The Nairobi City County irregularly used the Kenya Revenue Authority (KRA) bank accounts for over 13 months without an existing agreement, a new audit has revealed.
Auditor-General Nancy Gathungu said the taxman received revenue totaling Sh9,331,046,235 for the county government of Nairobi during the year to June 2023.
The KRA and the county government of Nairobi entered into an Agency Agreement, under which the taxman was to collect revenue on behalf of City Hall for 24 months with effect from March 16, 2020.
The agreement was extended for six months to September 15, 2022.
“Review of records indicated that the county government continued channeling collections through the Authority’s bank accounts even after the expiry of the agency agreement,” Ms Gathungu said. “Management indicated that the continued use of the authority’s bank account was to enable a smooth transition.”
Ms Gathungu said the continued use of the authority bank accounts for over 13 months without an existing agreement was irregular.
“In the circumstances, management was in breach of the agreement,” Ms Gathungu said.
The KRA and the defunct Nairobi Metropolitan Services (NMS) entered into a contract for revenue collection for Nairobi City County Government in 2020.
The agreement, which commenced on March 17, 2020, was in line with the Gazette Notice No. 1609 of February 25, 2020, under Article 5.5 appointing KRA as the principal revenue collector for Nairobi County Government.
The gazette notice further provides KRA officers full and unlimited access to Nairobi City Government revenue processes, information data, and systems.
This includes and is not limited to records and documents necessary for the effective execution of its mandate.
The agreement saw all Nairobi County government staff engaged in revenue collection report to KRA headquarters at Times Tower for re-deployment from March 18, 2020.
KRA oversaw all streams of revenue and administered the taxes through the normal process of assessment, payment, accounting, remission, and enforcement through both compliance and debt recovery.
City Hall had been collecting revenue in partnership with the National Bank after parting ways with JamboPay in June 2019.
Governor Johnson Sakaja on Thursday announced that Nairobi County hit a record high of Sh12.8 billion in revenue collected in the 2023–2024 financial year, driven by improved collection in various tax heads and sectors.
Mr Sakaja had in the 2023/24 financial year set targets across various revenue streams, including Sh5.6 billion for rates, Sh3 billion for single business permits, Sh3 billion for parking fees and Sh1.8 billion for building permits.
He attributed the increased revenue collection to the digitisation of revenue streams and the reduction of waste in the revenue collection system.
“Nairobi broke the collection record due to digitisation and reduction of wastage in the collection system,” Mr Sakaja said after a meeting with the Senate Committee on Finance and Budget.
“We are anticipating to collect Sh20 billion in the 2024/25 financial year and we believe this target is achievable.”
He said the county government will continue to invest in technology to boost efficiency and transparency in revenue collection.
He, however, decried the negative effects of the anti-finance bill protests that rocked several parts of the country, with the epicenter being the capital, Nairobi.
Mr Sakaja said the anti-government protests spearheaded by youthful Kenyans cost the county about Sh10 million in lost revenue daily.
He said the county expected to net Sh13 billion in revenue but the anti-Finance Bill, 2024 protests affected collections.
