Nairobi County saddled with Sh44 billion debtSunday September 22 2013
Liabilities inherited from the defunct Nairobi City Council (NCC) are weighing down the county government, making it difficult to provide services to residents.
Total debt owed by the county of Nairobi stood at Sh43.99 billion as at the end of August, according to official data from City Hall.
Government agencies, on the other hand have not paid the Nairobi City County debt amounting to Sh47.5 billion. The city’s woes are compounded by a Sh5 billion loan from Equity Bank that the NCC borrowed to defray some of its expenses.
“The terms of repayment of this loan have significantly compromised the county government’s ability to deliver services and meet its other obligations,” Dr Kidero said when he appeared before the Senate Standing Committee on Devolved Government last week.
According to figures tabled by Dr Kidero, the county government owes Sh5.5 billion to its statutory creditors with Local Authorities Pension Trust (Laptrust) and Local Authorities Pension Fund (Lapfund) accounting for Sh4.2 billion.
The city government has not settled PAYE contributions of Sh614.4 million to the Kenya Revenue Authority (KRA), Sh674.4 million employees’ contributions to the National Social Security Fund (NSSF) and Sh3.5 million to the National Hospital Insurance Fund (NHIF).
It had by August 31 not settled its bank loans and overdrafts amounting to Sh4.95 billion, with suppliers of goods and services not paid Sh1.7 billion.
The county is also facing difficulties settling litigation fees which stood at Sh1.2 billion by last month and is also due to settle retired and deceased staff benefits totalling Sh85.9 million.
Contingent liabilities to KRA, NSSF, Laptrust, Local Authorities Service Delivery Action Plan (Lasdap) ongoing projects, litigations, government guaranteed loans, local government guaranteed loans and on-lent water (foreign loans) all total Sh27.2 billion.
“The Nairobi City County is currently facing cash flow challenges and is unable to meet its financial obligations which include payment of salaries, statutory deductions and service delivery to the residents —the most crucial being garbage collection, street lighting and provisions of health services,” he told the Senate team chaired by Kipchumba Murkomen (Elgeyo Marakwet).
Dr Kidero said the national government owes his county Sh3.1 billion in Contributions In Leu of Rates (CILOR) and parking fees.
The Kenya Broadcasting Corporation (KBC) tops the list of parastatals that owe the city government a total of Sh2.3 billion. KBC has not settled Sh815 million.
The Kenya National Assembly, Kenya Railways Staff Retirement Benefits Scheme, Agricultural Society of Kenya, Kenya Railways Corporation, Kenya Power, Kenya Industrial Training Centre and the Kenya Cultural Centre are among the city government’s debtors.
The county government is also claiming about Sh42 billion from the Department of Defence (DoD) for land on which the Embakasi Garrison stands. The county and other claimants are demanding Sh61.5 billion from DoD on the said land.
“Due to unpaid debts the county has over the period not been able to meet its obligations smoothly,” he said.
Dr Kidero has proposed a debt swap as the best way to resolve the city governments’ financial woes in addition to the national government settlement of its full debts.
The Senate is seeking ways that the huge debt that the defunct 175 local authorities incurred can be written off or be taken over by the national government to enable counties start on a clean slate.
“The debts inherited by the county governments should either be taken over by national government or written off altogether after a thorough audit by the Transitional Authority and the National Treasury, otherwise we are setting counties for failure,” Amos Wako, the Busia senator said.