Increased construction of buildings in Nairobi, spurred by the national government’s rollout of affordable houses, has tilted the county’s revenue streams, seeing building permits rake in more revenue than parking.
In the three months ending September, building permits generated Sh484 million for the county, surpassing Sh434 million in parking fees, the controller of budget (COB) reports.
The building permits revenues accounted for 22 per cent of the Sh2.26 billion that the Nairobi City County generated from its own sources during the period and were an 86 per cent increase from the Sh260.5 million revenues netted during a similar period last year.
This saw revenues from the issuance of building permits for the first time contribute the highest proportion of the county’s own-source revenue (OSR), surpassing parking revenues, which have always been the number one cash stream.
“During the first quarter of FY 2024/25, the county generated Sh2.26 billion from its sources of revenue … This amount was an increase of 31 per cent compared to Sh1.72 billion realised in a similar period in FY 2023/24, and was 11 per cent of the annual target,” the COB reported.
Top revenue streams for Nairobi City County during the three months included the issuance of building permits, followed by parking fees which generated Sh434.4 million, hospital fees which amounted to Sh382.5 million, and issuance of business permits (Sh275.8 million).
Historically, Nairobi has been relying on parking fees to contribute the largest share of its OSR. During the first quarter of the previous (2023/24) fiscal year, parking fees contributed 24 per cent (Sh413.5 million) of the county’s OSR.
This was followed by building permits and approval, which generated Sh260.5 million, land rates which contributed Sh192.9 million and single business permits which managed Sh173.7 million.
“The highest revenue stream, Sh484.39 million, was from plans and inspections (building permits), which contributed 22 per cent of the total OSR receipts during the reporting period,” the COB reported.
Building permits also had the sharpest increase in revenues during the first quarter of 2024/25 compared to a similar quarter in 2023/24, with an 86 per cent increase in the amount collected, compared to business permits whose collections increased by 59 per cent to Sh275.8 million.
Building permits are growing to generate high revenues for the county at a time when the national government has been rolling out the construction of thousands of houses, under its affordable housing programme.
Latest government reports indicate that about 124,000 houses under the affordable housing programme are at different stages of construction, with the State banking on the programme to fill Kenya’s housing gap.
Treasury documents show that the government plans to collect Sh500 billion to facilitate the construction of some 363,860 houses over the next decade, though less than 5,000 houses have been completed since 2022, based on available data.
