Editorials

EDITORIAL: Nairobi’s Sh66bn debt calls for status rethink

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Nairobi governor Mike Sonko. FILE PHOTO | NMG

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Summary

  • Kenyans have focused on public debt in recent years, a rare occurrence in a country where public finance gets fleeting attention.
  • While expert opinion has been divided on whether the Sh5.3 trillion internal and external debt is sustainable, little focus has been paid to agencies like counties and parastatals, including universities, that have been on binge borrowing.
  • The latest revelation that the Nairobi County debt has climbed to Sh66 billion in particular merits attention.

Kenyans have focused on public debt in recent years, a rare occurrence in a country where public finance gets fleeting attention. While expert opinion has been divided on whether the Sh5.3 trillion internal and external debt is sustainable, little focus has been paid to agencies like counties and parastatals, including universities, that have been on binge borrowing.

The latest revelation that the Nairobi County debt has climbed to Sh66 billion in particular merits attention. According to a report carried in this publication yesterday, City Hall owes pension funds — Lapfund and Laptrust — Sh13.8 billion, legal creditors (Sh5.4 billion) and suppliers and contractors (Sh5.2 billion).

It owes the taxman Sh5 billion, another Sh3 billion in bank loans, Sh875 million for utilities like Kenya Power and water bills and is yet to pay Sh134 million benefits for retired or deceased employees.

To be objective, the city is also owed billions by the national government, parastatals and residents which it has done a less than satisfactory job of collecting — either because of lack of political will or through inefficiency.

However, that does not lessen public concern about the gravity of the matter.

For instance, failure to pay pension funds contributions threatens the future of its workers, and hurts the work and future of pension funds as happened with the Technical University of Kenya. On top of that, failure to pay the likes of the the Kenya Revenue Authority means that City Hall is a threat to development and wellbeing.

The question that taxpayers in Nairobi want answered is whether the county government is capable of paying off these debts. The answer appears to be more likely in the negative. During the first 10 months of Mike Sonko’s government, revenue collection dropped by Sh1 billion compared to Evans Kidero’s era.

The current administration has just slashed car parking fees from Sh300 to Sh200.

The problem of counties failing to pay debts is not unique to Nairobi.

Governors, as a rule, must make a commitment to address the serious challenge that their governments’ failure to settle debts is posing to the economy.