Kidero hints at job cuts, higher fees in county revenue plan

Nairobi county government Wednesday announced an ambitious revenue plan that could see it undertake retrenchment to reduce the wage bill and increase fees charged for some services.

Governor Evans Kidero said the county plans to raise Sh16.9 billion or half of the county’s Sh31.5 billion 2014 budget from internal sources and the rest in transfers from the national government.

City Hall’s sources of revenue include rates, house rents, single business permits, billboard and parking fees.

Nairobi, the richest of the 47 counties, carries a huge annual wage bill of Sh9.5 billion or 30 per cent of the total budget. The county also spends 19 per cent of its revenue on servicing debts leaving little for development financing.

Dr Kidero said his office was exploring the options of reducing the wage bill, including a cut in staff numbers even as it seeks to plug the massive revenue leakages through inefficiency and corruption.

“It is an internationally accepted paradigm that for a public body to be sustainable, it should not spend more than 20 per cent of its income on personnel emoluments.

Any figure upwards of this, eats into resources that are required to meet the objectives of that organisation,” the governor told participants at a stakeholders’ conference.

The City Council of Nairobi’s monthly wage bill has climbed to Sh800 million from the previous Sh550 million.

The increment is the product of a new Collective Bargain Agreement (CBA) that raised the workers’ salaries by an average of 45 per cent and were backdated to September 2012. City Hall is yet to honour the agreement.

Development budget

The increase in the wage bill has continued to eat into the county’s finances leaving the development budget way below the optimal 60 per cent and resulting into poor service delivery.

“We need to intensify our revenue collection to take care of these alarming figures or to rationalise and restructure our workforce,” Dr Kidero said.
City Hall is also exploring new sources of raising revenue that will enable it to improve service delivery in the Kenyan capital.

“Traditional sources of revenue have proved inadequate, unreliable and with an expanded mandate, the county government needs to come up with innovative and progressive sources of revenue,” the governor said.

Dr Kidero’s intention to cut the wage bill comes one year after an audit recommended that City Hall should lay-off two in every three of its 11,392 workers lacking the relevant skills to perform their roles. PricewaterhouseCoopers (PwC), the consultants said the move would help cut staff costs and improve service delivery.

PWC at the same time recommended that City Hall hire 3,734 skilled workers — including urban planners and engineers — to fill the vacant positions arising from staff restructuring. It is not clear whether the county government intends to implement PWC’s recommendations.

Dr Kidero said he is particularly focused on plugging the public procurement loopholes that have for years been abused by corrupt officials.

“The Public Procurement and Disposal Act is very clear on what is supposed to be done while procuring goods and services for public entities. More often than not, public officials have invented ways to circumvent these guidelines culminating in the waste of public resources,” he said.

Five senior officials at City Hall were last week charged with attempted theft of Sh3.45 million from the City Hall.

(Read: City Hall officials charged with attempted theft)

The action came just days after Dr Kidero suspended them, blacklisted 25 phantom companies and subjected them to investigation.

The Treasury has recently established an integrated financial management information system (IFMIS) to help address revenue leakage problems both at the national and county levels.

Payment system

A key component of the IFMIS is an automated procurement and payment system that is expected help seal gaps in the buying of goods and services.

The system — Procure to Pay — would link up all government pay points and involve identification of users through passwords, meaning each action can be traced back to the initiator.

“I will need to enlist the help of each and every one of you as whistle-blowers to help eliminate the vice,” Dr Kidero said in reference to corruption.
The governor said that the county will in the new fiscal year liquidate Sh5.7 billion of its Sh33.9 billion debt.

Half of the debt is in loans that were borrowed to put up water infrastructure in Nairobi. The county is owed Sh51.3 billion, including Sh1.8 million, in rate defaults by the national government.

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