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City Hall on the spot for surrendering county title deed to private developer
City Hall, Nairobi. A court has issued conservatory orders against a move by the Nairobi City County government to allow a private developer to use a title deed belonging to the county to secure a loan from a commercial bank.
A court has issued conservatory orders against a move by the Nairobi City County government to allow a private developer to use a title deed belonging to the county to secure a loan from a commercial bank.
The orders came after a lobby group known as Sheria na Watu petitioned the move by the county executive which was later taken to the assembly for approval. The petitioner argued that the move was against the law.
In a ruling issued by Justice Edward Wabwoto of the Environment and Lands Court at Milimani, the county was stopped from proceeding with the move until the case is determined.
Members of the city county assembly in April approved a motion that recommended that Tecnofin Kenya Limited be allowed to use the title deed to secure a loan from the Kenya Commercial Bank (KCB).
According to the motion that was presented by Majority Leader Peter Imwatok, the developer had sought to use the county assets as collateral to raise funds for the completion of a housing project.
The MCAs’ decision came after Nairobi Governor Johnson Sakaja held a county executive committee meeting where it was resolved that the title deed be used as collateral for a loan for the Pangani Estate Urban Project.
The city government, through acting County Secretary Patrick Analo, had requested the MCAs to approve the resolution allowing the private developer to use the county asset as collateral.
This is not the first time Nairobi City County is giving away its assets as collateral for a loan.
In 2012, the defunct city council lost access to a 10.13-acre piece of land where the Mariakani estate sits. The property was taken away to settle an outstanding debt of Sh1.4 billion that was owed to the Lapfund.
The debt was incurred after the defunct City Council failed to remit statutory deductions from its employees’ salaries to the pension scheme for several years.
Lapfund
The estate comprising 240 three-bedroomed residential units is now in the possession of Lapfund.
Efforts by then Nairobi Governor Evans Kidero’s administration to claim a stake in the 50-year-old estate proved futile after the courts gave the green light for LapFund to take over the property to recover the debt.
The Pangani Housing Project is a Public Private Partnership (PPP) programme undertaken by the city county government and was launched by then-President Uhuru Kenyatta on June 30,2020.
The project sits on a 5.2-acre property in the Pangani estate, which was developed in the 1950s.
The city county government is seeking to develop 1,582 housing units equipped with modern amenities for city residents.
Under a joint venture agreement, the city county government and the private developers created a special purpose vehicle (SPV) to implement the housing projects.
The agreement also states that the city county government is only required to provide land for the projects while the responsibility of the developer is to raise funds and implement the projects.
It is not clear the explanation that Tecnofin Kenya Limited gave in order to be allowed to use the county title deed as collateral to raise the funds.
According to the Registrar of Companies, Tecnofin Kenya Limited is owned by a web of other construction companies.
The registrar of companies lists Sovereign Group, associated with former President Moi aide Joshua Kulei, as a shareholder with a 39 per cent stake.
Epialces Investments Limited owns 39 per cent of the shares while Lee Construction Limited, owned by ex-Cabinet minister Simeon Nyachae’s son Lee Nyachae, owns 21 per cent of the shares. The remaining one per cent is held by Tecnofin Fczo.
The directors of the company are listed as Lee Nyachae, Antonio Da Silva, Renzo Bernadi, Noah Kibet Kulei and Robert Kanyi Muchoki.
