 0.04 per cent, affected by drop in import values of fuels and lubricants, and food and beverages which recorded declines of 16.4 per cent and 14.6 per cent respectively as export values declined by 2.0 per cent especially from horticulture (-2.5 per cent) and tea (-15.4 per cent).

Additionally, access to credit by the private sector, the Commissioner General revealed, remained constrained due to higher commercial bank lending rates in the current year compared to the previous year.

Nevertheless, a downward adjustment in lending rates is anticipated following the Central Bank of Kenya’s (CBK) decision to lower the benchmark rate to 9.75 per cent in June 2025.

“As at the end of December 2024, credit extended by commercial banks to the national government grew by 13.9 per cent, while credit to the private sector declined by 1.1 per cent,” he reported, adding that this contraction in private sector credit dampens the prospects for investment and expansion across key economic sectors.

Notwithstanding these challenges, Wattanga said KRA’s robust measures yielded a significant revenue collection turnaround in the second half of the financial year as revenue grew by 9.1 per cent, compared to the 4.5 per cent growth recorded in the first half of the financial year.

The Commissioner General reiterated that this 4.5 per cent growth of the exchequer revenue equates to Sh2.323 trillion collected by KRA compared to Sh2.223 trillion collected in the previous financial year which translates to a performance rate of 99.0 per cent, against a target of Sh2.347 trillion.

KRA also collected Sh248.276 billion on behalf of other government agencies, surpassing the target by Sh40.465 billion which translated to a performance rate of 119.5 per cent.