Kenya: City Set to Unleash Debt Collectors on Defaulters

Businesses and property owners in Nairobi may soon face private debt collectors after the Nairobi City County government moved to outsource the service.

A notice inviting a consultant to formulate an automated debtors' and creditors' management platform says the agents will pursue individuals and companies who fail to pay parking fees, unified business permits, house rent, markets' fees, billboards advertising as well as land rates.

The county government, which currently owes contractors about Sh66.6 billion, says once in place collectors will be paid on commission for recovered monies as agreed with the county government.

"The overall objective of the assignment is to reduce the amount of county debts and liabilities and put in place sustainable long-term debt and liabilities management structures," it says. To address inability to recover monies from defaulters, the county government has suggested setting up a debt factoring clause, where private entities pay dues in advance at a discounted rate while intending to recover the monies from the defaulting company. Deputy President William Ruto's office is currently the largest defaulter with a debt of Sh189.08 million for 113 reserved parking spaces on Harambee Avenue and another Sh14.06 million for 10 slots along Parliament Lane that has remained unpaid since 2014.

Nairobi collected Sh8.8 billion in the 10 months to June, a 10-per cent fall from Sh9.8 billion generated in a similar period to June 2017, being payments for vehicle parking, building permits, inspection of buildings, land rates and Wakulima Market.

The county government debt has risen from Sh55.5 billion in July 2017 to Sh66.6 billion in June 2018, representing an increase of 18.1 percent.

Top on the pile of those owed by City Hall are pension funds --Lapfund and Laptrust--that are demanding Sh13.8 billion, legal creditors (Sh5.4 billion) and suppliers and contractors (Sh5.2 billion). The consultant will also do other specified tasks.

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