Shortfall in local revenue and colossal pending bills are among the major challenges facing the Nairobi county government.
The issue of pending bills has continued to be a major economic policy challenge facing the
county government having inherited a huge debt from the defunct City Council.
As laid out in the Nairobi County Fiscal Strategy Paper (CFSP) for 2019-20 (draft) the pending bills have exposed the county to high interest rates and other unpredictable costs elements as the debt trend has been increasing from one year to another.
In March last year, Sonko gazetted a 10-member task force headed by former EACC boss Patrick Lumumba to audit Nairobi county's Sh60 billion pending bills.
The committee was given three months to finalise its report, but upto date no report has been released by the committee.
The committee also had a mandate to develop a system to ensure that future escalation of pending bills with the county is avoided.
A payment priority list of all cleared payment taking into account the need for equitable treatment of creditors and cash flow was also to be created.
To address the pending bills issue, the county is putting into consideration to establish a digitised debt servicing management systems to improve accountability and prevent fraudulent loan amounts.
Also utilisation of cheap loan opportunities available in the money and or capital market has been put in as a measure..
City Hall will also consider creation of new channels of revenues to ease on the loan amounts required to finance development projects.
Shortfall in local revenue has been identified to be the main fiscal risk being faced by the county government.
Revenue generated from internal sources has continued to face challenges with the top five revenue stream failing to reach their targets.
"For instance rates revenues have continued to be below expectation due to high default rates among statutory bodies and land buying companies. The existing valuation roll is not as per market rate therefore the revenue realised from rates is far below expectation," reads the CFSP.
The 2018 CFSP indicated that Nairobi has not hit its revenue target since 2013 by between 20 and 25 per cent.
The previous 2017-18 financial year , parking fees stood at Sh1.88 billion, followed by rates at Sh1.87 billion, single business permits (SBP) at Sh1.7 billion, billboards and adverts at Sh698.05 million, and building permits at Sh49 .41 million.
During Governor Evans Kidero’s regime in 2016-17, parking fees were at Sh1.98 billion, rates Sh2.26 billion, SBP at Sh1.7 billion, billboards and adverts at Sh720 million, and building permits at Sh1.28 billion.
For the last four financial years, billboards and advertising has been the best performing revenue stream as per set targets, while building permits have been relatively poor.
Land rates have been persistently the largest revenue stream, generating Sh10.27 billion over the last four financial years.
To mitigate, City Hall will publicize and streamline the use of electronic payment system to ensure effectiveness in revenue collection
The CFSP also states that the Identified legal gaps will be addressed through proposed legislation particularly for the key revenue streams.
The County treasury has initiated consultations on the 2018 Finance bill to address existing flaws in the 2014 Act.
Finally, issuance of waivers on penalties will also be implemented.