Nairobi Governor Johnson Sakaja before the Senate Committee on Roads, Transport and Housing on Tuesday /HANDOUTGovernor Johnson Sakaja’s ambitious revenue collection in Nairobi has suffered a major setback after the High Court struck down his administration’s Finance Act for 2023.
The court nullified the law late last week, citing failure to meet legal requirements of pricing transparency and public consultation.
Finance Acts are updated each year.
The 2023 law is still in effect because the Sakaja administration withdrew its 2024 Finance Bill, following President William Ruto’s withdrawal of the national Finance Bill due to Gen Z protests against higher taxes.
The court decision will be reflected in the Finance Bill, 2025, which is being considered by the city county assembly. A new bill is expected to be introduced.
The county’s 2023 Act had introduced sweeping increases in levies and fees. It raised the reserved parking fee from Sh1,000 to Sh1,500 per day and increased the annual loading zone fee from Sh220,000 to Sh250,000. The annual display fee for vehicles on road reserves was also increased from Sh10,000 to Sh15,000 per square metre.
Alcohol licensing costs were sharply increased; general retail licence fees surged from Sh25,000 to Sh100,000. Small and medium-sized nightclubs faced higher charges. Large transport companies were hit with a Sh40,000 increase in their annual trade licence fees.
Taxi-hailing companies were also hit. The application fee for passenger pick-up and drop-off was increased from Sh1,000 to Sh5,000.
Parking fees in the Central Business District also rose. Sedan cars in non- automated zones increased from Sh200 to Sh300 per day, while pickups and vans were charged Sh500.
Due to the 2023 Finance Act, the county has been doing well in raising own source revenue.
In the 2023-24 financial year, Nairobi county collected a record Sh12.8 billion, marking the highest own-source revenue among the 47 counties.
Justice Bahati Mwamuye ruled, however, that the county government had violated both the constitution and the County Governments Act by introducing new fees and levies without first formulating a clear tariff and pricing policy.
He emphasised that without a guiding structure, the county had no legal basis to charge residents and businesses for these services.
“The petitioner’s uncontroverted evidence shows that Nairobi City County did not develop, adopt, publish, or implement any tariffs and pricing policy before enacting the impugned Finance Act, 2023. Public participation involved presenting schedules of proposed fees without underlying policy or cost analysis,” the judge said.
The case was filed by Nairobi resident Jared Ngisa Nyabuto, who argued the county government had implemented illegal revenue measures that financially burdened the public. He sued the county assembly, its speaker, and the county executive. None of them responded to or challenged the petition in court.
Justice Mwamuye ruled that all new charges introduced under the 2023 Finance Act were unlawful. He ordered the county to revert to the fees and levies in effect under the previous Finance Act of 2022, or any earlier applicable law.
“Accordingly, the levies, rates, and fees imposed by law and in force immediately before enactment of the Nairobi City County Finance Act, 2023, which has been quashed, being those under the City County Finance Act of 2022 or earlier, shall now continue to apply and shall be paid by all affected persons, pending the enactment of a new Finance Act,” the judge said.
He said the county must comply with all constitutional and statutory requirements, including public engagement and clear pricing structures, before imposing any future financial obligations on residents or businesses.
