Nairobi MCAs raise red flag over city revenue collection

The Star Kenya

Nairobi County Assembly has expressed concerns over the transparency and accountability of the city's revenue collection system. https://bit.ly/3Fvz05P

Transcript

00:00 With me is Honorable Amy Ambala, Special Elect and also a member of the ICT Committee.

00:07 Ladies and gentlemen,

00:11 As members of the Nairobi City-County Assembly Energy and ICT Committee,

00:16 we have invited you today here to shed light on the current state of revenue collection

00:21 and accountability by the Nairobi County Government.

00:26 Let us restate that the Sectoral Committee on Energy and ICT is established pursuant

00:31 to provisions of the Nairobi City-County Assembly Standing Orders.

00:35 Among the Committee's functions is to investigate and inquire into all matters relating to the

00:40 assigned departments as they may deem necessary and as may be referred to them by the County

00:45 Assembly.

00:47 With modern finance functions and operations linked to ICT, we find it necessary to extend

00:54 our inquiries to include systems currently being used by the Nairobi County to manage

00:58 its revenue collections, reporting and accounting.

01:02 It is instructive that we found a complete lack of transparency in the entire manner

01:07 in which the Nairobi City-County revenue is being collected, reported and accounted for.

01:13 Imagine that now we have so many developments in Nairobi, with the developers paying as

01:18 much as 2 million shillings, 3 million shillings, 15 million shillings per unit, but it cannot

01:24 be resited 3-4 months later because nobody is in control of the revenue system at the

01:31 Nairobi City-County Executive.

01:35 These collections cannot proceed to documentation allowing the same because their payments have

01:41 not been resited.

01:45 The GEC finance is helpless and even the Chief Officers are helpless.

01:49 The Governor is helpless.

01:50 The Senator is helpless.

01:53 The people at KRA are helpless.

01:56 Even Directors are not aware of what is happening.

01:59 I guess this must stop.

02:02 We highlight this issue at this time because the recent report by the EACC on the opacity

02:07 of the Nairobi County Revenue Collection System coincided with our own inquiry into the Oil

02:13 Revenue Management Program.

02:16 Just as EACC noted that the use of mysterious revenue collection providers is a possible

02:21 avenue of loss of public funds, our internal investigations also revealed the massive irregularity

02:32 in Nairobi County Revenue Management.

02:37 Nairobi has a potential of 135 revenue streams.

02:49 In the previous financial year, Nairobi County is reported to have received $15 billion from

02:55 the National Government and collected just over $10 billion from their own source revenue.

03:00 We believe that it is possible for Nairobi County to raise more than this figure and

03:04 we are confident that it is even capable of raising as much as $43 billion per year from

03:11 its own revenue sources.

03:13 We are casting a deep shadow on the revenue reported because there are some major gaps

03:18 in the oil program setup.

03:21 Section 157(1) and (2) of the Public Finance Management Act guides on the receivers and

03:27 collectors of county revenue and it states that "The county executive member of finance

03:33 shall in writing designate persons to be responsible for collecting, receiving and accounting for

03:41 such government revenue as the county executive committee member for finances may specify

03:47 in the letters of designation."

03:50 It also states that "A receiver of county government revenue is responsible to the county

03:57 executive member of finance for ensuring that the revenue for which the receiver is responsible

04:02 is collected or recovered and is accounted for."

04:05 Unfortunately none of the C's for finance and ICT have even basic user rights to the

04:13 service known as NRS.

04:18 We don't know the identity of the owners, they also don't know the identity of the owners

04:22 or operators or which contract they are operating under.

04:28 They are clueless about the whereabouts of the server and which code is running on the

04:33 system.

04:34 We don't even know how many bank accounts are connected to the system.

04:39 Even more confounding is that no valid contract exists in which the Nairobi county has appointed

04:44 Nairobi Revenue System to be its principal collector.

04:48 As was rightly stated by the EACC, this degree of opaqueness in the contracting of external

04:53 suppliers to manage revenue for the county is a recipe for pilferage of public funds.

04:59 Being the county which contributes the largest share of national GDP at 28% going by the

05:05 recent reports by the Kenya National Bureau of Statistics, it is crucial for Nairobi County

05:17 revenue to be properly collected, reported and accounted for.

05:22 Yet for now, it is clear from our investigation that the county is punching well below its

05:26 weight in development as there is a high degree of revenue leakage.

05:32 We have noted from research across various county wards, speaking with the people working

05:35 in the transport, public health, trade, environment, infrastructure sectors, that Nairobi County

05:41 possibly reports only 10% of total daily collected revenue and collects than one third of the

05:49 possible income.

05:51 Indeed, our analysis has shown that Nairobi County has the capability to run its operations

05:57 without the injection of the national government and if properly managed, can easily build

06:02 a fund which can be used to lend other counties or even countries money.

06:08 The current challenges facing Nairobi County residents including loss of life due to mismanagement

06:13 of our health facilities, poor road network, water and sewer infrastructure, coupled with

06:20 dilapidated physical infrastructure and low quality of residential lives are the results

06:25 of poor revenue management.

06:29 It is disturbing to note that in the light of the provisions by the various acts of government,

06:36 both the current and previous CEC Finance in the county are not aware of the owners

06:40 of the current collector and manager of the current revenue system, popularly known as

06:47 NRS.

06:48 The entire finance sector and ICT sectors do not know where the physical servers are.

06:54 The CEC Finance do not have the administrative rights or user rights to the current revenue

06:58 collection systems.

07:00 It is not clear how many bank accounts are linked to the revenue collection system.

07:05 It is currently there is no valid contract between Nairobi County and Nairobi Revenue

07:11 System as the principal collector as they emerged prior to the end of NMS term.

07:18 When the Nairobi Metropolitan term expired, all functions ought to have been reversed

07:22 with the county government.

07:24 Yet, very suspiciously, there are consents or sub-contractions of revenue collection

07:30 by CRA then to Nairobi Revenue System in an unclear and unprocedural way.

07:35 There have never been a complete audit of all the revenue systems deployed in Nairobi

07:39 City County since the advent of county governments.

07:45 We acknowledge that the national government has already been very steadfast in the use

07:49 of technology to ease service delivery for Kenyans in line with the National Digital

07:53 Master Plan and Agenda.

07:55 The drive to automate government services and make them available online is commendable.

08:01 Automation should not end on the revenue streams.

08:06 Non-revenue functions automation is an aspect forgotten in the campaign by the President.

08:14 We call upon the President to initiate similar changes in devolved units, beginning with

08:20 the highly strategic Nairobi City County.

08:23 It is time the county operated an organization-wide ICT system known as ERP instead of the present

08:30 use of disjointed systems which do not communicate to each other.

08:34 To conclude, we are patriots of this count and we are patriots of this count and Disney.

08:40 And so we have come forward with this information as a call to action because we want the best

08:45 for our countrymen and women.

08:47 Thank you.

08:49 [BLANK_AUDIO]

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