City Hall to collect Sh829.6bn from debtors in bid to cut ballooning debt
City Hall in Nairobi as pictured on June 10, 2020.
What you need to know:
- The Nairobi County Government’s outstanding liabilities grew by Sh200 million in the past year, from Sh76.7 billion as at December 31, 2019.
City Hall plans to collect Sh829.6 billion from its debtors in a bid to offset its ballooning debt, which now stands at about Sh76.9 billion.
The Nairobi County Government’s outstanding liabilities grew by Sh200 million in the past year, from Sh76.7 billion as at December 31, 2019.
The county’s medium term debt management strategy paper for 2021 says City Hall will issue a waiver on land rates.
Nairobi residents owe the county government Sh825 billion, with the bulk of Sh803 billion being in the form of penalties and interest.
The county has also formed a debt collection unit that will be tasked with pursuing defaulters.
City Hall is owed Sh904 million in single business permits, Sh644 million by sundry debtors, ShSh302.4 million in rent arrears by county houses tenants, Sh114 million from rental market stalls and Sh268 million for advertisements.
Another Sh811 million is for loading zones fees by both private users and national government institutions.
For the Sh856 million in way leave by Kenya Power, City Hall has commenced a debt swap with the utility firm. It still owes the State agency Sh692 million in electricity bills.
“The county government will now issue demand notices followed by enforcement upon expiry of the notices. If the county is able to collect the above account receivables, it will be easy to pay all debts,” said Finance executive Allan Igambi.
Debt breakdown
The county government’s debt consists of Sh55.1 billion in verified debts and another Sh21.8 billion in book debts (unverified).
Outstanding liabilities to creditors tops the list, standing at Sh38.7 billion, from the Sh39.5 billion recorded in 2019.
The Sh21.8 billion unverified debt was inherited from the defunct Nairobi County Council as part of loans taken by to fund water infrastructure projects in the 1970’s as well as government guaranteed loans taken in the 1980’s.
Suppliers and contractors are owed Sh6.7 billion, up from Sh4.7 billion recorded in December 2019.
In terms of loans, City Hall has an outstanding liability of Sh4.4 billion, up from Sh4.3 billion at the same time in 2019.
Another going concern for Nairobi is Sh4.1 billion in outstanding liabilities to lawyers.
In January, the Ethics and Anti-Corruption Commission (EACC) slammed the brakes on plans by the county government to pay Sh500 million to 25 law firms that had conducted business with it.
The EACC has been investigating the authenticity of the legal fees.
City Hall retired employees are owed Sh173 million in benefits and another Sh926 million in utilities.
“With strained county revenues due to accrued interests and penalties, especially on statutory debts, the county’s debt has continued to grow,” said Mr Igambi.
“Further, the debt portfolio worsened over the years due to failure to achieve revenue projections and high-compounded interests and penalties charged by statutory creditors. This has made servicing of the debts quite a challenge. The result is an ever-growing debt portfolio,” he added.
