‘KRA Has the Capacity, but It Is Kept On a Tight Leash’: The Politics of Tax Administration and Policy in Kenya

Abstract

This paper examines the factors that have influenced the performance of the Kenya Revenue Authority (KRA) since its establishment in 1995. It discovers a pronounced role for Kenya’s competitive and fragmented political settlement, which generates strong incentives for ruling elites to constrain KRA’s autonomy because of its potential as a patronage tool and as a political weapon. For much of KRA’s first decade of existence, these dynamics curtailed its ability to function as a ‘pocket of effectiveness’ (POE). KRA did, however, emerge as a POE (albeit a fragile and progressively weakening one) from around 2003, when a shared set of ideas motivated newly elected President Mwai Kibaki and an inner circle of likeminded ‘technopols’ to try and insulate the organization from the more corrosive and short-termist pressures generated by Kenya’s political settlement. They did so because of the importance of revenue mobilisation within their broader developmental vision. That said, KRA was a somewhat isolated POE, as Kibaki’s administration failed to overcome the much greater political pressures around tax policy to provide the kind of broader enabling environment that would have allowed KRA to tap significant new revenue streams. Thus, even in periods when KRA has functioned as a POE, Kenya’s performance with regards to revenue collection has demonstrated only moderate improvements. These findings, the paper concludes, offer insights into the limitations of POEs when the broader policy environment within which they are located remains unconducive.