The Nairobi government has blamed its soaring debt on delays by the Treasury in disbursing funds.

At the end of the last financial year on June 30, Nairobi owed about Sh67 billion.

City Hall has also cited low revenue collection of projected revenue by the county as another major reason for its huge debt.

Responding to the Auditor General’s report year ending June 30, 2017, the county also blames high interest rates and penalties.

According to the report, the county had pending bills of Sh44 billion as of June 30, 2017, mainly of unremitted statutory deductions.

Governor Mike Sonko’s administration also says statutory creditors are charging them high interest rates and penalties, pushing the county deeper into the hole.

In November the same year, the debt rose to Sh52 billion. Foreign loans totalled Sh15 billion and a KCB Bank long-term loan was Sh4 billion.

Interest charges and penalties are high.

Pending deductions include Sh4 billion for KRA, Sh470 million due to NSSF, Sh15 billion for on-lent water loans and Sh4 billion government guaranteed loans.

Others include Laptrust principal of Sh6 billion, Laptrust penalties of Sh3 billion, Lap Fund principal of Sh2 billion, Lap Fund penalties at Sh8 billion and Laptrust interest of Sh3 billion. The county is negotiating with the national government to pay its obligations on time so City Hall won’t be over-reliant on rates and parking.


“The resources will come in handy for the county to pay some of its historical debts that have high interest rates,” reads City Hall’s response on the auditor’s report.

The county is also remitting statutory deductions to creditors when salaries are paid. The county has agreed with with KRA that the taxman should not issue notices over non-payment of Pay As You Earn (PAYE) when the Treasury has delayed exchequer payment.

In October,the county said it would consider a property swap to pay off debtors.

The county and national government are coming up with the Nairobi County Financial Recovery Plan. It will be included in the Nairobi Debt Management Strategy paper 2019.

In February last year, Sonko appointed a 10-member committee to review and clear pending bills for goods supplied and services dating from the previous administration.

The committee’s mandate was to review and analyse all the pending bills and make recommendation to the county treasury whether or not to pay.

By then, the pending bills amounted to Sh60 billion.

City Hall also owes Kenya Power and other service providers millions of shillings.