Members of the Nairobi County Assembly have approved a proposal allowing City Hall to borrow up to Sh1.7 billion every month from Sidian Bank to cushion the county against salary payment delays affecting its more than 19,000 employees.
The facility, anchored in a Memorandum of Understanding (MOU) between the Nairobi City County Government and Sidian Bank Ltd, is intended to help the county bridge cash-flow gaps whenever there are delays in receiving its equitable share from the national government or when internal revenue collections fall short.
The approval followed deliberations by the Assembly’s Finance, Budget and Appropriations Committee, which reviewed the MOU under the provisions of Standing Order 205 before tabling its report in the House.
Budget Committee chairman Wilfred Odalo, who presented the report, said the facility was meant to ensure county workers are paid on time and that services to residents are not disrupted.
Sidian Bank logo.
Photo credit: File | Nation Media Group
“We evaluated the proposal and ensured that workers within the county government are working and for service delivery, we have approved this deal,” Mr Odalo said.
Under the terms of the agreement, Sidian Bank will provide payroll support services, enabling City Hall to access up to Sh1.7 billion monthly to cover salary obligations. The MOU further states that the lender will charge a 0.5 percent late payment fee for any outstanding amount after 60 days from the due date of an instalment.
Minority Leader Anthony Kiragu said the borrowing which is equivalent to Sh1.7 billion will be used to offset the salaries of the workers.
“It is an agreement that the county executive has with the bank and this will allow the smooth running of operations. We have scrutinized and looked at the figures for the past four months and realized that everything is in line with law and requirements,” Mr Kiragu told the House.
City Hall told MCAs that it settled on Sidian Bank after two other banks that had expressed interest in the arrangement were dropped, with county officials indicating their fees were higher.
Nairobi County reinforcement officer marching in front of the Nairobi City County Assembly along Wabera Street before Governor Johnson Sakaja (Centre) addressed the Assembly on October 19, 2022.
Photo credit: Evans Habil | Nation Media Group
The approval also comes months after Nairobi County shifted its primary banking operations to Sidian Bank, a move that had sparked unease among several MCAs and fuelled questions about the circumstances surrounding the change.
At the time, some legislators demanded clarity on why the county abandoned its previous banking arrangements and whether the switch had been linked to the proposed payroll financing facility now before the Assembly.
Beyond payroll support, the agreement also assigns Sidian Bank several additional financial services for the county government, including revenue collection and revenue management systems, management of the Facility Improvement Fund (FIF) through ledger fee–free accounts integrated with mobile payments, and management of project accounts, particularly donor-funded programmes, without ledger charges.
However, the committee flagged gaps in the information provided by the county treasury, particularly regarding the cost of payroll services under the new arrangement.
“Whereas the committee appreciated this positive graduation, it could not determine the cost of the payroll services and hence to understand from the County Treasury on the claim that the previous bank was charging higher repayment interest and whether such costs was occasioned by delays in payments,” read part of the committee report tabled before the Assembly.
The report also noted that in the Second Assembly, the county had a similar arrangement with Cooperative Bank, which charged a 0.5 percent late payment fee for outstanding amounts after 30 days, a term the committee observed appeared to contradict claims by the county executive that the previous arrangement carried higher repayment costs.
The Nairobi County Assembly at a past sitting.
Photo credit: File | Nation
The borrowing facility comes against the backdrop of ballooning personnel costs at City Hall, which have strained the county’s finances in recent years.
By late 2025, Nairobi County’s wage bill had risen to about Sh1.7 billion per month, pushing the annual personnel expenditure to roughly Sh17.3 billion, up sharply from Sh6 billion in 2022. Over the same period, the number of county employees expanded from 5,777 to more than 19,000.
Employee compensation now consumes between 55 percent and 69 percent of the county’s revenue, placing sustained pressure on its budget and contributing to recurring salary delays.
A special audit has also raised concerns over payroll management, revealing that more than 60 employees were processed through both the Integrated Personnel and Payroll Database (IPPD) and manual payroll systems, a loophole auditor warned could expose the county to double payments.
The newly approved borrowing arrangement is expected to provide temporary relief for salary payments, though the rising wage bill continues to pose long-term fiscal challenges for City Hall.
