Puzzle of declining City Hall revenue amid increase in traders
City Hall, Nairobi. Nairobi City County collected Sh1.42 billion in January, Sh1.3 billion in February and Sh1.78 billion in March.
The Nairobi City County government has been experiencing dwindling revenue despite the increase in the number of markets in operation in the county. The declining revenue is attributed to the lack of control over revenue collection functions in several markets within the city county.
The revelation was made during the Nairobi County Assembly’s Trade, Tourism and Co-operatives Committee hearing with the county executive at City Hall last week.
During the hearing, it also emerged that Nairobi City County does not have information on the number of markets operating in the city.
Business and Hustler Opportunities CEC Rosemary Kariuki said the only way of knowing the markets in Nairobi is through a taskforce.
“We are asking ourselves how many traders we have, how many markets we have, how many are gazetted and are known as official markets. We do not know how many markets we have as the county government. We have to establish this through a taskforce so that we can have a true picture,” Ms Kariuki said.
According to the revelation, a section of the markets that are in operation has also been taken over by unknown individuals who masquerade as county officials.
These individuals, the committee heard, collect the money from the traders in the stalls, take their cut, and later remit the rest to the county government using the Nairobi Pay platform.
Ordinarily, traders are expected to directly remit the dues to Nairobi County using the platform that was launched by Governor Johnson Sakaja in January this year.
Internal rivalries in Nairobi County between the Finance and Trade departments were also laid bare during the hearing.
A section of those in charge of the markets is sharply divided with some of them being loyal to the finance department while another section is loyal to the trade department.
Ms Kariuki told the committee that she last week called for an official meeting with those in charge of markets only for the finance department to call another meeting at the same time.
“We called for a meeting for those who are in charge of the markets so that we can iron out these issues but only half of them showed up. We wanted them to tell us if they have information on people who own stalls and how many of them are paying but only half of them showed up. The other half refused to attend the meeting. We decided that those who showed up in the meeting are the only ones who are in charge of markets, the rest are strangers and we will announce positions so that we can fill their positions,” said Ms Kariuki.
A number of unscrupulous business individuals have also taken over the market stalls.
According to the Chairperson of the committee Deonysias Mwangi, these individuals rent out the stalls with the pretext of using them to do business but later rent them out to traders at high prices that are three times what they pay to the county government.
“Eighty percent of the stall operators in Nairobi do not own them. They rent them from other individuals who have also rented them from the county government. The amount that they charge as rent is sometimes three times what the county demands from the traders. They rent them at a high cost which discourages people from occupying them. Most of the stalls are now unoccupied,” said Mr Mwangi.
A large number of the markets are also controlled by the political class. According to Chief Officer for Trade Geoffrey Akumali, most of them charge exorbitant cess fees for traders yet they are not officials from the county.
“The political class is part of these cartels controlling the markets. These cartels want to charge Sh50,000 for a lorry carrying sacks of potatoes. As the county, we charge Sh5, 100. When they collect this Sh50,000 there is someone within the political system who receives the amount,” Mr Akumali told the committee.
Despite the increased digitization of 136 revenue collection services, Nairobi County has been experiencing dwindling revenue collections.
In the first half of the Financial Year 2022/2023, the county revenues decreased by 23.8 percent to Sh2.73 billion. This was the lowest amount collected by the county since devolution.
In the third quarter of the financial year 2022/2023, the revenues increased to Sh4.5 billion as property owners rushed to clear their land rates.
The revenue from markets had a dismal performance with the county recording a revenue of Sh78.5 million in the first three months of 2023 which is a drop of Sh22.6 million.
This is despite the county spending millions of shillings in refurbishing public markets such as Mwariro, Westlands and City Park.
The county also last week gazetted public participation for the construction of 20 new markets in Nairobi.
Most of the markets in the city such as Muthurwa are also in a deplorable state despite the traders paying revenue to the county. They lack amenities such as proper drainage, lighting and security. As a result, traders have moved out of the stalls to occupy city center roads and back lanes.
The county executive is currently working on the Nairobi City County Market Management Bill, 2023 that seeks to streamline revenue collection services from the markets.
The bill seeks to create a task force to identify the markets and officially gazette them as well as carry out a reshuffle of those in charge of the markets.
