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Opinion & Analysis

Consider proposal to transfer council debts

City Hall, Nairobi
City Hall, Nairobi. Nairobi County will for the second year running receive the lion’s share of the proposed Sh242.4 billion set aside for devolved units in the 2014/15 financial year. 

The proposal by a lobby group that an autonomous institution be established to inherit the billions of shillings owed by local authorities is worth considering.

Presently, the law dictates that all local authorities will cease to exist and their powers and liabilities are to be transferred to county governments after the next General Election.

The Kenya Alliance of Residents Association (Kara) reckons that this sets the table for chaos on the strength that the debt-laden country governments will be unable to deliver services efficiently, hence defeating the essence of devolution.

This position makes plenty of sense. We, therefore, urge policy and lawmakers to mull over plans that will allow county governments to start on a clean slate and accelerate service delivery as required under the Constitution.

For decades, local authorities have offered Kenyans a lesson on how not to run on what has seen the bulk of them earn notoriety for corruption and nepotism, which relegated service delivery to the back burner.

As a result of the poor leadership, the employees of the authorities perfected the art of dipping their fingers in State coffers—leaving the councils with little money to settle debts like bank loans, utility bills and employees’ pension obligations.

They also had weak structures that made it difficult to collect what is owed to them in form of rates and licence fees.

This placed the authorities in a unique position where they are owed more than they owe their service providers. For instance, the City Council of Nairobi reckons that it’s owed more than Sh50 billion, mostly by property owners in unpaid land rates, while it has sought the assistance of the Treasury to help it service part of its debts—which presently stand at Sh17 billion.

This irony is partly explained by the fact that the State has never been good at pushing its creditors to pay it on time.

And that’s why it’s important to establish an autonomous body whose mandate will be to pursue persons and businesses that owe councils and use the proceeds to settle billions owed by the local authorities.

This will be the only way to ensure that the benefits of devolution trickle down to households instead of saddling the freshly- minted county governments with debts.

We are aware that the proposal to have an independent body sort out the debt mess was scuttled by the central government, which insisted that the 47 counties must take over the assets and liabilities.

In sum, we urge the central government to reconsider this position and find means to resolve the debt matter without burdening the county governments.

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