Cash crunch hits Nairobi County amid crippling budget crisis

City Hall

Members of the public walk past the entreance to City Hall in Nairobi on April 19, 2024.

Photo credit: Francis Nderitu | Nation Media Group

What you need to know:

  • Operations in different departments almost grinding to a halt due to lack of funds.
  • A number of contractors have also downed tools due to non-payment of arrears.

A cash crisis has hit the Nairobi City County Government after Controller of Budget Margaret Nyakang’o blocked a supplementary budget meant to finance operations in the devolved unit.

Among the most affected sectors is garbage collection. The county assembly has also been affected with operations in different departments almost grinding to a halt due to lack of funds.

A huge number of suppliers are also feeling the pinch with the amount of pending bills crossing the Sh100 billion mark.

A source familiar with the affairs at City Hall indicated that a number of contractors have downed tools due to non-payment of arrears.

Ms Nyakang’o rejected the supplementary budget citing the breach of different sections of the Public Finance Management Act (PFMA) and lack of public participation in the budget-making process.

In the supplementary budget, Governor Johnson Sakaja’s administration had transferred a huge portion of the development vote head to fund recurrent expenditure.

Ms Nyakang’o noted that such a move will hinder the delivery of government services for the benefit of the residents.

“Only 108 capital expenditure projects worth Sh8.5 billion will be financed out of the previously recommended 279 capital expenditure projects worth Sh14 billion. It means that Sh5.5 billion worth of capital expenditure projects have been scrapped and money reallocated to recurrent expenditure without adherence to the PFM Act and the Constitution,” Ms Nyakang’o said.

She also faulted the county government for failing to ensure an equal allocation of Ward Development Fund projects across the 85 wards in Nairobi.

“Only 55 out of 85 WDF projects in various wards will be financed promoting regional inequality and social disparity,” she added.

The official further raised a red flag over discrepancies in the budget and the annual fiscal programmes that have been prepared by the county government.

“There will be a deviation of 40 percent on financial objectives and planned development priorities contained in 2023-2024 financial year. The deviation doesn’t meet the threshold of PFMA section108,” she added.

Ms Nyakang’o reduced the County Public Service Board’s allocation from Sh130 million to Sh120 million.

The development budget in the Agriculture sector has also been reduced from Sh96.3 million to Sh27.7 million.

Other projects in the supplementary budget also had their allocations completely cut. Allocations for the projects worth Sh4.2 billion was rerouted to other areas. 

They include the completion of a number of projects in wards and upgrading of roads within the estates.

Additionally, the development budget that had been allocated to the County Assembly has been slashed by Sh915 million out of the current total budget allocation of Sh2.4.

Meanwhile, the Nairobi Revenue Authority, which was set up to help in revenue collection in the city, seems is the biggest loser after the development fund of Sh100 million was scrapped.

Following the rejection of the budget, the county government has a few weeks to prepare another supplementary budget ahead of the beginning of a new financial year in July.