Councils a burden to counties as 75pc 'can't pay salaries'

Seventy-five per cent of local authorities cannot pay employees’ salaries from their own revenues, in what will be a burden to counties.

Philip Owade, the secretary for Local Authorities administration said the entities were indebted to the tune of Sh17.3 billion as at the end of October last year.

All the 175 local authorities will be disbanded with their assets, liabilities and staff transferred to the 47 counties after the General Election due on March 4, 2013. Only 44 Local Authorities are able to pay salaries from revenues that they generate,” Owade said.

Mr Owade revealed that the authorities have accumulated nearly Sh1 billion worth of salary arrears adding that most authorities largely depended on Local Authorities Transfer Funds (LATF) to meet their obligations.

The official said “overemployment” was the main course of the problem that has contributed to the huge debt portfolio.

“According to the recent report commissioned by City Council of Nairobi (CCN) and which was conducted by Price Waterhouse Coopers, 70 per cent of recurrent expenditure of the council is spent on salaries.

The Council needs 7,716 workers compared to the current 11, 392 most of whom are semi illiterate, unskilled or semi-skilled,” Owade told a forum for mayors, chief officers, Local Authorities' associations and civil society groups on managing transitions into county governments at a Nairobi hotel.

UN Habitat executive director Joan Clos and the Head of Swedish Development Cooperation Mr Anders Ronquit addressed the forum.

Mr Owade raised concerns that he said needs to be addressed before the next general elections key among them the debts owed by local authorities.

He noted that although existing local authorities infrastructure yielded Sh19 billion in the 2010/11 financial year, bank debt for instance is close to Sh10 billion.

“Among these debts-Sh17,281,183,162-are statutory debts owed to NHIF, NSSF, Pensions funds, other creditors including SACCOS and suppliers,” he said.

The transition process will see the repeal of Local Authorities Act cap 265 with the direct abolition of all the 175 councils, towns, municipalities and cities.

Owade revealed that the ministry has reached a decision that all local authorities’ staff will be taken over by county governments but respective county public service boards will decide whether to take them on board.

Two weeks ago, the Kenya Alliance of Resident Associations (KARA) led a number of civil society members in pushing for the formation of an autonomous institution that will inherit the billions owed by local authorities.

Kara chairman Richard Nyaga said the body would then liaise with the government on how to the debts will be repaid otherwise the new counties will not function if they inherit the debts