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How wanton bribery, fraud has denied Nairobi residents value for money

When the concept of devolution was hatched more than 10 years ago, the plan was to decentralise the government, bringing services closer to the people through counties. Over the years, however, county governments have become corruption hotspots, devolving embezzlement and mismanagement of public funds instead of advancing development.

Billions of shillings have been pilfered from the devolved units, with several county governors and top officers implicated in corruption cases over the years. Nairobi, in particular, stands out on account of several audit reports exposing massive corruption and blatant theft of public funds.

Nairobi County receives the lion’s share of funds from the national government from equitable share of revenue as well as collecting the highest amount in own-source revenue.

Since 2013, City Hall has received in excess of KSh164 billion as equitable revenue share from the national government, in addition to conditional grants. During the same period, the county government has also raised on average KSh10 billion annually as own-source revenue (OSR), for a total of at least KSh100 billion.

According to a report by the Commission on Revenue Allocation (CRA), the county received KSh489.4 million as equitable share of revenue and Sh61.5 million as conditional grants in the fourth quarter of the financial year ended June 2013.

In the fiscal year ended June 2014, KSh9.5 billion was received, which then increased to KSh11.3 billion in the following financial year and further to KSh12.9 billion in the fiscal year ended June 2016. Conditional grants for the years were KSh390.4 million, KSh1.6 billion and KSh636.5 million in that order.

Stephen Osiro

Former head Nairobi County Treasury Stephen Osiro's apartments in Kisumu. 

Photo credit: File | Nation Media Group

In the financial year ended June 2017, KSh14 billion was advanced to the county as equitable share of revenue, with another KSh590.9 as a conditional grant. This then shot to KSh15.4 billion in the financial year ended June 2018.

In the 2018/2019, KSh15.79 billion was received, which then increased to KSh15.91 billion in the next two fiscal years, or KSh16.5 billion, including conditional grants. 

City Hall then received KSh19.5 billion in each of the financial years ended June 2022 and 2023, including conditional grants. In the current financial year, the county will receive KSh20.07 billion as equitable share of revenue, excluding conditional grants.

Despite the billions received by the county government, residents continue to grapple with below par service delivery such as poor housing and sanitation, water shortages, run down early childhood education, among others.

A latest report by the Controller of Budget Dr Margaret Nyakang’o for the fiscal year ended June 2023 names Nairobi County in top five of the poorest spenders of development billions, recording an absorption rate below 20 per cent.

The Public Finance Management Act, 2012, requires county governments to spend a minimum of 30 per cent of their budgets on development.

Runaway corruption and misuse of public funds has left close to five million Nairobi residents with nothing to show in terms of value for their taxes.

Interestingly, City Hall is set to hike levies with the aim of raising more funds, forcing residents to dig deeper into their pockets to fund an administration without commensurate level of service delivery. In its draft Finance Bill 2023, Governor Johnson Sakaja’s administration is proposing a raft of new and hiked fees to be borne by residents as it seeks to raise KSh19.9 billion in OSR in the current financial year ending June 30, 2023 to finance a KSh42.3 billion annual budget.

Parking fees, cess, market rental charges, properties rates and single business permits, among others, are set for increase.

Regrettably, billions of shillings collected from residents have ended up lining individual pockets of county officers at the expense of ensuring quality service delivery for the taxpayers. The cartel-ridden City Hall has turned into an exclusive club of millionaires who siphon billions from the county government with wanton abandon.

Sonko blames 'City Hall cartel' for his woes

When Mike Sonko succeeded Dr Evans Kidero as the second governor of Nairobi, he admitted to the presence of cartels in the county government. He pointed to the Land and Rates department as a playground for cartels terrorising helpless widows and Nairobi property owners through fraudulent transfer of property through a well-planned syndicate.

Sonko promised to reshuffle staff at City Hall as some had served in the same departments for over 15 years and had personalised them into family business.

Garbage collection, he said, was a scam riddled with corruption and run by a cartel. Here, too, he promised to ensure that garbage collection and disposal tenders were awarded transparently and in accordance with procurement laws. “I wish to take this opportunity to warn the City Hall-based cartels that sooner rather than later, the long arm of the law shall catch up with you,” Sonko warned MCAs in September 2017 at a Nairobi County Assembly.

Interestingly, Sonko faces numerous charges in the courts, including several corruption cases arising from his tenure at City Hall, which he has denied. He is alleged to have embezzled more than KSh300 million partly through the irregular awarding of contracts to friends’ companies that are said to have wired money to his personal accounts after receiving their payments from the Nairobi County.

Consequently, the ex-Makadara MP is now permanently barred from holding public office.

In May, an anti-corruption court in Nairobi froze assets belonging to a City Hall employee over unexplained wealth worth KSh537 million. The employee, a junior procurement staff earning a net salary of KSh21,000, acquired the millions within eight years between January 2014 and June 2022. He had as assets 11 vehicles, nine parcels of land and a three-Star hotel in Kisumu County belonging to the employee.

Former chief finance officer at City Hall Jimmy Kiamba.

Photo credit: File | Nation Media Group

Another staff member, Jimmy Kiamba, an accountant on a monthly salary of KSh85,000, had joined City Hall in January 2007 worth KSh1 million but by 2013 was worth KSh401 million.

According to the Ethics and Anti-Corruption Commission (EACC), Kiamba banked Sh400 million in eight of his bank accounts between January and November 2014 and had banked at least Sh1.5 billion between 2007 and 2014. Even with a graft case hanging over him, he was rewarded with a pay rise, pushing his salary to Sh145,000 a month when he left City Hall in January 2015.

Another one was Wilson Kanani, an employee earning KSh55,000 monthly, who had assets of nearly KSh100 million. He was working as a development control officer tasked with clamping down on companies flouting laws on outdoor advertising.

Still yet another former City Hall employee was arraigned in court after amassing a KSh340 million fortune in both cash and property between January 2011 and April 2016. Stephen Ogaga Osiro, City Hall’s head of accounting, is said to have amassed the millions while earning a salary of only KSh90,000 monthly.

The cases of the four employees is just a tip of the iceberg of institutionalised corruption and embezzlement of public funds at City Hall.

Immediately after assuming office in 2013, Dr Kidero signed a memorandum of understanding (MoU) with the EACC for a lifestyle audit of county staff with the aim of having property of individuals convicted of corruption confiscated. He blamed fictitious and inflated contracts for City Hall’s KSh41.5 billion debt, even going ahead to say that some corrupt employees had sold off public facilities such as schools, health centres and fire stations.

That year, Nairobi was ranked sixth in the EACC report on bribery, with an average bribe of Sh7,000 solicited by municipal employees, mostly of it being paid by those seeking services.

However, Kidero ended up being the EACC’s client on a KSh213 million graft case. EACC investigating officers laid bare how monies were channelled through two companies that had allegedly tendered to supply goods to City Hall, ending up in Kidero’s personal accounts held at the Family Bank.

Several reports paint a grim picture of the state of affairs in the county government. An audit report by the Auditor-General, Nancy Gathungu, for the financial year ended June 2021, flagged Nairobi among worst counties in terms of managing and reporting use of public funds. Ms Gathungu fingered the county for failing to provide evidence of purported expenditure of at least Sh9.7 billion, breaching procurement laws in spending, and cases of ghost workers, among others.

Similarly, a 2009 report by Transparency International-Kenya placed Nairobi City Council sixth in the list of bribery-prone public institutions in Kenya and 14th overall in the East Africa region. The defunct City Council was only bettered by Kenya Police, Ministry of Defence, the Judiciary, Ministry of Public Works and Ministry of Lands. Almost 10 years later, a 2017/2018 report by the same organisation flagged land, rates, and health departments in Nairobi County as dens of corruption.

A 2021 EACC National Ethics and Corruption Survey placed Nairobi among the top 10 counties, at position six, where service seekers have to part with a bribe in order to be served. The report said an average of Sh8,500 in bribes is paid by service seekers. The amount is even more for collection of building certificates, for which one has to part with at least Sh20,000. Sakaja last year pointed out how cartels had managed to thrive at City Hall because of free interaction with cash during the revenue collection process.

He explained that out of the more than 150 revenue streams, very few are digitised an anomaly he intends to fix by automating and digitising all county revenue collection streams. “You can’t have a cabal of 10 or 15 people putting the lives and livelihoods of five million residents at ransom. The first thing you do is dissociate from them,” said the governor. 

A report by the CRA last year indicated that Nairobi County has the potential of generating KSh25 billion annually as own-source revenue, with KSh7.95 billion from single business permits alone. An earlier report by CRA had put the figure at KSh67.7 billion if the county government could fully automate its revenue collection and close up the loopholes. Our efforts to get comments from current office holders at the county government proved futile as our calls and text messages went unanswered.