City Hall's debt grows to hit Sh5.9bn in a year


Acting Nairobi Governor Anne Kananu. PHOTO | FILE

Nairobi county government's debt owed to third parties has grown by Sh5.9 billion within a year despite efforts put in place by City Hall to clear pending bills.

The debt stood at Sh72.9 billion as at June 30, 2020, but has now grown to Sh78.1 billion as of June 30, 2021 in spite of the Ann Kananu-government paying Sh3.29 billion pending bills during the period under review.

The county debt was at a staggering Sh76.7 billion as at December 31, 2019, having ballooned by Sh20.4 billion in the last three years.

According to the Nairobi County Budget Review and Outlook Paper for 2021, presented to the Nairobi County Assembly by Finance CEC Allan Igambi on Tuesday, the county debts comprise arrears owed to statutory bodies, merchants and litigation, loan from KCB Bank, contingent liabilities and loan guaranteed by the government.

“The debt trend has been increasing from the year 2014 largely due to interests and penalties charged to statutory creditors,” said Mr Igambi.

Local Authorities Pension Fund (Lapfund) debt stands at Sh23 billion, having grown by Sh3.4 billion from the Sh19.67 billion it was in June 2020.

For the Local Authority Pension Trust (Laptrust), the debt has increased by Sh2.4 billion and now stands at Sh14.99 billion.

Statutory debt owed to the National Social Security Fund (NSSF) is Sh381 million with the county government still owing the Kenya Revenue Authority (KRA) Sh751 million in taxes even after paying Sh400 million.

Contingent liabilities which include Laptrust’s actuarial deficit, the difference between social security obligations and the income rate of the fund, stands at Sh2.6 billion and national government-guaranteed loans of Sh19.1 billion.

For utilities, debt owed to Kenya Power has reduced to Sh477 million after City Hall paid Sh171 million; water bills debt stands at Sh234.9 million while pending bills due to suppliers and contractors now stand at Sh2.65 billion after Sh2.69 billion was paid.

Loans and banks overdrafts are at Sh4.4 billion, litigation fees has grown from Sh4.1 billion to Sh6.7 billion, climbing by Sh2.65 billion; money owed to staff retirees has reduced to Sh138 million after City Hall paid Sh35 million to the retirees.

To rein in on the ballooning debt portfolio, Mr Igambi said City Hall is looking into reducing county expenditure while at the same time coming up with mechanisms to increase own-source revenue as well as allocating more funds in the budget for debt serving.

Further, the county government has initiated a renegotiation plan with the statutory bodies especially Laptrust on interests and penalties for quick servicing of the debt.

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