KCB moves to court over Sh4.3bn City Hall default

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KCB Group #ticker:KCB has moved to the High Court to enforce the collection of Sh4.3 billion worth of loan and interest from the Nairobi County which has defaulted on the credit inherited from Equity Bank .

In an application filed before the High Court in Milimani, KCB wants the court to recognise a ruling from an arbitration and compel the county government to settle the debt.

The county government was directed to pay KCB Sh4.3 billion in November last year after the matter was referred to Phillip Bliss Aliker.

City Hall has set aside Sh4.4 billion to clear the KCB debt, signalling end of protracted legal battle and risk of asset seizure.

The amount is contained in Nairobi County’s second supplementary budget for the year ending next month and approved by ward representatives last Thursday.

Nairobi County Assembly Budget and Appropriations committee chairman Robert Mbatia said as part of the second supplementary budget, Sh12 billion has been allocated towards settling the county’s pending bills and debt obligations that were audited by the Office of the Auditor-General.

The allocation, he said, demonstrates the county's commitment and desire to settle pending bills.

City Hall's debt stood at Sh76.9 billion as of December, having ballooned by Sh20.4 billion in the last three years, according to the Nairobi County Medium Term Debt Strategy Paper.

KCB inherited the loan from Equity Bank in September 2014 and offered City Hall a grace period of six months before it could start servicing the debt over eight years.

Equity had lent the now defunct Nairobi City Council Sh5 billion in 2011 to pay statutory deductions.