Kenya: Councils owe SH17.3bn 'and can't pay workers'

Three quarters of local authorities are unable to pay employees’ salaries from their own revenues, a problem which is expected to be passed on to county governments.

Local Authorities Administration secretary Philip Owade said the civic authorities were indebted to the tune of Sh17.3 billion as at October 30, last year.

“Only 44 local authorities are able to pay salaries from revenues that they generate,” Mr Owade said.

All the 175 local authorities will be disbanded with their assets, liabilities and staff transferred to the 47 counties after the next General Election.

He revealed that the authorities have accumulated nearly Sh1 billion in salary arrears and that most of them largely depend on Local Authorities Transfer Funds to meet their financial obligations.

The official said bloated wage bills are the main cause of the unmanageable debt portfolio.

“According to the recent research commissioned by City Council of Nairobi, which was conducted by Price Waterhouse Coopers, 70 per cent of recurrent expenditure of the council is spent on salaries,” Mr Owade told a forum for council officials, NGOs and other stakeholders at a Nairobi hotel.

“The Council needs 7,716 workers compared to the current 11,392 most of whom are semi-literate, unskilled or semi-skilled.”

The forum on managing transitions into county governments was also told that there were key issues to be addressed before the next General Election including the debts the local authorities owe.

Although the civic authorities generated Sh19 billion revenues in the 2010/11 financial year, bank debts, for instance, are close to Sh10 billion.

Among these debts, Sh17.3 billion are owed to National Health Insurance Fund, National Social Security Fund, pension funds, saccos and suppliers.

The transition will see the repeal of Local Authorities Act cap 265, which creates the local authorities.

Mr Owade said that the Ministry of Local Governments had decided that all local authorities’ staff be taken over by county governments but respective county public service boards will determine board membership.

Two weeks ago, the Kenya Alliance of Resident Associations (Kara) led a number of NGOs to push for the formation of an autonomous institution that will take up the debt local authorities owe.

The Kara chairman Richard Nyaga said the body would then liaise with the government on how to the debts will be repaid or else the counties may not function if they inherit the debts.

UN Habitat executive director Joan Clos asked the government to ensure that both technical and political capacity are in place during the transition.

“There is need to plan for the common good of city residents,” he said.

Mr Owade said: “The implication for this ‘movement’ from local authorities to the 47 counties is vast and complex and entails taking over assets and debts.”

Mr Owade said the shift to county governments will require delicate balancing because there is a functional government structure.

“While taking over assets is gratuitous, debts are problematic particularly since they are substantial. The ministry is evolving an indicative debt list,” he said.

The head of Swedish Development Cooperation, Mr Anders Ronquit, said that local government, as the most central institution to the people, must be supported to offer services.

Source: www.businessdailyafrica.com

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