LIVE! Firestorm as Nairobi Gov Johnson Sakaja faces Sifuna, Kajwang & Senate PAC members.

[0:00] Hansard and Audio Department. [0:03] Afternoon, Chair and Members. [0:04] John Chege, Sergeant Adams. [0:07] That's all from us, Chair. Thank you. [0:08] Thank you. Let's go to Auditor, starting Larson. [0:13] Good afternoon, Chair and Members. [0:14] I'm Ruki Patrick, the Larson Officer. [0:16] Chair, we have a team from our Nairobi Region Office. [0:19] This team also audits Kiambu, amongst other entities. [0:23] But today, they're here for Nairobi. [0:25] With the permission, they can come on record. [0:28] Good afternoon. Thank you, Chair. [0:30] My name is Evelyn Kauna, Director, Office of the Auditor General. [0:33] Thank you. [0:35] Good afternoon. My name is Geoffrey Yirongo, [0:37] Deputy Director, Office of the Auditor General. [0:41] Good afternoon. My name is Adam Bogori, [0:44] from Office of the Auditor General. [0:45] Where are you from? Oh, thank you. [0:48] Okay. Just go record. [0:53] I need to hear. [0:54] Good afternoon, Chair and Members. [0:59] My name is Adam Bogori, from Office of the Auditor General. [1:02] Okay. [1:03] Thank you. [1:05] Do you have control of budget? [1:08] Thank you, Chair. My name is Kilbarga Chanja, [1:11] from Office of Control of Budget. [1:13] Chair, I am a company [1:15] but I am also an officer from the same office. [1:17] With the permission, you can come on record. [1:19] Yes, please do. [1:20] Chair, good afternoon, Honorable Members. [1:25] My name is Joseph Wambua, [1:28] from the Office of Control of Budget. [1:31] National Treasury. [1:34] Thank you, Chair. [1:34] My name is Dr. Jackson Ndungo, from the National Treasury. [1:37] Thank you. [1:38] Thank you. [1:38] ESCC? [1:40] Yes. [1:40] Good afternoon, Chair and Honorable Members. [1:42] Christine Muel, from ESCC. [1:44] Thank you. [1:45] Thank you. [1:47] Did you invite the County Assembly of Nairobi? [1:49] Thank you, Chair. [1:51] Yes, I can confirm that we did invite the County Assembly. [1:53] However, [1:53] the clerk informed me that it seems like the Assembly is engaged in another activity out of town. [2:00] Okay. [2:02] Governors, [2:02] it's time to introduce yourself and your team. [2:05] Thank you very much, Chair and members. [2:11] My name is Akaja Arthur Johnson. [2:14] I'm the Governor for Nairobi County. [2:16] I have a team of relevant officers with me. [2:21] I'll allow them to introduce themselves, [2:24] starting with the CEC for Finance. [2:27] Thank you, Chair and Honorable Members. [2:31] My name is Ibrahim Mauma, [2:32] the Acting CEC for Finance and Economic Planning. [2:36] Thank you. [2:38] Good afternoon, Chair and Members. [2:40] My name is Tiras Ndjaroge, [2:41] the Narubisity County Receiver of Revenue. [2:46] Good afternoon, Honorable Chair, Honorable Members. [2:49] My name is Asha Abdi, [2:51] the Chief of Subfinance. [2:52] Good afternoon, Chair and Honorable Members. [2:57] My name is Bonfis Wawero, [2:58] the Acting County attorney. [3:04] Good afternoon, Chair and Honorable Members. [3:06] My name is Susan Silantri. [3:08] I'm the CEC for Health, Wellness and Nutrition. [3:14] Good afternoon, Honorable Members. [3:16] My name is Paul Mwangi, Revenue Reporting. [3:21] Honorable Professor Lance. [3:22] Thank you. [3:24] The rest of the contingent might need to stand [3:27] so that we can see you. [3:31] They might need to stand all the same. [3:36] All protocols observed. [3:39] My name is Nicholas Bainer, [3:41] reporting team, Revenue Administration. [3:42] Members, good afternoon, Honorable Members. [4:09] I'm Dr. Nancy Dalla, [4:10] the Chair of the Audit Committee in Nairobi County. [4:12] Good afternoon, Chair, Members. [4:17] My name is Francis Ndjaroge, [4:19] Internal Auditor, Director. [4:21] Good afternoon, Chair. [4:24] Good afternoon, Members. [4:25] My name is Job Mwara, Head of Press. [4:29] Good afternoon, Chair. [4:30] Good afternoon, Members. [4:31] My name is Justin Muli, Peter, Governor. [4:33] Good afternoon, Chair and Members. [4:38] My name is Patrick Wanjohi, [4:40] Director, Accounting Services. [4:42] Good afternoon, Chair and Members. [4:46] My name is Bidan Degwa, [4:48] Assistant Director, Accounting Services. [4:51] Is that all, Governor? [4:55] Okay, Clerk, please administer oath to the Governor. [5:02] Mr. Chair, I, Sir Kaja Aper-Johnson, [5:16] who solemnly swear that the evidence [5:18] I shall give before this Committee [5:19] matters before the Committee [5:21] shall be the truth, the whole truth, [5:23] and nothing but be so happy. [5:26] Mr. Chairman, [5:36] yeah, please also table the documents [5:38] that shall rely on the amendments. [5:43] Mr. Chair, you will bear with me. [5:44] You can hear my voice is not how it normally is. [5:49] It's okay. [5:51] Mr. Chairman, sir, [5:52] I hereby table the following documents [5:54] before the Committee. [5:55] Number one, management responses [5:58] and accompanying annexures [5:59] on the report of the Auditor General [6:01] on the County Executive of Nairobi City County [6:04] for the year 2024-2025. [6:09] Secondly, management responses [6:10] and accompanying annexures [6:12] on the report of the Auditor General [6:13] on the Receiver of Revenue Statements [6:16] for the County Executive of Nairobi City County [6:18] for the financial year 2024-2025. [6:22] Mr. Chairman, management responses [6:24] and accompanying annexures [6:26] on the report of the Auditor General [6:27] on the County Revenue Fund [6:29] for the county executive of Nairobi City County [6:33] for the financial year 2024-2025, Chair. [6:37] Thank you, Governor. [6:39] Auditors, did you receive the documents in good time [6:41] and do you think we are ready to proceed? [6:45] Yes, Chair, we did receive. [6:47] Beautiful. [6:48] Clark, did you receive our documents in good time? [6:50] Thank you, Chair. [6:51] Yes, I can confirm that we did receive the documents in good time [6:53] and we should be able to proceed. [6:55] Beautiful. [6:56] Governor and members, as a preliminary matter, [6:59] on Wednesday, 25th March, 2026, [7:09] you were summoned to this committee, [7:12] but you did not appear. [7:15] And on that same date, [7:18] you were fined as a resolution of the committee [7:21] Kenya shillings, 500,000 [7:25] that you are to pay in your personal capacity. [7:29] Clark, did the governor honor that 5DD pay? [7:33] Thank you, Chair. [7:35] Yes, I can confirm that the governor has already paid the 500,000 fine. [7:38] Okay. [7:40] So, members, I don't think we need to belabor that because there is... [7:43] Chair, yes, on preliminary. [7:47] Governor, I have seen you have two senior positions that are acting [7:52] and they are critical with your indulgence, Chair, [7:55] for the running of the county. [7:58] You know, Nairobi is not just a county, it's a city county. [8:02] And your senator normally refers to some of us as rural senators. [8:07] My only concern is there are limitations of an acting. [8:11] I have seen you have CCM acting finance [8:14] and I think acting county attorney. [8:17] Could you just tell us, [8:19] because, you know, for the running and efficiency, [8:22] the county public service board, [8:24] what is the status so that we know [8:26] the county is running as it should be? [8:29] Why are you having most of your senior officers as acting? [8:32] Thank you, Chair. [8:33] Although they're just two, they're not most. [8:35] Governor can respond. [8:37] It depends on where you did your English. [8:39] Chair, Chair. [8:40] Yes. [8:41] The only acting person here is the county attorney. [8:45] CC finance is not acting. [8:47] Once you get a letter from the governor, you hold it. [8:50] But he said acting. [8:51] Yeah, I'm correcting you. [8:53] The previous holder had a legal issue [8:57] that is being pursued in court [9:00] and it's something that I really want to bring to the Senate [9:03] because the legal holder of the office, [9:07] or rather the previous holder, Charles Kerridge, [9:10] was convicted because of pending bills. [9:14] Chair, the government proceeding act [9:16] protects public servants from such conviction. [9:22] It was not him to pay from his pocket [9:23] and sometimes the limitations. [9:25] But when it comes to county governments, [9:28] our officers are continuously harassed, [9:30] arrest warrants. [9:32] They are constantly hounded. [9:34] But you'll never see a permanent secretary [9:35] in the national government [9:36] or a cabinet secretary [9:38] because a CC is the equivalent, [9:40] you know, a cabinet secretary going through that. [9:42] That is a special appeal I will make to the Senate. [9:45] The county attorney is newly appointed [9:47] and the procedures for approval are underway, Chair. [9:52] Governor, are you saying you've never seen [9:54] a national government official facing contempt of court proceedings? [9:57] Not contempt, arrest warrants for not paying. [10:01] The warrant comes from contempt [10:03] because the courts have made decisions [10:06] that your government has to own. [10:08] We are a rule of law country. [10:10] I mean, if the courts have made a decision [10:13] that a certain amount of money is payable, [10:15] I am familiar with these cases. [10:17] Yes. [10:17] You can't excuse the accounting officer in such an event. [10:21] What do you want the Senate to do? [10:23] Because we also respect court orders. [10:25] You can, Chair, without us going into that as a substantive point. [10:29] If a CC, for instance, is compelled to pay a certain amount [10:33] that has not been approved by the budget in the county assembly, [10:35] how does he pay it? [10:37] So what arguments do you have for the judges? [10:40] Because we cannot excuse someone who has been convicted by a court of law. [10:45] I have not asked you to excuse anyone. [10:46] I am saying that the context within which [10:48] county government officers are dealt with vis-a-vis [10:51] their colleagues in the national government [10:53] is something that I have been on both sides. [10:55] Something that I have seen is it is not fair. [10:57] And we will be bringing substantive issues. [11:00] Even before any issue of contempt, [11:02] there are always arrest warrants in counties. [11:05] One of the senators who are dealing with them, [11:07] county secretary, that time was always in hiding. [11:09] The country, you know, it's a bigger issue that I think [11:12] the devolution committee, please allow me to finish, Senator Ombua. [11:16] Oh, yeah. [11:17] That the devolution committee needs to hear us out and look at it. [11:21] That is what I want to propose, and I'll bring it later. [11:24] It's not about a specific case. [11:25] It is something continuous on numerous, numerous issues, Chair. [11:29] Senator Ombua. [11:30] Chair, Governor Asagaja, I'm actually in support of what you're saying. [11:39] And, you know, you began by saying that you will bring [11:41] that matter to the Senate. [11:44] We will sit back and wait for that matter to be brought. [11:47] Because, you know, what, Chair? [11:49] This mistreatment of county governments by the national government [11:53] does not begin and end with officers of the county governments. [11:58] It also extends to allocation of resources in the treasury [12:03] to county governments. [12:05] So bring that matter. [12:06] Let's deal with it. [12:07] Chair, just as an exit point, Governor, just under 30 seconds. [12:13] Then the hypocrisy in your statement is you fired courage [12:18] based on that legal challenge. [12:20] Oh, he's not been fired. [12:22] He's not holding the position for now. [12:24] But you have appointed somebody substantively. [12:27] Chair, we have 10 CCs. [12:29] And for, you know, the one... [12:32] So you moved him to another department? [12:34] Yes. [12:34] He is the substantive CC. [12:37] Why does he know that he's substantive CC? [12:39] Yes, because he came here. [12:41] He's not... [12:41] Or he became substantive after I asked. [12:44] Did you hire him on instance? [12:46] You know, it is first time to sit before you. [12:50] Sometimes he sees you on TV, so he's, you know... [12:52] Yeah, there is an issue that we have to agree on, Governor. [12:56] Warrants of arrest only issue if you fail to attend court. [13:00] No. [13:00] Yeah. [13:01] That's why I want this thing substantively dealt with. [13:03] Just a minute. [13:04] We have warrants every week without issues of attending court. [13:06] This is where we want to guide you. [13:08] Because you cannot bring matters that are before the courts [13:11] to the Senate for resolution. [13:13] No. [13:13] The issue that we want to be clear on, eh? [13:16] Even you have been subject to various warrants from the Senate [13:18] just recently because you failed to appear. [13:21] If you appeared before the courts, that is where you make your case. [13:25] Because also those courts, they are also Kenyans. [13:28] They understand the challenges that devolved units are going through. [13:32] We have been through numerous such issues. [13:34] I remember when the lawyers were issuing those warrants all the time [13:37] and it is usually those legal bills. [13:40] And you sit down with some of them, agree on a payment plan. [13:42] Something you can take to the court. [13:44] So, my senator should listen to his governor. [13:48] Why are you preempting the issue before I bring it? [13:50] For you to look at the entire... [13:52] Chairman. [13:53] The entire... [13:54] The entire... [13:54] The chair. [13:55] The chairman. [13:55] The chairman. [13:55] Is what we want to exercise in futility? [13:58] Chairman. [13:58] That's what your senator is warning you against. [14:00] But everyone deserves a hearing. [14:01] Exercise in futility. [14:02] Let's talk. [14:03] Everyone deserves a hearing. [14:04] Let's hear it. [14:05] Let's talk. [14:05] Is it other than good? [14:06] When you say, Senator, why can't we just move to this? [14:10] Senator, yeah. [14:11] Because you see, he said he will. [14:14] He has not. [14:14] He may not even bring it. [14:16] That's all put our mix of members. [14:17] But we don't want him to do exercise in futility. [14:20] So, why can't we just let him do what he has to do? [14:22] Yes. [14:23] We got the serious issue for us. [14:24] Because at least money is exercise in futility. [14:26] The Senate is a house where everybody comes to look for reliefs. [14:31] He said, you know, we... [14:33] We cannot all be talking, surely. [14:35] Yes, let's just talk in tongues. [14:41] Let's just talk in tongues. [14:43] Now, let us listen to Senator Mbua. [14:48] You know, me, what I'm saying is, the governor has said that he will. [14:53] He has not. [14:55] Let's wait for that to happen. [14:58] When it happens, we will deal with it. [15:01] That is... [15:01] He's saying, let's go to the issues here. [15:03] Because there are quite serious issues here. [15:04] Yes. [15:05] I would probably want to know whether the one million machine for making chapatis arrived. [15:10] Yeah. [15:10] No, those are issues that I want to discuss. [15:11] I'm not chairman. [15:14] Please, let's just talk when you get my mic. [15:17] It is possible for you to ask for the mic. [15:19] And I'll give you the mic. [15:21] And you prosecute your case. [15:23] Now, Senator Sifuna, are you asking for the mic? [15:25] I have asked. [15:26] Please do. [15:28] Finally, you know, I don't know how I can put this. [15:31] If you go to the wrong forum with a problem, expecting resolution, it's actually... [15:38] I don't know how I can put it, governor. [15:41] Because we have, even in our standing orders, we have the subjudice rule. [15:45] We can't deal with matters that are before the courts. [15:48] What was given was guidance. [15:49] But we will wait for that. [15:50] I just wanted to know. [15:51] Because it's a matter of great concern to me personally, because I know Kirich. [15:55] Are you aware, as a government, of his physical whereabouts? [15:59] Che, let me say this. [16:01] One, we've not come on that matter. [16:02] I have not said we're bringing substantive issues with respect to court rulings. [16:09] Because the subjudice rule is that if you bring a matter that is currently before court [16:13] and your hearing of that matter can jeopardize its outcome, that is when you don't discuss it. [16:20] I'm talking about the Government Proceedings Act. [16:23] And allow me to leave it at that, yeah. [16:25] Is it possible, members, that we leave that issue and we go to the substantive matters? [16:34] Because looking at the times... [16:35] I've been asking you to give me a more case. [16:37] You know, this is the house of record, yeah. [16:41] And we all know, including governor here, that we have all taken oath, even us as we sit this afternoon, [16:48] to respect the constitution of the Republic of Kenya. [16:50] So, if the courts have issued orders and you have a county attorney, you have a legal department, [16:57] you have gone to court, you have lost the case and there's that court order, [17:02] what will you want the Senate of Kenya to do? [17:04] Which matter are you talking about? [17:05] Whatever matter, you know, you are coming here, you are trying to ventilate before us that you have a problem [17:16] with this issue of courts issuing orders. [17:19] Chair, that is the folly of judgment before a matter is brought to you. [17:24] What is the issue you are raising? [17:27] I'm talking about unfair execution of Government Proceedings Act. [17:31] Through court orders. [17:33] I mean, that's not a matter we can... [17:35] Senator, when I have the mic... [17:36] That's not a matter. [17:37] Senator Dulo. [17:38] Chairman, that's not a matter that we can prosecute. [17:40] Let it come. [17:41] With due respect. [17:41] Let it come and let you just sit down. [17:43] It has not come before us. [17:45] Even putting it on record itself is unprocedural. [17:49] Chair, I think the governor shared the frustration they are going through as county governments. [17:54] And it's not the matter that brought them here before this committee. [17:58] So, I think until when he actually has done his own research and is ready to come before Senate for a solution, [18:06] then we should move to the audit issues. [18:09] Please. [18:10] Senator, Chair, we have been around. [18:12] We know what is happening around this country. [18:14] We have had a lot of issues where counties are being frustrated left-right. [18:18] And that's what the governor is just saying. [18:20] I think Senator Wambu has summarized everything. [18:22] Let's wait for that opportunity. [18:23] Senator, finally, I think my question, members, was very simple, which the governor has put to rest that the CCM is not acting, is substantive. [18:35] The only person who is still in process is the county attorney. [18:38] He's in the record. [18:38] The governor just said. [18:39] Yes, that is the introduction was that it was acting. [18:42] But the governor has confirmed he has just hired him substantively. [18:45] So, let us leave it there, Chair. [18:47] I yield. [18:48] When the devolution comes, Governor, I agree with your frustration. [18:51] Allow me to say something, kindly. [18:54] Sorry, Governor, yes? [18:55] In Article 96 and 95, the Senate exists to protect the interests of counties and their governments. [19:02] It is very unfortunate. [19:04] Even before senators can be prejudicial, why don't we wait for that matter to be brought? [19:14] Look at it. [19:15] If it makes sense, do what you need to do. [19:18] If it doesn't make sense, then you leave it. [19:20] So, the matter that the governor is talking about is not in this house yet. [19:29] No, it is not. [19:30] Go and prepare, bring it. [19:32] It has been dealt with in one or another in the last Senate, but not substantively. [19:36] Thank you. [19:37] Senator, you want to read something? [19:39] I have not been answered on whether the county government of Nairobi knows where Kerichi is physically. [19:44] I will not answer that. [19:46] But, Chair, I thought that is... [19:48] I will leave it. [19:51] Fair enough. [19:51] I think fair enough. [19:52] Looking at time. [19:53] Ten minutes to two members. [19:54] Chair, just as an exit with your indulgence, if you don't know where your employee is physically, [20:00] how will they execute their duties? [20:01] I mean, it's still substantive. [20:03] So, how would he know where he is really? [20:06] Is there something I don't know about this issue? [20:08] Chair, can you control the duties? [20:11] Yes, I think let's just go to the substantive matter, members. [20:18] Is that okay? [20:19] So, before Governor, you came in, we had opportunity to engage with the auditors on the matters raised in the receiver of revenue. [20:30] We will start with the receiver of revenue, and then if you get time, go to the executive. [20:36] We looked at the matters that were not resolved. [20:38] These are the matters that we shall look at now. [20:44] The first paragraph was paragraph 8, that is page 5. [20:51] On the certificate, receivables from exchange and non-exchange transactions, auditor, you had already done your audit. [21:02] Because by that first, we had our report at first March, the governor had not turned up. [21:13] He had and adopted this report. [21:17] What we'll be wanting from you is we're just looking at the implementation of this report. [21:23] So, still we'll go through the issue, and then the governor would give us the response [21:29] and how they're implementing the recommendations of the Senate report. [21:35] Please go through 8.1. [21:37] Thank you, Chair. [21:45] Sorry, 8.2. [21:47] 8.8.2. [21:47] 8.2, yes. [21:48] 8.2, yes. [21:51] Do I read the whole of it in summary? [21:53] Yeah, it's all of it. [21:54] No, thank you. [21:56] 22 to the 11 new statement reflect receivable from exchange transaction [22:01] totalling to Kenya shearing 7,529,000 million, 755,055. [22:10] However, receivable totalling Kenya shearing 4,816,825,885, [22:18] or 65% of the receivable have been outstanding for more than three years. [22:23] Further, transition from cash based to accrual accounting introduced a significant variance [22:32] between the audited prior year, alias, balance and the current year's reported opening balances [22:44] which were not reconciled or supported with determination, redocumentation and explanation [22:51] for downward adjustment. In the circumstances, the accuracy, completeness and recoverability [22:57] of the revenue of the receivable, totaling to Kenya sharing $62,769,430,875 could not [23:06] be confirmed. [23:07] Governor, please respond and point us to the page that you will be reading your response [23:16] from, Chair. Thank you very much. The response on 8.2. We will give the response here and [23:31] also discuss the issue generally because it's a big issue that needs to be looked at holistically. [23:39] The county has put measures towards recovering or signing debt owed to us which includes joint [23:43] operation for enforcement teams, clampdown closure and recovery of unpaid items. Talked [23:49] to the government entities to explore possible recovery and in some cases debt swaps. The [23:56] county also did data cleansing, exercise whose results show county weighing itself a good [24:02] amount coming to hospitals, schools and county offices and all parcels were being calculated [24:07] in the system. [24:08] Which page is that? [24:09] Page 9. [24:10] Page 9. [24:11] Is it labeled 9.3? [24:22] Go ahead. Go ahead, governor. [24:42] The same data had exempt properties being calculated in the system and above all the general interest [24:48] and penalties had grown beyond the principles by far. Chair, we've attached a transitional [24:53] statement and transitional reconciliation statement which have been provided. Also the reports [24:59] on the data cleansing activity. The corrective measures undertaken is a comprehensive data [25:05] cleansing exercise on land rates and data records. Exempt properties and unrecoverable balances [25:11] identified and removed from active receivable balances. Enforcement teams were deployed to recover [25:17] of outstanding land rates and rent arrears. Demand notices, legal notices, bulk messages and eviction [25:24] notices in the case of house rents were issued to defaulters. And in appendix 13.4, we've submitted [25:32] samples of those. Debt recovery initiatives including clampdowns were initiated and are still ongoing. [25:40] Detailed aging analysis and reconciliation schedules were prepared. Revenue collection strategies were enhanced [25:47] to improve collection of arrears. Periodic review of outstanding balances is continuously done to identify [25:54] long outstanding debts for appropriate action. Chair, in a nutshell, with accrual accounting [26:02] now we must, you know, the receivables. What do you expect to get from either accounts we have [26:12] or parcels of land. Because land rates and property taxes are indeed the highest revenue stream for the [26:18] county of the county of Nairobi. The variance is then what is not elected and what is outstanding in terms [26:31] of defaulters. Now the defaulters, even after the cleanup chair, I think that amount of 62-63 billion [26:39] is really the amount of money to Nairobi, its citizens and other entities. And mainly in form of land [26:53] rates, the rents amount is not as high. It has come down. And it's because of a lot of, you know, [26:59] measures that were put in place including, unfortunately, evictions that had to be done [27:05] and, you know, such enforcement measures. Chair, if you look at the list of those who owe 63 billion, [27:13] it's a huge list. And I'm happy when currently we are undertaking a negotiation with the debt collector [27:24] to now move to auction. Because the people of Nairobi need services. They need, you know, [27:31] garbage collected. They need medicine in hospitals. You need to serve this county. 63 billion out there [27:37] is way too high. And the cost of running the capital is extremely high. It's a service county. Things need [27:45] to be seen to be done. So that is what we're doing. Chair, you remember earlier I brought up the issue of [27:49] Rating Act and the need for certain regulations by the Cabinet Secretary. The issue of, what do you call [27:58] it, sectional properties. How one acre in a certain area is paying the same as its neighbor with 70 [28:06] apartments, you know, which is not equitable. Now, the common Monenchi is paying every day. [28:12] The Mamamboga is paying her 50 shillings or 20 shillings. But it's landowners of the 175,000 [28:18] parcels that we've now reconciled to who are not paying their due to the city. So that is the long [28:24] and short of it all. So inasmuch as we've improved on collection. Chair, that financial layer in question, [28:31] we collected 13.8 billion in 2024-2025, which is a big improvement from what I found it. Those are [28:45] land rates. No, that is in total. Of course, half of that is land rates and property-related taxes. [28:54] Chair, we've increased revenue collection in Nairobi by 55%. But still, in as much as what we're [29:00] collecting in Nairobi is more than 30 counties combined, it is not enough to serve the people [29:05] of Nairobi. I shall rest there for now. Auditor, that was the query and that is the response from the [29:11] management. Yes? Before you even do that, we want to ask the auditor if that query was responded too [29:21] well. If not, what is still outstanding? What is outstanding? We can say, I think, [29:30] what is the current state out of that 62 billion? Because the concern was it has been outstanding for [29:38] long. We think what is outstanding for more than three years? What is now out of that? What is the [29:46] current state in terms of what have you corrected within that? Is it possible you get that now, [29:50] Governor, or is your monetary? You see, a lot of the increase between the 8 billion to the 13.8 [29:56] of our current revenue can be attributed to people who've paid outstanding rates, [30:02] but a huge majority are not paying. And that is why, you know, I've seen there three categories [30:09] of people. One, they are very faithful people who come and pay whether you remind them or not. [30:17] Second, there are those who need to be reminded. I think even today, some of you might have received [30:22] a message reminding you that you have until 30th June for 100% waiver on interest. Sadly, [30:27] there are those who can only pay when they are caught. Unless they are caught and there's legal [30:33] action or there's an auctioneer in their property, they will not pay. And that is the biggest problem. [30:39] But also, there's a government. There's contribution in lieu of rates from national government [30:45] entities, but it's still owing. And I'll get the exact number. I think it's 3.8 billion from government [30:53] entities, including parliament. Parliament is one of the defaulters who won Nairobi County [30:59] contribution in lieu of rates. The new rating act provided a new procedure where you write to the [31:06] CC finance rights to the National Land Commission listing all government entities owing CILO. And then [31:13] the PS of finance is the one who receives that from NLC and is the one who reports back and pays [31:21] through NLC. That was the change that came with the rating act. And there's still been delay in [31:26] actualizing those provisions because of the regulations in the house, Chair. [31:29] Senator Sifuna? [31:31] Chair, Governor, the CS for Treasury sat in that same chair last year. And according to Treasury, [31:40] according to what he told us, is that some of these conversations are stored because of unavailability [31:45] of your office to have those conversations. Sitting here today, what do you have to demonstrate [31:53] the progress that has been achieved in terms of resolving some of those concerns? [31:56] Well, Governor, like the question, we'll give for a second, another one from Senator McGill. [32:03] Governor, you said what? Evidence to show progress? [32:08] Yes, because he laid the blame squarely on you as a CEO of a county. [32:12] You should have called us together. You would not have said those things. [32:16] Order, Governor. [32:17] Sorry, sorry. [32:19] The center will get you. [32:21] Yes, Governor, I've heard you say that revenue has increased [32:26] from 8 billion to 13 billion under your stewardship. [32:30] 13.8. [32:32] 13.8, huh? [32:33] Yes. [32:35] Do you attribute this to efficiency or you have also increased your rates significantly? [32:44] What is the percentage you have increased the rates? [32:47] Then number two, can you say that Nairobians are correspondingly receiving services to reflect [32:56] this increased revenue from 8 to 13 billion? [33:00] Personally, where I live, I've never seen a garbage collection from the county government of Nairobi. [33:05] Where do you live? [33:06] Where do you live? [33:06] In Nairobi. [33:07] Where? [33:07] Where? [33:08] Don't worry. [33:08] Where are you? [33:10] You must say. [33:10] You must say. [33:12] Governor, I live, I live, I live, I live in the great corner of a year. [33:17] I was not saying what I was talking about, responsibility for statements of facts. [33:20] Yes, actually, not, not just, this is a general question, but generally there is a problem of garbage collection. [33:28] I drove through Isili yesterday, I actually took a video clip, I will send it to you. [33:34] There are heaps of garbage in Isili, the same thing with our center here in Kamkunji. [33:42] So, I don't know why we are not seeing a clean Nairobi. [33:45] Now that you have increased revenue to 13 billion. [33:49] Senator, just write the questions you'll answer. [33:51] Senator, Chair, and you must bring the Governor to order, he waits to adjourn to answer. [33:58] This thing of giving snipers while members are speaking doesn't look very neat. [34:03] Governor, note this down, I have gone to collective measures. [34:08] There were teams that went out, there is the issue of comprehensive dunder cleansing, [34:13] there is the issue of demand legal notices, debt recovery initiatives, debt and aging analysis. [34:21] I have seen over three years in your report that you have given, that is more than three years, [34:26] is almost 95.9% in terms of aging analysis that you have given. [34:34] On all these eight corrective measures, how much have you collected comparing what is still outstanding? [34:41] And then finally, you have said your revenue collection has increased from 8 to 13 billion. [34:49] But according to CRA, your revenue potential should be 63 billion. [34:55] So, what are you doing to actualize that? [34:57] Because I know before this projection of revenue collection is, the CRA and that potentiality of Nairobi [35:04] should be much more because that consistency in Nairobi city has never been achieved. [35:10] So, when you say there is improved efficiency of collection, [35:14] then you still have this pending. [35:15] And then finally, finally, you had the CS Mbadi was here, the expert, was here. [35:24] We argued for some time about what national government should do. [35:29] You have argued in your response that there could be debt swaps. [35:33] With that engagement, how much have you done debt swap with the national government? [35:37] And how much are you agreeing on settling? [35:43] As in, in terms of, I know national government owes you, you owe them. [35:48] So, where is the meeting point to ensure that? [35:51] Because the bulk of this chair, the bulk of this outstanding is bought by the national government as opposed. [35:57] And on the issue of carpet collection, I don't know the efficiency, because even when you drive [36:02] Waiyaki Way and most of our high states, still a big problem in terms of carpet collection. [36:07] Governor, you may respond now. [36:10] Thank you, Chair. I'm very happy senators are making the same point I'm making, because that collection requires resources. [36:18] It is a heavily logistical exercise. It's a very expensive exercise. [36:22] Without these resources, you will definitely not see the kind of efficiency we deserve. [36:26] An increase of five billion or six billion will not all go into one thing. [36:32] You know, it won't all go into garbage. [36:34] The county provides medical services, roads, a lot of things, you know, Chair, that you know, [36:41] because you're the ones who look through our audits. [36:45] Let me answer them in sequence, starting with my senator. [36:49] The evidence to show progress in terms of what national government, or rather these measures that we're [36:56] taking, is really correspondence between us. Correspondence to the NLC we can provide. [37:01] The demands for those amounts we can provide. Demands to national entities that we've actually written to, [37:08] we can also provide. The issue that, if I get it right, that CS body was on about, [37:18] and if I'm wrong you can correct, was on pension debts. And the pension debts matter. [37:24] In fact, I chaired a meeting that he missed in Treasury to agree on a new formula, [37:29] because they had been applying the actual deficit strongly. When you look at funds that are [37:36] defined benefit funds. Defined benefit funds like LAPTOS. But on DC funds, we, for instance, [37:42] have no outstanding arrears when it comes to that, apart from interest. So that is the one meeting [37:48] that he's kept talking about, where I came and gave them. They wanted the views of Nairobi and [37:53] Mombasa. And I remember that day I left OP and went straight to Treasury, and we gave them an opinion. [38:00] In fact, we actually pointed out where they are wrong in the calculation, because you cannot have [38:05] interest plus actual deficit being applied on a county entity. It was not about the debts they owe us. [38:12] It was about how much counties owe pension funds, LAPTOS and LAP fund. And Chair, you will remember, [38:19] this is a matter I dealt with a lot when I was your Chair of Labor in this House, up until we passed [38:26] the County Government Retirement Scheme legislation. So I can provide that correspondence. Chair, what is [38:33] slowing us down? One, the ability or the teeth to enforce. When you owe KRA, KRA will come for you. [38:45] And they have all the powers plus police and all of that. For the counties, enforcement is a challenge. [38:54] In fact, part of why we are working on the Nairobi Metropolitan Police Force. Because all our people [38:59] have is Nirungutu. So I've told you, I owe you this. You go to court to get an injunction. You stop the process. [39:07] The Section 19, if I'm not wrong, 18, of the National Rating Act provides those remedies. It says that the [39:20] county government can, one, deny you whatever service, including water. Two, can come and put an [39:28] agency notice on your property. Three, can collect rent on your behalf in the case of a place that [39:36] has rental income. Four, can auction. Now, what has been waiting for implementation or execution of that [39:43] has been regulations. Because the same law says the Cabinet Secretary shall prepare regulations [39:48] for the enforcement of that. Before what they used to be, under the Valuation for Rating Act of 1956, [39:58] which, Mr. Press, in its 1956 law, was that you set a valuation court in the county, which we did. [40:08] You get a magistrate to head the tribunal. Then those with disputes can be able to, you know, question the [40:15] disputes before producing a new valuation draw. Fortunately, and my senator, this progress, we are the only county [40:21] that has been able to move to a new valuation draw. 2019 valuation draw. The rest are still in the 80s [40:28] valuation draw. So implementing it, I'll pay it with a few people who had objections. If you help us [40:33] get the proper regulations on two laws. One, the National Rating Act. I sit with the governors and [40:42] mayors from across the world. Capital cities are run through property taxes. Number two, on the [40:54] sectional properties law. Sectional properties law demands, and I'll give you an example, half an [41:00] acre in Kileleishwa with one house is paying the same rate as half an acre with 60 houses. Yet they [41:06] need more services, more water, they use the roads, more ETC. Sectional properties will provide that each [41:11] and every of those units first gets a sectional title by a certain time, and each of them becomes [41:17] a rate payer. Even if there are not the accumulation of the sectional properties act. Again, it's the [41:22] regulation. We've done our regulations. We've done, did a draft that we shared with the CS that they [41:27] can adopt, because we're the biggest beneficiaries. We've done county regulations. So, Governor, that is [41:32] a proper matter to bring before the Senate, and for your information, we have dealt with changes to the [41:39] Statutory Instruments Act. We've passed, I think, three separate in these last three months or so to [41:45] criminalize delays in operationalization of laws, including failure and delays in passing of regulations. [41:54] Thank you so much. Thank you. That would really help the city. [41:57] Chair, I just wanted to ask the Governor, since this matter has been in the books for the last three years, [42:06] are you able to realize this collection? Because it cannot remain in your books forever. So, if it's not possible, [42:15] can you make proper justification on how you can get it off your books? If you're unable to do it, [42:22] then you can bring it to the Senate. They can be able to help you to go through that. Thank you. [42:27] What my elder sister is not getting, the issue here is hundreds and thousands of people who owe the [42:40] county rates and are not paying. The only way to sort it out is when the county has the teeth and ability, [42:48] for those habits, as you're saying, on Wanyer Road, for garbage, it requires money. It requires [42:54] resources. It requires equipment. We need to fix drainage in this city. It requires resources. [42:59] So, you're running a city of seven million people with a 38 billion budget. We definitely cannot have [43:08] the same quality of life that we want elsewhere. And I'll give an example. I was hosting my colleague, [43:12] Mayor of Paris, and I took her to see one of her projects. She asked me, how much do you have? I said, [43:19] seven million. She's like, oh, she has two million. Then she said, and that's Greater Paris. Then she asked me, [43:24] what is your revenue? When I told her the amount, she was shocked. So, what is your budget? I said, [43:33] I converted it. I asked her what her budget is. It's equivalent of 1.3 trillion Kenya shillings for the capital. [43:39] We want that quality of life in Nairobi, but we don't want to pay for it. It is not fair. So, that is [43:45] the issue, Senator Dulo. No, no. Chair, I agree with the governor, the frustration and challenges [43:51] they are going through. But the other thing is that, for how long are we going to have this on record? [43:58] If you really feel that you cannot make headways, can you give this matter to the Senate? And then we [44:05] can be able to see how it can be. You can be assisted. Because we cannot have it forever [44:11] in books. Yes. And you are unable to realize. Yes. So, that operationalization, I hope that is [44:16] the right way you say that word. That's making it work of those two laws, and that is really why [44:22] we push those two laws, would be a huge victory for not just Nairobi. Nairobi, Mombasa, Nakuru. [44:29] So, Chair, I hear the governor saying that with proper facilitation by law. Yes. [44:39] This 62 billion is... Can be realized. Can be realized. Yeah. And once you realize that, [44:46] you will see the services. We are doing a lot with so little. The little that we have. Chair, [44:51] let me give you the last example. The Senate graciously has been able to provide for us, [44:58] you know, increasing allocations to county. Another one I thank my senator. You know, I used to boast to [45:04] him that me when I came, I found 15, I left it at 18. Now he's come to 21. You know, so he's performed [45:10] very well. Do you know, of the 1.7 billion that I receive a month, 1.5 is salary. We want [45:21] controls fixed, we want doing it done, we want 7 million people served, and Senator Mugenie's [45:26] garbage collected. The financing question of the capital must be looked at critically. The [45:32] financing question. Chair, on the second question on revenue increase, Senator Mugenie, yes, it has gone up [45:37] by 55%. What I attribute it to mostly, is digitization of all revenue streams. The digitization [45:45] of all revenue streams, and having a no-cash policy, has really helped the efficiency. Number two, [45:53] simplification of paying. So 55% should give us what, from 8 billion, if you increased it by 55, [46:00] wouldn't it bring us close to 13 billion? Yes, that's why we collected 13.8. [46:04] So the fact... I have increased revenue by 55%. Because you have increased the rates? [46:12] No, no, no. I'm explaining the reasons you asked. The first one was digitization, [46:18] and making it efficient, devolving the customer service centers. Today, across the city, you don't [46:27] have to come to City Hall to pay. On star647 hash on your phone anywhere in the world, you can pay your [46:34] rates. On NairobiServices.geo.ke, you can describe your business, print your license with a QR code, [46:42] without going to any office. So that efficiency has helped. Senator Mugenie, the issue of rates [46:47] increase, does not apply, because the rates increase was quite minimal. Because what we're doing is 0.05% [46:54] of undeveloped site value. And we even did a capping. Because for the larger rate payers, [47:03] we said that if they increase almost double, or rather doubles your rates, you will not pay beyond that. [47:09] And so it's a very small category of people. Most rate payers is 10,000, 15, 20, you know, [47:15] but the defaulters are the 100 million. And, you know, I don't know if data privacy is an issue, [47:21] I would list, I would name people here. But someone is well-to-do, is driving a big car, [47:27] they're doing business, they lost 12 million shillings, and they don't want to pay. And for people, [47:32] even these rates, you can pay month by month in arrears, you know, in installments, you know. [47:39] So really, it is that issue of can't pay, won't pay until you get me. But today, I'm very happy. [47:44] Governor, the way you are talking about those big people, I'm looking at Cheragia, [47:48] and wondering whether he knows one of them. Maybe he's one of them, you know, he's a big guy. [47:54] Chair, you need to protect me. Let us remain on focus. You know, when you're hunting for antelope, [48:02] go for the antelope. No, that's cruel. But I hope you're not hunting. [48:07] Chair, there are big names, political names, big institutions, and something people do not know. [48:13] This law today does not exempt people like golf clubs. You know, golf clubs are refusing to pay. [48:22] Huge golf clubs, all these rich people go there to complain about the portal. But they themselves [48:27] have arrears. If I list for you Karen Muraiga, Royal here, which if I auction it, [48:32] can make a very nice park for the Kibra people. You know, it can be a very nice recreational [48:36] facility. They're not paying. Yet, the biggest complainers of lack of service delivery are members. [48:44] Now, this new rating act only exempts religious institutions. And those religious institutions [48:50] that have a business entity are not exempt in the business entity. If you go here to Holy Family [48:56] Basilica, they're collecting a lot in their parking silo. So we only charge them rates for that part. [49:03] But for the rest of the church, it's only religious. You saw my staff went to the [49:08] Freemasons. Freemason is not a religious institution. It's a gentleman's club. It even has a bar inside. [49:14] But you see, these are the people who are also allowed this. [49:18] Do you say people who are going to church don't drink? [49:21] No, it's not registered. All religious institutions are registered in Kenya, [49:28] through the registral societies, all of them. And so, people claiming those exemptions, [49:33] yet conducting business. You know, let's be fair. Senator Sifuna, you represent [49:37] Mamamboga, who comes early in the morning to Wakulima, and she's paying her 50 bucks. [49:43] But people... You can't vlog this horse further. [49:45] Yes, yes, yes, yes. [49:55] There's not been good progress. There's not been good progress. We've done numerous meetings. [50:02] One example is, I explained yesterday in a different committee chair, how I was going to be very happy, [50:09] having moved Nairobi from 119 billion pending bills to zero, because that was going to happen. [50:15] One, I've already reduced from 119 to 86. Now, from the 86, the Supreme Court ruled that Nairobi [50:24] county is owed for the Makassi garrison to rule that it is ours. And we said the military must not [50:29] start paying for it. And the value of it, in my assessment and the assessment of our team was 80. [50:35] It has come down to 75. That negotiation stopped there. But if you press upon them to pay, [50:40] as even to say, to pay an additional 10 billion every year or 20, it'll come to deliver services [50:45] to the people. Because the court found that that is a property Nairobi bought for value from Kayaole [50:51] industrial, Kayaole states, that time it was 40,000 pounds. So these are the things that can really [50:56] help us be able to serve the people better. Chair, I'll leave it at that. Thank you. [51:00] Chair, just follow up, because when we finish the issue of revenue, I think we'll be done. Chair, [51:05] Governor, I sympathize with doing the issue of rating, and we are about the statutory instrument. [51:10] But I am a cheatary, because your potential should be 65.1 billion. If I accept the property [51:18] rate, when you come to packing fees, your potential should be 2.5, but you are collecting 2 billion, [51:24] just as an example. The hospital and public health fees, you should be collecting 6.2 billion, [51:29] but you are collecting 1.5 billion. The building plan approvals, and I see many buildings coming up [51:36] everywhere in this city. You should be collecting 6.1 billion, but you are collecting 1.5 billion. [51:43] On the issue of business trading license, the potential is 16.0 billion, but you are collecting [51:48] 2.7 billion. This issue, and this analysis of your revenue, the liquor licensing is very interesting, [51:56] because I normally see estimated potential of 8.4 billion, but you are collecting 38 million. [52:04] I'm just giving breakdown, exempting the rating, the property rate. So does it mean, one, how do you [52:11] through the chair, how do you ensure that this potential is maximized? Number two, for example, [52:16] like liquor licensing. I know most Nairobians like Sherry, and whenever I drive around, you see [52:24] Quiver, you see what, and even your senator with the individuals has always referred himself as [52:30] I thought you should have at least corrected 5 billion to 8.5 billion. So what are you doing [52:37] to maximize this other revenue that you don't need the rating at? Finally, you have said [52:44] that you are moving to from non-cash basis. Governor, we saw one of your senior officials, although this [52:52] a matter under investigation was found with 65.6 million, although I'm told it was more, you never [52:59] know what happens in this country. And it's a senior county official, and you are talking about moving [53:04] to non-cash. Why would a senior official be found with more than 65 million in a house? What is, the [53:12] point is, I don't need to deal with the investigating part, but you are talking about non-collection through [53:19] cash. So my concern, if you find a senior official and you have said we are moving to cashless, [53:25] then some of us doubt considering finding a 65 million with one person is very, very dangerous. [53:32] Let me deal with the substantive issues. Yes, the potential in those revenue streams that you have [53:42] mentioned, I'm not going to agree with the figures because that was just an estimate, but it is high. [53:49] But remember, you also need resources to collect resources, you know. You need to invest in equipment, [53:56] you need, and especially for what we call the DCU, the debt collection unit. We are now getting into [54:03] leasing to have more vehicles for those teams that go to the ground. And so the potential is there, [54:10] but of course we also don't want to overtax Nairobians. We are not raising taxes, we have not raised for the [54:15] last two or three cycles, but we are expanding where people can actually be able to pay. An example [54:22] that counties have not explored well, I think apart from Kisumu and maybe Lamu, if I'm not wrong, [54:29] is what you call entertainment tax. I think Kwale, one of the coastal counties, you know, [54:35] the constitution says that counties can levy business and property fees, and B it says entertainment taxes. [54:44] If an entertainment tax of whatever percentage is put on a lot of what you'd call entertainment, [54:52] it is a potential for all counties to actually raise some money, and it can be collected even by carry, [54:58] you know, as a percentage, as they collect their VAT, without overburdening Kenyans. Yes, [55:05] Nairobians love Sherehe. There's been an increase in liquor, especially this financial year. Again, [55:12] because of the same process, we now moved to Liquor Pay. Now Liquor Pay is a system that is digital, [55:20] that all of those who are applying to run these businesses are now using, they're very happy with it. [55:27] You know, it's very hard to hear people you're regulating coming to say thank you for doing that. [55:33] I think finally, on the officer found with money, it is not revenue, you know, I don't think it's [55:40] being investigated, but in Nairobi, first we don't condemn that, and I condemned it completely, [55:45] I suspended the officer immediately. We've seen cases of people being found with money, from [55:49] national government, from other counties, before, whether it was bribes collected from people, [55:54] it is wrong, and we must do everything we can do to tighten systems to prevent that. Of course, [56:02] as I said, even in my statement, there's a space for personal culpability. You know, I saw the media, [56:10] my friends here, trying to now run with it, saying, Sakaja's officer found. Like, surely, [56:18] how do I know what you have in a bucket in your house, under your bed? I have 19,000 officers. [56:22] You are right, he's your officer. But when someone else was found, [56:28] KPA, they didn't say so-and-so's officer, found with 500 million. You know, it is very unfair when it [56:34] comes to counties. But the point I'm making, [56:38] is that in defense of the media, Sakaja, who you know, I'm also a scribe. [56:44] Or they even apologize to me. [56:46] But you know... [56:48] I'm sure. [56:50] For the four-on-one... [56:52] There is nothing wrong with them making reference to you, because you... [56:56] They also need familiarity, you know? [56:58] The boss of Nairobi City, the boss is Sakaja, so... [57:06] I think a very close ally. [57:08] I think we can close... [57:09] But you have worked with him. [57:10] Very close ally. [57:11] Let's close. [57:12] But some of us know you are such. [57:14] Yes. [57:15] It's your close name. [57:16] You're chairman. [57:17] You're chairman. [57:18] Chairman, as we make progress... [57:20] Yes. [57:21] Governor, I think you need to... [57:23] I'm happy that you are condemning the officer who was found with money. [57:26] You know, when you look at the projections on how much you should be making, [57:30] and when you see an officer working with 65 million shillings, [57:34] that should be an indicator there is a big leakage. [57:37] Right. [57:38] In terms of collecting of rates or revenue, and the like. [57:42] So you really need to... [57:44] You can't blame the media. [57:45] Of course there is... [57:46] Certainly there is a problem within your own administration. [57:49] That there is that wind of somebody working with 65 million shillings [57:53] is an indicator that there is a problem. [57:56] So I hope when you go back, you will fix that issue, [58:00] that weakness in systems that can enable an officer to work around [58:04] with 65 million shillings. [58:06] Thank you. [58:07] I don't know why the governor is complaining, [58:09] because I don't know if he saw... [58:12] They were saying the same. [58:13] When you don't show up to the committee, [58:15] the people of Nairobi are saying go and get him from his house. [58:18] Because they say you are my governor. [58:20] Yeah, they say that I am unable to do oversight. [58:23] In fact, even on this specific officer, [58:26] the explanation is that I should know where all of the officers live [58:30] and should be conducting periodic oversight visits. [58:34] So you shouldn't be complaining because at the end of the day, [58:40] the people expect that those of us in these positions [58:43] do something about some of these things. [58:45] So as you make progress members, just governor, [58:48] Yes sir. [58:50] In the financial layer in 23-24, for land rights, [58:54] you collected 3.4 billion, but there was a huge leap. [58:58] For the financial layer 24-25, you collected 18.5 billion. [59:02] Is it? [59:04] No, no, no, no. [59:05] Is that figure okay? [59:06] No, that is one of the queries. [59:08] That was a receivable. [59:11] That is a receivable? [59:13] For land rights. [59:14] For land rights. [59:15] Okay. [59:16] Those are people... [59:17] In fact, those are the best. [59:18] Because these are people you know, isn't it? [59:20] They have an account. [59:23] You have invoiced them, but they have not paid. [59:27] Okay. [59:28] It is easy to enforce on those ones. [59:29] Then those who you may not know, and what we're working on as well, [59:34] and I really wish to be faster, an API between us and the Ministry of Lands. [59:40] Because sometimes you get a defaulter, and then they say, [59:44] Oh, I did a subdivision. [59:45] And so they say, Oh, the ownership changed. [59:47] The county should be able to know real-time when those changes happen, [59:51] so that we go after the right person. [59:53] But the 18.5 chair was receivable. [59:55] So it is occasioned by the change in the accrual to accrual to... [59:59] From cash to accrual. [1:00:00] From cash to accrual. [1:00:01] Okay. [1:00:02] Let's make progress. [1:00:03] So people, do what you can do, so that you can get these receivables. [1:00:07] And then number two, if there's anything that the Senate can do, [1:00:11] in terms of fast-tracking the... [1:00:14] Rating Act. [1:00:15] Yeah. [1:00:16] The Rating Act, and the... [1:00:19] The other... [1:00:20] Section on Properties. [1:00:21] Section on Properties Act. [1:00:22] Just one minute. [1:00:24] 30 seconds. [1:00:25] You said you were supposed to do something with lands, [1:00:29] Ministry of Lands. [1:00:30] Yeah. [1:00:31] Is there progress, so that we don't need to come up next year, [1:00:34] so that it assists, because I know majority, [1:00:36] if they can give you those, it is easy. [1:00:38] It slowed down. [1:00:39] And Nixon Corrine is your personal friend. [1:00:41] That is true. [1:00:46] But you know, institutions also exist. [1:00:48] And we've been taken around by officers. [1:00:52] I don't know why. [1:00:54] Because, you see, if Senator Terarge, you buy land today from Senator Wambua, [1:01:00] I should be able, as the rating authority, to know who's the new... [1:01:08] The other way round. [1:01:09] The other way round. [1:01:10] Me buying from him, not him buying from me. [1:01:12] No, no. [1:01:13] God's blessings, you know. [1:01:14] Yeah, it's okay. [1:01:15] From my lips to God's ears. [1:01:17] Members. [1:01:18] Members, I think we need to agree. [1:01:20] You know, Wambua is an incoming governor, so... [1:01:22] Yes. [1:01:23] We need to agree with all such things. [1:01:25] Governor, not really auditor. [1:01:28] Let's look at paragraph 9.2. [1:01:30] On under receipt of all source revenue against bank collections. [1:01:35] Go through the paragraph, then you get to know what the governor has to say. [1:01:40] Thank you, Chair. [1:01:42] 9.2. [1:01:43] Under receipt of all source revenue against bank collections. [1:01:47] Analysis of Nairobi City County Executive all source revenue for the financial year [1:01:55] review, revealed variance between the receipts recorded in the automated revenue system and [1:02:02] credit in the bank account. [1:02:03] The system reported total receipts of Kenya shillings, $10 billion, $602 million, $255,000, [1:02:13] $152,905, resulting in unreconciled variance of Kenya shillings, $912,897,014. [1:02:33] This indicates that part of the revenue credited in the bank was not receipted in the system [1:02:40] as required. [1:02:41] Failure to align the system with the bank credit undermines the integrity of the reported [1:02:48] revenue that weakens the accountability in the management of the public funds. [1:02:52] Further, it was not possible to confirm the completeness and accuracy of all source revenue [1:02:58] for the year as the account is exposed to revenue leakage and possible misappropriation [1:03:07] of funds leading to misstatement of financial reports. [1:03:10] Thank you. [1:03:11] Governor, let's get the response. [1:03:15] Chair, allow me to read it and then just give a further explanation. [1:03:19] Let me read what we gave. [1:03:21] Chair, the variance of $912,897,014 is as a result of payments done directly in the bank [1:03:29] without specific revenue stream narration or invoice numbers. [1:03:34] Such payments do not reflect in the system as integration is based on the bill or invoice numbers. [1:03:40] These are receipted later when reconciliation is done that identify similar payments related to issued bills. [1:03:49] The county is in process of enhancing system integration to ensure that this challenge is resolved. [1:03:55] So, Chair, the system that you are talking about here, the revenue collection system, has three ways of paying. [1:04:09] One is through the U.S.S.D. when you dialed star six or seven hash. [1:04:14] Because once you dialed star six or seven hash, there's a drop-down menu and you'll say, I am paying for land rates or I am paying for, to use Urupak or whatever it is. [1:04:24] And then you pay. There, there will be no discrepancy. [1:04:28] The portal as well, NairobiServices.geo.ke, where whatever you pay then gets receipted because you paid for a specific item. [1:04:38] And of course, going to any customer service center and we know that Moruma has paid a million for this. [1:04:45] Now, there's a category of people who send a payment directly to the county, to the bank. [1:04:50] This $912 is money that there is more money in our bank than the system, payments that didn't go through the system. [1:04:58] So somebody just does an RTGS to Nairobi County government of five million or of three million. [1:05:04] And then our guys have to figure it out. What was this three million for? [1:05:08] We found it in the bank statement, but we don't know what revenue thing it was until that person comes himself and says, [1:05:14] I paid for approval of building plans and this is my receipt. [1:05:19] So that is what we are trying to get integrations, including speaking to the Kenya Bankers Association. [1:05:23] This normally happens with the banks that we don't bank with. [1:05:26] When you go to a cooperative bank and the banks you bank with, they assist or they have a drop-down. [1:05:31] But through the Kenya Bankers Association, we want them to have a drop-down menu. [1:05:36] If someone is paying Nairobi County, you can go to the drop-down and say this is for rates or this is for, you know, whatever it is. [1:05:44] In fact, you will see this very small discrepancy in parking payments, for instance, because that one is direct. [1:05:52] You have not been invoiced, you know, it starts 647, you pay and there's no discrepancy. [1:05:58] So this 912 is attributed to that, but it is not money that has leaked out of the account. [1:06:03] It is more money that has come than what the system has reported because of people paying directly to our banks. [1:06:09] Thank you, Governor. [1:06:10] I hope you understand. [1:06:11] Point us to Appendix 9.1 in your documents. [1:06:14] 9.1. [1:06:17] I don't seem to be having it. [1:06:19] You have it? [1:06:21] It's there. [1:06:22] It's not labeled 9.1. [1:06:25] As you look at the appendix, auditor, there was more money in the bank than in the system. [1:06:37] Is this a reconciliation issue or does it point to reconciliation? [1:06:42] Lots of funds. [1:06:43] Do you think the response has answered that question? [1:06:47] Thank you, Chair. [1:06:49] What the management provided in soft copy is the revenue for the total, 11. [1:06:58] What is outstanding our concern also is the reconciliation to support this reconciliation 912. [1:07:05] The variance between the two because we need to ascertain the accuracy of the 912 million. [1:07:12] So that is what I'm starting. [1:07:14] Governor, 912 million, you need to know where it came from. [1:07:17] Is it possible to know where it came from? [1:07:19] That's what the audit says. [1:07:20] That's the process. [1:07:21] We have to, you know, if someone just sends an impecer from Dallas, let's not say what it's for. [1:07:26] Governor, the problem is in your response you've said the reconciliations and schedules have been provided in soft copy. [1:07:31] The auditor is saying there are no reconciliations in that soft copy. [1:07:35] That's what he's saying. [1:07:36] You don't have the... [1:07:39] Do you provide the reconciliations? [1:07:41] Yeah. [1:07:43] We provided the reconciliation to the extent that we can reconcile. [1:07:46] You know, there are some which remain that we are not aware of. [1:07:49] So then we should be able to see if what you're saying is correct. [1:07:53] If it was 912, we should see reconciliations for at least 400 or 300. [1:07:57] Is that the case on the agenda? [1:07:59] Yeah. [1:08:00] Exactly. [1:08:01] That's the case. [1:08:02] How far have they reconciliated? [1:08:04] Because they were now addressing this specific... [1:08:09] Trying to... [1:08:10] They only provided the total... [1:08:12] The total revenue. [1:08:15] No, you're not saying this. [1:08:17] Discrepence. [1:08:18] You're losing us. [1:08:19] The governor is saying he has provided reconciliations to a certain extent. [1:08:22] That's what we want to know so that we know what reconciliations are outstanding. [1:08:26] The amount involved. [1:08:27] That one we don't have for this but... [1:08:30] Yeah. [1:08:31] Okay. [1:08:32] So, governor, we don't have that reconciliation. [1:08:34] We have done it and we can provide it again. [1:08:39] We provide it. [1:08:40] So how much have we reconciliated? [1:08:42] You know, there is a reconciliation for the entire amount. [1:08:45] For all of it. [1:08:46] For the entire amount. [1:08:47] For the entire amount. [1:08:48] For the 900. [1:08:49] But what happens is a small amount left, we'll get the specific, is then reported as other incomes. [1:08:54] That is what we want to give. [1:08:56] And Chair, by the way, what would be really bad is if the system has more money than the [1:09:02] bank. [1:09:03] Yeah. [1:09:04] But if there's 912, the system and the bank is missing 912, that's a leakage. [1:09:08] This is extra in the bank than what was in the system. [1:09:11] So, just provide the details to where we got. [1:09:13] Of course, you'll not be able to determine all of it until somebody, for instance, until [1:09:20] I come to your house and say you didn't pay rent. [1:09:22] No, no, no, no. [1:09:23] This M-Pesa on this date was the actual rent payment. [1:09:26] Then reconciled. [1:09:27] So, auditor, and members, because you don't have that reconciliation, is it possible you [1:09:31] keep it in view in your next audit? [1:09:33] Yeah, in your next audit. [1:09:36] Maybe two weeks you provide that document to the auditors for whatever you've been able [1:09:41] to reconcile? [1:09:42] 14 days? [1:09:43] That's okay. [1:09:44] You want to ask something, Dr. Legge? [1:09:46] Governor, for how long will you rely on manual extraction of bank balances to reconcile [1:09:52] your statements? [1:09:53] What do you mean by manual extraction? [1:09:56] Your system does not reconcile? [1:09:59] It does. [1:10:00] It doesn't? [1:10:02] It does. [1:10:03] The system, I know, does. [1:10:04] It does. [1:10:07] The auditor has pointed out that, however, the system lacks full functionality to generate [1:10:12] accurate, comprehensive, and reliable revenue reports. [1:10:15] Consequently, the account relies on manual extraction and analysis of revenue from bank statements. [1:10:22] Maybe let me ask the receiver of revenue to explain. [1:10:25] It's also an ICT there. [1:10:27] Thank you, Chair. [1:10:28] I think the difference that the auditor is pointing out to is the same 912. [1:10:36] Because it did not have the proper narration, the system will not be able to recognize it. [1:10:43] But once it has the proper narration, then the system is able to recognize it. [1:10:47] So that is a variance that is there. [1:10:49] And that's why His Excellency says that we are also engaging the bankers' associations [1:10:53] for us to be able to have the payments come in a manner that is recognizable by the system. [1:10:58] Because, remember, every single day there are thousands of people. [1:11:02] I'm sorry. [1:11:03] The procedure. [1:11:04] Yes, Senator. [1:11:05] Since we have, and the rules of parliament are very clear, since we don't have that document here, [1:11:10] why don't we risk the matter and stop? [1:11:14] Yes. [1:11:15] Then give further direction because we are shooting in the dark. [1:11:18] That is what I had proposed before Dr. Leggo said he wants to ask. [1:11:21] I didn't know he's asking about the same thing. [1:11:23] Why don't we then go to 9.3? [1:11:26] 9.3 auditor? [1:11:29] 9.4. [1:11:30] 9.3 is addressed. [1:11:31] 9.4. [1:11:32] 9.3 is addressed. [1:11:33] Sorry. [1:11:34] Let's go to 9.4. [1:11:35] Thank you, Chair. [1:11:36] Unauthorized revenue reversal. [1:11:37] Audit established that two commercial banks contracted by the Nairobi City County [1:11:48] reversed a total amount of Kenya shillings to nearly $224,474 from the revenue correction [1:11:57] at source without prior authorization from the county treasury or legal basis. [1:12:05] These reversals were not backed by formal referred policy or disclosed or approved by the county [1:12:12] budget execution framework. [1:12:15] allowing revenue correction agents to reverse funds directly from the revenue account without [1:12:22] legal authority or treasury approval amount to spending at source, exposing the county to [1:12:29] financial mismanagement and loss of public funds. [1:12:31] In the circumstances, the accuracy, regularity and completeness of the revenue correction tottering [1:12:38] to $28,869,874,594 could not be confirmed. [1:12:45] The Governor, Chair, the reversed amount of $2,224,474 was noted by the county and addressed [1:13:10] to the bank. [1:13:12] The standard operating procedures indicate the bank should seek approval any time there [1:13:17] is a reversal. [1:13:18] Any time there is an error made by the bank or the client, a standard reversal form is filled [1:13:27] and approved by either the bank manager if the error is originating from the bank or the director [1:13:33] of revenue administration if the error is originating from the client. [1:13:36] Then an approval is granted through the same form. [1:13:40] So, what we've attached is letters to banks stopping unauthorized revenue reversals [1:13:44] and an extract of bank statements showing revenue reversals of $2,2 million, $4,474. [1:13:54] The corrective measures undertaken, SOPs for revenue reversals were reinforced [1:14:00] in the operational currently in the county. [1:14:02] Banks were formally instructed to seek approval before effecting reversals. [1:14:06] And this also should include M-PESA and mobile money providers. [1:14:12] Standard reversal forms requiring authorization by responsible officers were introduced. [1:14:18] I don't think, should I expound more? [1:14:24] It's all an insignificant amount. [1:14:28] Out of 13.8 billion, this is 0.016%, but it is normally when an error has been made. [1:14:34] You want to pay $1,100, you pay $1,300. [1:14:37] And so you ask for that school to be reversed. [1:14:40] Or sometimes the person filling the RTGS in the bank makes an error. [1:14:44] And I agree, by the way, legally, anything coming out of CRF without having gone through the controller [1:14:52] is like spending at source, even though they've made a mistake. [1:14:57] So we need, you know, advice how to treat that. [1:15:02] When a Kenyan makes a mistake in the M-PESA and sends us $25,000 instead of $2,500, [1:15:08] then applies for reversal from Safaricom and Safaricom okayes it. [1:15:11] Because also we are paid through a pay bill number for M-PESA 6060-047. [1:15:17] So that is the challenge that this is trying to look at. [1:15:21] What did I advise us how to address it? [1:15:24] I think whatever Governor has explained is okay the action you have taken. [1:15:28] What we did not get is the evidence it has been reversed. [1:15:31] I think they are supporting that it has not been reversed. [1:15:35] There is a communication to the bank between the two entities, [1:15:38] but no evidence of reversal is what is lacking. [1:15:42] So do we mark that issue as addressed? [1:15:44] Yes, we can follow up during the current year audit to provide the evidence of that. [1:15:49] Let's keep it in view. Okay. [1:15:50] Thank you. [1:15:51] Just keep it in view. [1:15:52] Now, members, I want us to go to report on lawfulness and effectiveness in the use of public resources. [1:16:00] And the first issue we can look at under this category is paragraph 6. [1:16:09] Non-compliance with legal requirement to conduct data protection impact assessment. [1:16:17] So, let's go to, um, we can, let's just look at 10. [1:16:26] Let's go to 10, auditor. [1:16:28] Let's go to 10. [1:16:32] That is irregular engagement of Nairobi pay vendor. [1:16:35] Let's look at that one. [1:16:38] Thank you, chair. [1:16:41] Irregular engagement of Nairobi pay vendor during the year. [1:16:49] Auditor, let's start with number 7, please, because all of them are related. [1:17:09] Let's start with number 7. [1:17:13] Yeah. [1:17:17] Thank you, chair. [1:17:18] Outsourcing of SAS and maintenance of Nairobi pay... [1:17:22] The certificate page 12. [1:17:24] Page 12. [1:17:25] Outsourcing of SAS and maintenance for Nairobi pay despite county ownership. [1:17:34] Audit established that, in December 2024, Nairobi City Account Executive entered into a contract with a service provider to provide software as a service that is SAS for the Nairobi pay revenue system at a cost of 4% of all revenue collected. [1:17:55] The contract also grants the service provider responsibility. [1:17:59] Audit, are we reading the same document? [1:18:01] Yeah. [1:18:02] What is the percentage on your document? [1:18:04] 4.5%. [1:18:05] You said 4%. [1:18:06] Oh, sorry. [1:18:07] 4.5%. [1:18:08] Oh, sorry. [1:18:09] Thank you. [1:18:10] Go on, auditor. [1:18:15] Let's go on, auditor. [1:18:16] Let me repeat, sorry. [1:18:21] Audit established that, in December 2024, Nairobi City County Executive entered into a contract with a service provider to provide software as a service, into bracket SAS, for the Nairobi pay revenue system at a cost of 4.5% of all revenue collected. [1:18:42] The contract also grants the service provider responsibility for the system support and maintenance. However, audit review confirmed that Nairobi pay is already owned by the county, raising concern over the justification for outsourcing its hosting and management function. [1:19:03] Based on the county average revenue correction of Kenya shillings 1 billion per month, the estimated cost payable to the service provider under this arrangement amount to Kenya shillings 540 billion annually. Over the five years, the country… [1:19:22] 540 million annually. [1:19:24] 540 million annually. [1:19:26] 540 million annually. [1:19:27] Over the five years contract period, the total estimated cost payable to the service provider amounts to Kenya shillings 2.7 billion. No evidence was provided of cost benefit analysis, technical limitation or capacity constraint that would necessitate the outsourcing. [1:19:58] 640 million. [1:19:59] In addition, no competitive procurement documents were provided, and the service agreement lacked clear justification for relinquishing operational control over the county owned system. In the circumstances, the outsourcing… [1:20:19] We can leave that paragraph. [1:20:21] Members, we are proposing we do all the paragraphs because they seem related up to 10. Then you ask questions. [1:20:28] 7… [1:20:29] 8 and 10. [1:20:30] 7… [1:20:32] 8 and 10. [1:20:33] 7… [1:20:34] 8 and 10. [1:20:35] We leave out 9. [1:20:36] Okay. [1:20:38] So let's go to 8. [1:20:39] Audit… [1:20:40] We will get the responses from the… [1:20:42] Yes. [1:20:43] Okay. [1:20:44] And then the governor responds. [1:20:45] Then we ask questions. [1:20:46] Just mark your questions. [1:20:47] Thank you, Chair. [1:20:50] Under utilization of Nairobi County Taiwan server room, due to outsourced hosting of revenue system. [1:20:57] Audit established that Nairobi City County executive maintained a fully equipped Taiwan server room, developed to meet the technical and operational requirements of a data center. [1:21:10] The infrastructure was designed to host core county system, including operational applications and revenue management platforms. [1:21:18] However, despite this investment, the county entered into a contract with a service provider in December 2024 for the hosting, support, and maintenance of the Nairobi pay revenue system and a software as a service, SAS arrangement. [1:21:35] Audit could not establish that a cost-benefit analysis or feasibility study was conducted to justify the outsourcing decision, nor was there evidence the county executive's own data center had been assessed for readiness to support the system. [1:21:52] As a result, the entire one server room valued at approximately Kenya shillings 850 million remained underutilized, while the county incurred ongoing hosting fees estimated at Kenya shillings 540 million annually and Kenya shillings 2.7 per over the five-year contract term based on revenue projections. [1:22:16] In the circumstances, in the circumstances, outsourcing system hosting to an external vendor while maintaining an idle or underutilized in-house server room led to wastage of public investment, inefficiency, and poor return on infrastructure expenditure. [1:22:34] Thank you. [1:22:35] Go to 10. [1:22:36] Go to 10. [1:22:37] Go to 10. [1:22:39] Okay. [1:22:41] Thank you. [1:22:42] Thank you, Chair. [1:22:43] Number 10. [1:22:44] Irregular engagement of Nairobi pay vendor. [1:22:46] During the year under review, Nairobi County Executive operated a revenue management system, Nairobi pay, which was in operation since October 2022. [1:22:57] However, the contract with the vendor was dated 16 December 2024, an indication that the county had operated without a valid contract for over two years with the vendor up until 16 December 2024. [1:23:12] Further, the service level agreement defined the terms of support of the revenue system was not provided. [1:23:19] In addition, correspondences in support of how the vendor was identified and any engagements were not provided. [1:23:26] In the circumstances, the lack of a contract and service level agreement increased the risk that the county executive will not receive the services as contracted or have defined terms of engagement on service delivery. [1:23:40] Thank you. [1:23:41] Governor, you will answer 7, 8, and 10 respectively. [1:23:52] And then also point us to the page where your response is. [1:23:58] I doubt we have the same document because? [1:24:01] Because you've jumped some queries, just point us to where your response is. [1:24:06] I also read the full paragraphs. [1:24:08] Yes, please. [1:24:09] So what was the first one? [1:24:10] The first one is on outsourcing of SAS and maintenance for Nairobi pay despite county ownership. [1:24:20] Okay, chair. [1:24:26] And I have explained this many times in this house. [1:24:29] I know. [1:24:31] So many times. [1:24:32] Same thing. [1:24:33] It's still reappearing. [1:24:34] So we still have to continue. [1:24:35] The auditor has refused to understand what... [1:24:38] Anyway, let me get my responses. [1:24:41] Just make us understand. [1:24:43] Point us to your response page. [1:24:45] So my response in my document is page 26. [1:24:48] I don't know if that's the same you have. [1:24:50] Would we be having different documents? [1:24:52] It's the same. [1:24:53] 26. [1:24:54] I hope not. [1:24:55] Okay. [1:24:56] It's 26. [1:24:57] The system was developed by multi-sectoral efforts from the national government and was [1:25:06] first adopted in Nairobi city county in 2021 with support by the national government. [1:25:12] The development of the system was to be utilized across all counties in Kenya as a shared platform [1:25:18] service in a bid to improve the efficiency of collection, mapping and location of on-source revenue, OSR. [1:25:24] Article 189 of the constitutional mandates cooperation between national and county governments. [1:25:31] Upon exit of the national government, Nairobi county, this is not right, didn't acquire, [1:25:38] but we entered a contract with Konza Technopolis Development Authority. [1:25:43] This is the one in 2024. [1:25:47] KOTDA is a state cooperation under the ministry. [1:25:50] So acquisition was necessary to continue to provide it as software as a service, maintenance, [1:25:56] support and enhancement at 4.5% of whatever is collected. [1:26:00] We've attached negotiation agreement meetings. [1:26:03] We did it as government to government, which determined that 4.5% fees would be sufficient. [1:26:09] And it's not just hosting. [1:26:10] It is public web portal, the apps, Microsoft Dynamics, compliance and enforcement app, Power [1:26:18] BI dashboards, Nairobi plan sub-module for building approvals and everything related to the built environment, [1:26:28] GIS system and constant maintenance. [1:26:33] The charge was even within the range of previous contracts entered by the county [1:26:37] with previous outsourced revenue collection service providers. [1:26:41] The technical support framework has been provided and that's what preceded the contracting of Konza [1:26:48] through the ministry of ICT through Konza to provide it as software as a service. [1:26:54] Corrective measures undertaken is that we entered the technical support framework [1:26:57] with Konza Technopolis Development Authority. [1:27:00] Support arrangements for Nairobi pay maintenance, enhancement and hosting were formalized. [1:27:04] The county strengthened oversight of outsourced service provision. [1:27:09] Negotiation agreements defining the scope of services and responsibilities were documented. [1:27:14] Of course, plans to strengthen internalized capacity and infrastructure were initiated, [1:27:18] including hiring of people and both hardware and software, strengthening, [1:27:25] monitoring mechanisms for vendor performance and service delivery were enhanced [1:27:28] through project implementation committee. [1:27:31] The second one, the second one is page 29. [1:27:36] Yeah, 20. [1:27:38] It's at the end of 28. [1:27:44] The second one is duplication, eh? [1:27:46] I think, Chair, in the response is just take one question at a time so that we don't have to be flipping back and forth. [1:27:56] Okay, let's see. [1:27:57] Yeah. [1:27:59] Auditem, how is that response to that particular query? [1:28:04] Do you think the executive answers that question? [1:28:08] Is there anything outstanding? [1:28:10] I think what we may need is a clarification, the cost benefit, eh? [1:28:16] Because the county is spending 540 per million. [1:28:23] When, when you are outsourcing your own system, is it? [1:28:29] It's not ours. [1:28:30] That's what I wanted to explain. [1:28:34] Governor, let's ask for the mic from me. [1:28:38] That's what you are saying is still subsisting? [1:28:41] Yes. [1:28:42] Governor? [1:28:43] Please give me the mic. [1:28:44] Yeah, I have the mic. [1:28:45] What I'm seeing is a confusion here, is that there is Nairobi Pay and there is Software as a Service as two things. [1:28:50] It's the same thing. [1:28:51] It's just a brand name. [1:28:53] And I had explained here, because we're going to go and repeat, that during NMS time, where NMS was working with KRA and the county government of Nairobi, [1:29:03] they got these young people who developed this system. [1:29:06] The same people who developed Ardi Sasa. [1:29:08] Yeah? [1:29:10] That system was deployed to Nairobi. [1:29:13] It was supposed to be for all the counties. [1:29:15] When I got into office, I looked at the system, because you know, when a new governor comes into office, [1:29:21] the first people you meet, apart from pending bills, is people who have a system for revenue, private vendors. [1:29:29] And everybody was saying, I have a system, I have a system, I have a system. [1:29:32] And we said, why don't we strengthen this government system that is there? [1:29:36] And initially we said, let's strengthen and own it as a county. [1:29:43] At this committee, your chairman actually guided us and said, software as a service is better, [1:29:48] because of the maintenance cost, equipment cost going forward. [1:29:51] And so we moved that into a contract between Nairobi County and the Ministry of ICT through Konza, [1:29:58] to provide the same service to the county, to invest in equipment, to invest in servers, [1:30:05] to keep developing it and the apps. [1:30:08] But it's exact, there's no company called NairobiPay. [1:30:11] There is no company that is different, that's providing the software as a service. [1:30:17] It is the same arrangement, which for me is, I've seen it's very extremely efficient. [1:30:22] So I'm not looking, you can look at spending 540 million, but you can also look at bringing 13.8 billion. [1:30:28] It has been efficient, it has raised more revenue than any other system before. [1:30:33] And so, the G2G framework for us, works very well. [1:30:37] Yes, there are challenges here and there, as with any other system. [1:30:42] There are challenges, sometimes there are down times, sometimes the problem is, you know, internet related, [1:30:47] which is not, they're not the provider. [1:30:50] But, it's a system that, with many iterations, you know, that's why you have IAS 9.1, 9.2, 9.3, [1:30:57] there's always bug fixes, there's always adjustments, and it keeps getting... [1:31:01] And as you answer, Governor, you need to give us evidence of the cost-benefit analysis, [1:31:07] technical limitations, capacity constraints that the auditor is specifically asking for. [1:31:15] Cost-benefit analysis, Chair, if I may, because... [1:31:18] Can we? Yes, so that you take all, yes. [1:31:20] You see, Governor, this confusion has been brought about by none other than you, [1:31:25] because you have appeared before this committee before, and swore, sitting there, that Nairobi owns the system. [1:31:32] Yes, they're giving... I remember. [1:31:33] I remember. Yeah. [1:31:34] So, let's go slowly, because the confusion has been caused by you. [1:31:37] You have sat in that same chair, I remember it vividly, you said we own the system, [1:31:42] the people of Nairobi are not going to pay anything else, and so on and so forth. [1:31:46] So, when that situation changes, you are the one causing that confusion. [1:31:50] In your response there, I know you have tried to edit it, when did government exit? [1:31:55] For why? You have said upon exit there, the national government, of the national government, [1:32:01] when did they exit, and for what reason? Number one. Exit organ and mess. [1:32:06] I'm reading your response at page 26. The confusion is coming from your end, it is not from us. [1:32:12] So, you are saying Nairobi County acquired the system. Again. [1:32:17] As a service, that is what is missing. [1:32:19] Let's go slowly, because I'm reading your text. Yes. [1:32:23] The words you are saying now, I don't see them on my... [1:32:25] When I read it, I said it's an error, when I was reading this response. [1:32:28] This is why we are saying, Governor, the confusion is coming from your end. [1:32:31] Those words that you are saying, nobody stopped you from including them in the response. [1:32:36] Unless you are paying power. [1:32:37] But that's why I am here. This is a telegram. [1:32:39] Why do you call us? [1:32:40] This is what we are saying. That's why we are saying, please include the full response in your written responses. [1:32:46] Because at the end of the day, it is what you have given us in writing that carries the day. [1:32:51] Then secondly, Governor, when we are discussing competitiveness of a system that you have procured, [1:32:57] you cannot compare it to previous contracts and say that is something that we should celebrate. [1:33:03] You were in this house when we were having problems with how those previous systems were procured, [1:33:09] and how much they were charging counties. [1:33:13] And you know all that background, Governor. [1:33:15] So the competitiveness for us would be for you to demonstrate, as the auditor has highlighted, [1:33:22] how you arrived at this particular system, how it is better value for money for the people of Nairobi, [1:33:28] and that the law was followed. [1:33:30] So comparing it to previous problematic service providers is not the answer. [1:33:36] And lastly, Chair, the expectation would be, because this is a story we have had in other so-called G2G arrangements. [1:33:43] I don't want to go there because Chiragay's sugar will spike. [1:33:48] But we have been told that the benefits of these G2G arrangements is that you get better rates. [1:33:56] How are we getting commercial rates from a system that we developed with our taxpayer money? [1:34:00] Because if it's government that developed this, it is our money. [1:34:04] We would expect then that they would be doing at least half of what the commercial vendors are doing. [1:34:10] So what is the cost benefit for the people of Nairobi really? [1:34:14] Take also for Senator Chiragay. [1:34:17] Chair, thank you. [1:34:18] One, I just want to, Governor, we have on this matter for law. [1:34:24] Yes. [1:34:25] And I remember even New York County Assembly tried to investigate similar issues, although the reports disappeared. [1:34:30] My only concern is on this. [1:34:33] I'll just do basic. [1:34:34] You have said this system was developed with Chiragay with the government. [1:34:38] So as of today, one, who owns this system? [1:34:44] Number two, in this arrangement, because I can see there is a five-year contract, is it in place that we are paying 2.7 billion? [1:34:54] Number two, which is amounts annually, you are paying 5.4 million annually. [1:35:00] Now my question would be, where is that contract? [1:35:05] And who did you sign contract with? That would be number two question. [1:35:09] Number three, they are saying if there is no contractual obligation, there was no competitive procurement documents and service level agreement on the issue of this county-owned control. [1:35:24] So that would be my third question. [1:35:26] Sorry, what is the third question? [1:35:27] The third question is on the aspect of, I'm reading the certificate of the OAG. [1:35:31] The OAG saying no competitive procurement documents were provided. [1:35:38] So we need to know where this document, because I'm just going through. [1:35:42] And finally, on the cost-benefit analysis. [1:35:45] Because if you are paying in five years 2.7 billion, that's like money we give to Algeo, Maracuette County, or Lamo, or even Tahita Tavera, it's a lot of billions of shillings. [1:35:55] So the point comes back. [1:35:57] In five years? [1:35:58] In two years. [1:36:01] This is in two years, according to the, in five years, sorry, sorry. [1:36:04] Thank you for that. [1:36:05] The five-year contract period. [1:36:07] So this one, this justification of payment of 2.7 billion. [1:36:11] If you tell the ones and you can prove who owns this, then we'll rest our matter there. [1:36:18] Can you take Centre Fatimadoulas also? [1:36:21] Chair, I don't want to be repetitive, but Governor, I can see you are very far. [1:36:29] Maybe you are reading something. [1:36:31] Now, we had a briefing from the auditors before you came in. [1:36:35] And it was really very hard even for auditors to understand what Nairobi Pay is and what SARs is. [1:36:45] Yeah? [1:36:46] Because they were trying to tell us, SARs is one system and then Nairobi Pay is another system. [1:36:54] Nairobi Pay is owned by you. [1:36:57] SARs are actually hired or rather bought from somebody else. [1:37:03] And I think it is very important for you to clarify to us. [1:37:07] Who owns Nairobi Pay? [1:37:08] How did you acquire SARs? [1:37:12] And we are being told SARs is actually housed elsewhere, which is not under your control. [1:37:18] Finally, we want to know whether the system you have is better than what was there. [1:37:28] Because according to our understanding, we are not getting value for money as Nairobi people. [1:37:33] And number two, the system might not be better than what was there before. [1:37:40] So that is what I wanted to raise. Thank you. [1:37:42] Let's take Senator Ombuds, then you can respond. [1:37:44] Chairman, be very quick. [1:37:47] Governor, you have said you have explained this matter many times. [1:37:52] I will volunteer information to you. [1:37:57] This thing has thrown us off balance. [1:38:00] Nobody seems to understand what this is. [1:38:03] So I just take time, let's understand it. [1:38:06] And from your response, upon exit of the national government, I gather that is the exit of NMS. [1:38:15] Yeah? [1:38:17] Nairobi County acquired the system. [1:38:19] Now what's that meaning? [1:38:24] Acquisition means acquisition. [1:38:25] I mean, you own it. [1:38:27] But now you're saying you don't. [1:38:33] You don't own it. [1:38:34] Then you went into a contract with CONSERT Technopolis Development Authority. [1:38:42] What necessitated that arrangement? [1:38:46] And how is it structured? [1:38:48] How is that arrangement with KOTDA structured? [1:38:52] What necessitated it? [1:38:55] Where are we? [1:38:56] I thank you, Chair. [1:38:57] Yeah, Governor, I've also tried to understand this. [1:38:59] Because in that last statement, which again you withdrawn the word acquisition. [1:39:04] You are saying acquisition was necessary to continue to provide SAS, maintenance, support, [1:39:11] and enhancement at 4.5% of all the revenues collected. [1:39:16] Now that you didn't acquire it, as you say, is that service still there? [1:39:21] Or what is the exact situation now? [1:39:25] Please try to explain to us. [1:39:27] Thank you. [1:39:28] Chair, acquisition you acquire as a service. [1:39:31] That is what is missing there. [1:39:33] Software as a service. [1:39:34] Now let me explain slowly. [1:39:35] There is no Nairobi Pay and the software as a service as two different things. [1:39:43] It is one. [1:39:47] It is the same system. [1:39:48] Nairobi Pay is a brand that we created together. [1:39:51] In fact, I'm the one who came up with, let's call it Nairobi Pay so that it is easier. [1:39:55] Let's use this short code as you develop it. [1:39:58] I'm the one who came up with that brand name. [1:40:02] My Senator, when I first came, the discussion with the government at that time was to hand it over so that we own it fully. [1:40:13] That is what they wanted us to do. [1:40:17] We ended up not agreeing. [1:40:18] And then, uphold even the advice of Senator Kajuan. [1:40:22] Because the kind of investment you'll have to keep doing, and by there even on the second question about value, it's not just hosting. [1:40:31] There are 65 engineers, 65 software engineers sitting daily, working on different aspects of this thing. [1:40:38] You know, it is, if they need to upgrade servers, if they need to upgrade systems, it does not come to us. [1:40:43] And software as a service has been seen as a more efficient way of doing this. [1:40:49] Now this is the same way many counties, actually all counties, the only difference is that all counties have engaged private vendors. [1:40:57] And as the vendor we've engaged is the government. [1:41:00] Now the question is, who owns Nairobi Pay? [1:41:04] It is owned by Konza Development. [1:41:06] There are the ones who own it, there are the ones who have it. [1:41:09] Because we've contacted Konza, we've not contacted anybody else. [1:41:12] Because that's according to us, the person we pay is the owner. [1:41:17] If they have engaged other people, I don't know. [1:41:21] But we are paying them as Konza Technopolis Development. [1:41:27] Remember the history of this thing, how it was developed. [1:41:30] During the time, I think some of you remember a time, President Uhuru was showing young people in Manyani doing, I don't know, ICT, whatnot. [1:41:38] That is when these things were being developed. [1:41:40] Ardi Sasa and this one. [1:41:42] That is the time that they were being developed and they were being run and funded by the national government. [1:41:47] In fact, the second question of why, for two years you operated it without a contract, is true. [1:41:54] Because we were told it's ours, and no one invoiced us, and no one billed us. [1:41:59] Now, the decision we made, because it's very easy, and I don't want to cast aspersions on any of my colleagues as governors. [1:42:09] But this is the, in fact, I wish all counties had such a system, that gives you the level of visibility, the level of data sharing within government. [1:42:23] You know, apart from the times where there's a mistake, when you're told your vehicle is parked in town and you left it at home. [1:42:31] The fact that we can just query it and get to know this number plate belongs to Mwaruma, and so we charge you. [1:42:36] That level cannot be attained by any private system. [1:42:39] It is in my interest to have the highest revenue in Nairobi you can collect. [1:42:45] I've complained here about how I'm constrained. [1:42:47] So I should be shooting myself in the foot, by looking for a system that is not as efficient as it should be. [1:42:54] So, in terms of who owns the system, these are government owned system. [1:42:57] Where's the contract? We have the contract we can provide. [1:43:01] Which government? [1:43:02] The government of Kenya, the national government. [1:43:03] The national government. [1:43:04] Okay, okay. Be specific, because we have national and county government. [1:43:06] The national government. [1:43:07] Oh. [1:43:08] The contract is with Kaunze Technopolis. [1:43:10] We can provide, we provided the contract to the auditor. [1:43:13] They have the contract. [1:43:15] Was there competitive procurement? [1:43:18] We did it G2G, government to government. [1:43:21] Experts in procurement will explain to us what that could entail. [1:43:30] Cost benefit analysis, we can do that for you, because you look at the costs of the hardware, [1:43:39] the cost of employing these people. [1:43:42] And these are not people who are earning 100,000 a month. [1:43:45] You know, that level of ICT development, the substantive chair will tell you, is a bit expensive. [1:43:54] But we can actually do a fresh cost benefit analysis. [1:43:58] Because all other, in fact I've never seen the auditor asking, [1:44:02] all other counties have engaged somebody to collect revenue. [1:44:07] Or to provide the system. [1:44:09] Because it's still the county that collects revenue. [1:44:11] So the only difference is that this is a system owned by the government. [1:44:16] For you to do the cost benefit analysis afresh. [1:44:18] Yeah. [1:44:19] When you're going into this contract, you must have done that cost benefit analysis, [1:44:23] and saw that the advantages of going for this one. [1:44:26] For me, first of all, it was extremely intuitive to see a system that is working, [1:44:32] that is able to, in fact, have two systems. [1:44:35] Not just your system for normal revenue collection, but planning, a planning system for urban development. [1:44:41] A planning system for urban development that has, first of all, all the shape files of the city. [1:44:47] No one else can give it to you. [1:44:50] Right? [1:44:52] I can point at your house and say, this one is so and so. [1:44:55] They owe us this amount of money, and this is what they've been paying in the past. [1:44:58] No other person has that kind of data set. [1:45:00] But we can get the substantive cost benefit analysis to provide for you chair. [1:45:05] So, we're very comfortable with it as we continue to develop the intricacies of that software as a service. [1:45:13] But it is not a different system. [1:45:15] There are not two systems. [1:45:16] We call it Nairobi Pay as a brand name. [1:45:18] Software as a service is not a brand name. [1:45:20] It is a way of engaging a service in ICT. [1:45:24] But Nairobi Pay is a brand name that the person on the street knows that, [1:45:28] the same way I'm telling you, we now have Liquor Pay. [1:45:31] The Alcoholic Licensing Control Board have also developed a system just for managing [1:45:37] doing control and management. [1:45:43] Was it better than the systems before? [1:45:45] Yes, by far. [1:45:46] Before this, Nairobi had something by NBK called NuVeta that was not stable at all. [1:45:56] It kept giving people the wrong invoices. [1:46:06] It was not being maintained well. [1:46:09] It was National Bank of Kenya collecting and that was terminated. [1:46:12] Before that, Nairobi had Jumbo Pay. [1:46:15] I think you know the stories around Jumbo Pay that had come up at that time. [1:46:23] The company also possibly has evolved and is better now because I see them providing services [1:46:29] in wider places including now airports and fueling and what not. [1:46:33] And it is a company that I believe should be given a chance to grow. [1:46:36] It's owned by a young man I was with him at the University of Nairobi, you know, Mushemi. [1:46:40] But that time you remember the challenges it had with Governor Kidero and Governor Sonko subsequently. [1:46:46] So those are the systems that have been there before. [1:46:48] It would be good for the auditor general to do for us an analysis, a comparative analysis of all systems being used in Kenya. [1:46:56] What interest we have, Chair, is the higher the revenue we can collect, the better so that we can serve our people. [1:47:04] After all, the constant I have with how much I'm able to collect every day. [1:47:07] Sometimes when it's down, I always want to beat people up because, you know, there's perishable revenue. [1:47:12] If the system is down at 8 a.m. until 10 and someone has not paid parking, they will not pay your parking tomorrow. [1:47:18] It is perishable. [1:47:19] So you have to go to a concert to find a person to beat? [1:47:23] Or how do you beat them? [1:47:25] That was, you know, something called analogy. [1:47:29] Where would you find out? [1:47:31] It does not mean. [1:47:32] Let's give the substantive chair an opportunity to go on record. [1:47:37] And if you have any question you ask, but, yeah. [1:47:40] Okay, let me go on record first. [1:47:42] My name is Moses Otieno Kajiwang, Senator from Homa Bay. [1:47:45] I'm the substantive chair. [1:47:46] But today, this session is going to be chaired by my Vice Chair up to the end. [1:47:51] Vice Chair and Honorable Members, Nairobi City County wrote a letter to the clerk seeking a postponement of today's meeting. [1:47:58] And that is why some of us made other arrangements. [1:48:02] But I'm happy that they have come because if they would have failed to come today, then the Inspector General of Police would have had to find the Governor again. [1:48:11] So that explains why I had some scheduling conflicts. [1:48:15] But it's good that the Governor is here. [1:48:17] We can prosecute the matters of Nairobi. [1:48:20] If you allow me, I know the Governor has referred to my advice in the past. [1:48:27] And it has been my personal view that this ought to be the direction where ICTs looked at as a shared service across government, both national and county. [1:48:39] Members, you remember the other day we were looking at Kilithi, which negotiated a revenue share deal of, was it 20 or 30 percent? [1:48:48] 30 percent. [1:48:49] 30 percent. [1:48:50] 30 percent. [1:48:51] 30 percent of revenue. [1:48:52] And they were collecting 4 million from the county to pay salaries for the service providers. [1:49:01] So it's a big mess. [1:49:02] It's a big, big mess, which can be cured by looking at ICT and systems as a shared service. [1:49:09] But the narration is nice. [1:49:14] But in this committee, we look at compliance with the law. [1:49:18] And Governor, having looked at your technical support framework for integrated county delivery management system, [1:49:25] I'm going to page 6 of 9, which is headed finances. [1:49:31] That is appendix 13.10, which you have referred to in your response. [1:49:37] Appendix 13.10 on page 6 of 9 of that appendix. [1:49:43] It's just before the placeholder for 14. [1:50:00] Just the placeholder for 14. [1:50:07] You have some signatures there. [1:50:10] Go to page 6 of 9. [1:50:11] Page 6 of 9. [1:50:13] There is a clause there on finances, which says this framework will be funded under a government-to-government revenue share model. [1:50:23] MIC and DE will consume a percentage of total revenue collected per month as negotiated and expended [1:50:31] in accordance with the provisions of the Public Procurement and Asset Disposal Act, [1:50:36] the Public Finance Management Act, and attendant regulations. [1:50:39] So Governor, I heard you say it was a G-to-G arrangement. [1:50:42] But this particular clause makes it clear that it must still be subjected to the Public Procurement and Asset Disposal Act. [1:50:50] Would you be able to share with us that process in documentary form? [1:50:56] Yes, we'll share it. [1:50:58] Chair, this transitioned into a contract. [1:51:01] The Public Procurement and Asset Disposal recognizes government-to-government contracting [1:51:06] or even using what has passed in another government before to contract. [1:51:13] It recognizes it. [1:51:14] We made sure we followed the law. [1:51:15] We had advice from PPRA very closely because you know this is a very sensitive area. [1:51:20] This area, if you don't contract nicely, you have 30 people in court against other vendors [1:51:25] who would have wanted to provide the service because it is money guaranteed. [1:51:31] Chair, so we'll be able to… [1:51:32] What was that other process? [1:51:34] Because ideally you'd find the revenue share prescribed in an agreement like this, [1:51:40] but at least then directed you to follow the law to come up with a proper pricing model. [1:51:46] Is there… [1:51:47] Could you describe to us that process? [1:51:51] I don't have it here, but it's a normal contracting process that includes negotiation to come up with a rate. [1:51:57] If you want that process substantively, I would ask… [1:52:00] I don't have the… [1:52:01] Yeah, I'm from procurement. [1:52:02] Because members, you know we were treated to some story here by my home county about lease agreement [1:52:11] and we had a procurement person coming and telling us they didn't have BQs, ETC. [1:52:17] If this was subject to the public procurement laws, [1:52:22] and we are looking at an expenditure of about… [1:52:26] The auditor is putting it at what? [1:52:28] Is it 450 million? [1:52:30] From the last revenue, 540? [1:52:34] 540 million. [1:52:35] But based on what we want to collect, it can go up to… [1:52:37] Yeah, so it would be nice. [1:52:39] I mean, as someone who has signed this space, the software service agreement, ICT as a shared service, makes a lot of sense to me. [1:52:48] But then there must be compliance with the law on procurement, [1:52:52] and that must start from having a procurement plan, having a budget, because this is a significant amount that you just can't wake up and do, [1:53:02] having a procurement professional, doing a professional opinion at initiation or at the end of the process. [1:53:08] That must be documented and that must be demonstrated. [1:53:12] I don't know whether, Auditor General, it's a question you have asked, [1:53:15] and whether you have been satisfied that that particular clause on finances was done in accordance with the law. [1:53:24] Auditor, you know we have an auditor, and we have a technical person there. [1:53:27] Is that something you want to respond to? [1:53:30] No. [1:53:32] We can bring the entire procurement of this as a standalone in a number of days. [1:53:42] Sorry, Chair. [1:53:43] Though perhaps there could be someone in the team who has got that institutional memory, [1:53:48] so that instead of telling you to bring a carton of documents, [1:53:54] maybe there's someone who can give us an explanation that might reduce that need. [1:53:58] Chair, I thought I had a gentleman through the chair that said something about revenue. [1:54:03] The gentleman seated to the media personality. [1:54:06] You introduce yourself as such. [1:54:09] Leave even that one. This is the receiver of revenue. [1:54:11] Oh yeah, receiver of revenue. [1:54:12] The person I want to respond is the Director of Procurement. [1:54:15] Because we're talking about the procurement process, isn't it? [1:54:18] So I would not want anyone to misrepresent the facts before this committee, [1:54:23] because I really respect this committee. [1:54:25] I have 100% respect. [1:54:27] But Chair, the Governor, they are speaking. [1:54:29] I can't write to you. [1:54:30] With your intelligence, Chair, all your officials are speaking to you. [1:54:34] I'm sorry. [1:54:35] Because you have taken the oath. [1:54:36] So you don't have a trust in all of them that they'll give you faith? [1:54:39] I know what everyone does. [1:54:40] Here there's a doctor. [1:54:41] I can't ask about this. [1:54:42] Okay. [1:54:43] Because I had somebody with revenue reporting and whatever next day. [1:54:46] Chair, can I propose this? [1:54:48] Please. [1:54:49] Chair, since you heard in our, when Senator Dulo was chairing briefing, [1:54:54] the even IT person from the OAG, we had a lot of... [1:54:58] Why don't we propose this? [1:55:00] That we do this issue as standard law. [1:55:02] We do an IT audit and recommender for us. [1:55:05] Because this spending of 2.7 billion is a lot of cash. [1:55:09] So we cannot close over. [1:55:11] You already asked for that. [1:55:14] We cannot close over. [1:55:16] I don't know why the Governor is excited. [1:55:19] The issue that should be going down by now. [1:55:22] Unless he's consuming something we don't know because it's not covered. [1:55:26] So chair, what I'm proposing is very simple. [1:55:29] That's the answer. [1:55:30] I would see. [1:55:31] You're out of order. [1:55:32] You know, Senator Dulo just withdraw. [1:55:34] This is... [1:55:35] But I've said he's consuming something we don't know. [1:55:37] It's just to go on record and say what he's consuming and we rest there. [1:55:40] Anyway, I can't tell what, maybe water. [1:55:43] So I replace with water. [1:55:45] He's taking water. [1:55:46] I think we've had a good meeting so far. [1:55:49] Let's not trivialize our discussions. [1:55:51] In the direction. [1:55:52] Senator Charal-Gay, we are on a very serious business, please. [1:55:54] Chair, we have that issue. [1:55:56] I've already said he's taking water. [1:55:57] Okay. [1:55:58] Which other thing would I replace? [1:56:00] So chair, what I'm proposing is very, very... [1:56:02] Governor just relax. [1:56:03] Governor relax. [1:56:04] Is the... [1:56:05] Senator Charal-Gay, ask your question. [1:56:08] Which is... [1:56:09] Yes, yes, sir. [1:56:10] That's why I'm saying this spending of 2.7 billion in five year contract, [1:56:13] I've agreed with the Governor. [1:56:15] He has said he won a standalone on this issue. [1:56:17] And it's also my feeling that if we can do further detailed analysis of this matter, [1:56:23] so that for the longest time I've been in this committee when he took over as the Governor, [1:56:27] this matter has recurred. [1:56:28] And I think either the OAG are not getting it or the Governor is not making himself crystal clear. [1:56:37] Because I can suspect even when you look at the previous year matters, [1:56:41] the same issues Governor is still raising. [1:56:44] So is there a way we can conclude this matter once and for all through in-depth analysis, [1:56:48] together with the Senate, the OAG, and the Governor, [1:56:52] and then we keep a detailed report on the matter so that we... [1:56:55] Governor, you're seeing something that already is in the process? [1:56:58] Chair, in the last audit, you directed that the Auto General does a system audit, which has been done. [1:57:04] So I don't know which other system audit Senator Terergeier wants. [1:57:09] But... [1:57:11] Unless he's consuming something, which... [1:57:13] Governor, I think you've had a very good meeting up to now. [1:57:16] No, there's no problem. I don't need to apologize on what I've told you. [1:57:21] No, I will show. [1:57:23] That was on a light note. I was just informing you, Chair. Sorry. Apologies. [1:57:26] But already that was asked for. And maybe the Auto General can... [1:57:31] Rita, do we have a report that, in fact, on the same? [1:57:34] Because we have never seen it and that's why it reappears. [1:57:36] Yes, yes. We need to know if that audit was done, the system's audit. [1:57:40] Okay. Thank you, Chair. [1:57:42] From the IT perspective, there was a request for the IT, the system audit that had been requested. [1:57:52] So... [1:57:53] Has it been done? Do you have a report? [1:57:55] We can only review back to the IT auditors... [1:57:59] Project a bit, don't... Project a bit. [1:58:03] ...for the current status of the system. [1:58:05] But they had done a portion of it that was incorporated in last year's report. [1:58:10] Audit report? [1:58:11] Yeah. The previous year's report, the previous 2023-2024. [1:58:15] Yeah. [1:58:16] You see, Chair? [1:58:17] Yes, Chair. [1:58:18] Where I'm seated, I don't think I want to hear about a part of it. [1:58:23] Because if we have reason to believe what the governor is saying, and there's no reason to doubt him, [1:58:29] that this is a system that goes beyond just collection of revenue. [1:58:34] It gives you visibility to a lot more other things in the county government. [1:58:39] And if he says it's a government system, then my understanding of it is that other counties can also plug in. [1:58:48] Yeah? [1:58:49] You can plug in. [1:58:50] Yeah? [1:58:51] You can plug in. [1:58:52] And you know, Chair, where I sit from Kitui, and I'm very sure you can say the same thing about, about Taita Taveta and other counties. [1:59:00] There is a lot of leakage in revenue collection. [1:59:04] The systems are brought, some of them just designed to, to pilfer it funds from. [1:59:11] If this system then is what the county government of Nairobi is saying it is, then there will be need for an engagement after the audit. [1:59:21] An engagement between ourselves and the county government of Nairobi. [1:59:25] And so that we can even authoritatively advise other county governments to acquire or go into whatever contract with the system. [1:59:38] And raise the funds that we keep fighting about here every day. [1:59:43] Chair Chair, with your indulgence, just 30 seconds. [1:59:45] I heard my sister here at the OEG say, part of the system audit date was incorporated in last year. [1:59:52] I thought as a committee, we had requested an independent, because the OEG can do special audit, forensic audit, ID audit, the normal audit that we do. [2:00:01] So Chair, I thought you need now to be specific that we needed a standalone system audit, [2:00:07] so that we can put this rest to matter. [2:00:09] Because this matter is recorded in many financial years. [2:00:12] And I thought, and then maybe if you heard the OEG say they have, I don't know whether they were able to have full access to audit the system, [2:00:20] so that they can give us a report and then we rest the matter. [2:00:23] Thank you, Charlie. [2:00:24] The OEG is almost asking the same, that if the audit was done in the last financial year, 24, 25, [2:00:29] do you have a paragraph on the same or we have a separate report? [2:00:35] So the request was not only on the system, it was going to other issues. [2:00:40] So it was incorporated now part of that report for 23-24. [2:00:44] But specifically for the system, no, we didn't have the request. [2:00:47] Okay. [2:00:48] Yeah. [2:00:49] Governor, what members are asking in the auditor... [2:00:52] Governor, you can see I was right. [2:00:53] Just send us a message. [2:00:55] Through the chair. [2:00:56] Ask for the mic. [2:00:57] Oh, sorry. [2:00:58] I've not given you the mic, so put off your mic. [2:01:00] Okay. [2:01:01] Yeah. [2:01:02] That we want to understand that the whole of that system from procurement and it's working. [2:01:10] Now, if you have documents that you can give us in the matters to do with procurement, [2:01:15] and as Senator Ombo is saying, if it is a very good system, then it's something you can propose [2:01:20] to be replicated to all the other counties. [2:01:24] That's why we are really dwelling on this. [2:01:26] Not to find fault, but to understand it and also propose it as defenders of devolution. [2:01:32] Because we want OSR for every county to go up. [2:01:35] Yeah. [2:01:36] That is the really trust. [2:01:38] Chair, maybe if I can make a comment that the Governor could respond to. [2:01:45] First of all, Auditor General, is this system capitalized in the assets of the county? [2:01:53] Because software is an asset. [2:01:55] Do you find it sitting there as an asset? [2:01:59] Thank you, Chair. [2:02:00] We are in the process of transitioning. [2:02:02] So, yes, it is part of the capital, but now we transition. [2:02:08] Within the three years, no transition. [2:02:10] We give the entities three years and they are able to prepare a comprehensive asset register. [2:02:17] No, no, no. [2:02:18] Auditor, you know that applies to the other difficult to identify assets that have transitional challenges. [2:02:24] But something like software, licenses, is it captured as an asset? [2:02:29] Yes, it is. [2:02:30] Governor, is it captured as an asset? [2:02:31] And what is its value? [2:02:34] I have to check. [2:02:35] I don't have that offered. [2:02:36] Yeah, because if it's capitalized on the side of Nairobi City County, then it's owned by Nairobi City County. [2:02:41] You are confusing us again. [2:02:44] So, if it is not owned by the Nairobi City County, how is it an asset of the county? [2:02:50] Remember, it can be owned by Nairobi City County, but hosted elsewhere. [2:02:55] You know, Nairobi City County can rent a cloud. [2:03:01] And I think that's a software as a service thing. [2:03:04] You are renting a cloud provided by Konza ICT authority. [2:03:07] Or are you renting the entire service? [2:03:11] Is it a furnished apartment or is it an apartment where you are coming in with your furniture? [2:03:17] No, Chair, he had made it clear that the ownership is with Konza and that the only thing we own is a brand. [2:03:26] No, but if it's capitalized, then it's a different story. [2:03:30] Is it possible then, members, I propose that we look at the next paragraph in terms of response, [2:03:37] that is under utilization of Nairobi County, Taiwan server room due to outsourced hosting revenue system to assist us on the service? [2:03:47] Okay. [2:03:48] Maybe I'll just make a comment before we go there. [2:03:49] Okay. [2:03:50] So, we must establish whether this has been capitalized. [2:03:53] And then, using that analogy of an apartment furnished or unfurnished, because that's what software service model is, [2:04:00] you rent space somewhere. [2:04:02] You can rent space and bring in your software. [2:04:05] Or you can rent space with its own software and you pay, you know, a higher lease. [2:04:10] Then, auditor, the other thing we must confirm. [2:04:13] Who receives this 4.5%? [2:04:17] Is it the ICT authority? [2:04:20] Is it Konza? [2:04:21] Because the parties in this agreement leave the Ministry of ICT through the Information and Communication Technology Authority. [2:04:30] So, you must also give us that assurance through documentary evidence and trail of transactions. [2:04:36] Who is receiving the 4.5%? [2:04:38] Yeah. [2:04:39] When Nairobi pays it, is it reflected in the books of ICT authority? [2:04:43] I think, I think in my view, honorable members, for me, there are only three things to question, [2:04:48] which is a procurement process, the payment of the 4.5, who's receiving it, and confirmation of ownership. [2:04:59] And that can be established by checking whether this software has been capitalized in the books of Nairobi, [2:05:06] or capitalized in the book of ICT authority, or capitalized in both, which would be a scam. [2:05:12] Thank you, Chair. [2:05:13] Let me clarify that. [2:05:17] Contract, this technical framework was before the contract was entered into the procurement process. [2:05:24] The contract was then done between Konza and Nairobi county government. [2:05:30] And so, Konza is the entity that is paid by the county. [2:05:34] We pay them the 4.5 fees for management, hosting, and all of that. [2:05:39] And let me just say this, even as much as it might not be warranted. [2:05:44] Chair, I know how counties are struggling with revenue collection. [2:05:51] And me, as one person who's raised ours by 55%, and know the potential. [2:05:59] If I could show you what I can see here on my system, I'm sure no other governor has this. [2:06:06] From development control, to land use planning, to management of many different things of compliance, [2:06:12] Senator Ombua will want it when you become a governor. [2:06:14] Because it gives you that oversight. [2:06:17] It's not just a box for coins to come in when you're collecting revenue. [2:06:22] It is much more holistic. [2:06:23] And if I was to recommend it to colleagues, I would definitely recommend it. [2:06:26] Why are you not recommending it, Senator? [2:06:28] I have recommended one of my colleagues has taken. [2:06:31] Is it Nyandarwa? [2:06:32] Nyandarwa. [2:06:33] Nyandarwa county has taken it up. [2:06:35] Because you see, all these private vendors, they come and say so much that they can do. [2:06:40] But they end up not doing it. [2:06:42] Ideally, all government procurement, sorry, revenue, including KRA, [2:06:46] should be government systems that has that cross-cutting ability to benefit from data. [2:06:53] Some data sets only belong to government. [2:06:56] So I would recommend this as the best. [2:06:58] If I was to start again, I would choose this one again and again. [2:07:01] But that process that the senator has asked for, the procedures, is something that we will be happy to... [2:07:08] Can you manage in 15 days? [2:07:10] Of course. [2:07:11] I mean, it's something we did. [2:07:12] Yeah. [2:07:13] In 14 days. [2:07:14] But Muriuki, is it possible to track this 540 million to Konza? [2:07:19] Yes, Chairman. [2:07:21] That, with the committee request, not only can be able to track. [2:07:24] Can you do that for us? [2:07:25] Yes, we will do, Chairman. [2:07:26] Okay. [2:07:27] And remember, 540 is very little compared to how much revenue we want to raise. [2:07:31] We are talking about 62 million. [2:07:33] Actually, it's 4.5% and most... [2:07:35] Over every collective. [2:07:37] Yes. [2:07:38] Yeah. [2:07:40] Yeah. [2:07:41] Members, just tie it in with the next one. [2:07:43] Then you see how to progress. [2:07:44] And utilization of Nairobi, count Taiwan. [2:07:46] Go through the response. [2:07:49] Then you can also tie in your questions. [2:07:52] So, again, Chair, this is part of us not understanding what the system is. [2:08:04] Chair, management adopted the SAS model. [2:08:15] Sorry. [2:08:16] Sorry, Governor. [2:08:19] Just do 9. [2:08:20] That is a duplication of VRP software in Nairobi city county leading to Westphal. [2:08:25] Explain it. [2:08:26] We did 9. [2:08:28] We did 10. [2:08:29] 10. [2:08:30] Sorry, I was not here during the briefings. [2:08:32] So, just do 10. [2:08:35] Irregular engagement of Nairobi pay vendor. [2:08:38] Explain. [2:08:40] Explain. [2:08:41] Yes. [2:08:42] So, which one? [2:08:43] Try it. [2:08:44] Try it. [2:08:45] Yeah. [2:08:47] Which one? [2:08:48] St. Adolo was here during the briefing. [2:08:50] Irregular engagement of Nairobi pay vendor. [2:08:52] That is what I've just been explaining, Chair. [2:08:55] Yeah. [2:08:56] I think we have covered even that. [2:08:58] Because you have requested on how you have engaged the procurement process. [2:09:03] The issues raised by Senator. [2:09:06] And remember, given the history. [2:09:08] I hope the Chair can guide. [2:09:10] Yes. [2:09:11] Yes, please. [2:09:12] What the people of Nairobi want to hear, Governor, is that we are not putting money in [2:09:16] things that don't provide value. [2:09:18] So, perhaps you can deal with the Tier 1 server room. [2:09:21] I have no idea what that is, why it costs 850 million, why the Auditor General is saying [2:09:25] it's underutilized, underutilization of Nairobi County Tier 1 server room due to outsourced [2:09:32] hosting of revenue system. [2:09:34] The auditor is saying we have put 850 million shillings into a server room that we don't use [2:09:43] Chair. [2:09:45] So, maybe... [2:09:46] Governor, did you hear Senator Sifuna's... [2:09:47] No, I know that question. [2:09:48] Yes, please. [2:09:49] Which, again, is answered here. [2:09:51] Let me go into the answer and explain. [2:09:53] So, this is in relation to the SaaS model management adopted because the county's Taiwan server [2:10:00] room, while structurally adequate just for the hosting, was not at the time fully configured [2:10:05] or certified to support a mission-critical financial platform requiring high availability, [2:10:09] redundant power and cooling, 24-7 monitoring, advanced cybersecurity controls, guaranteed uptime [2:10:16] and scalable infrastructure, capable of handling peak time, revenue transactions. [2:10:21] The county is working on redundancy upgrades, disaster recovery capability, intrusion detection [2:10:29] systems, real-time threat monitoring, high-capacity bandwidth, and specialized system administration [2:10:37] skills to safely host Nairobi Pay internally. [2:10:40] The SaaS environment provided immediate access to these capabilities, including managed security, [2:10:45] activity, automated failover, continuous patching, real-time backup, and performance guarantees [2:10:51] essential for interrupted revenue collection. [2:10:53] I'm sure if you go to Konza, you can see the infrastructure there. [2:10:57] Accordingly, the SaaS option was selected to mitigate operational risks, ensure service [2:11:01] continuity, and support county revenue operations, while long-term plans for optimal utilization [2:11:06] of the county's data center continue. [2:11:10] Corrective measures undertaken is we initiated upgrades. [2:11:13] Remember, this was done in 2017. [2:11:14] A lot of the equipment would, you know, was obsolete by the time we were even getting there. [2:11:20] Cyber security enhancements, including intrusion detection, and real-time monitoring have been [2:11:24] initiated, and measures to improve internal hosting capacity for Nairobi Pay undertaken. [2:11:30] In addition, the data center does not just host your revenue system. [2:11:37] The data center hosts every IT-related, you know, connectivity issue within the county, [2:11:43] including our LAN connections, you know, our email. [2:11:48] There's so much that it hosts, more than just this software as a service. [2:11:55] You know, so that's the point. [2:11:56] It's not necessarily underutilized, but we continue, you know, upgrading it. [2:12:00] Remember, from 2017, when it was launched, to 2022, it was hardly, if at all, used. [2:12:05] We found things that we had to be replacing. [2:12:07] I've bought servers, I've bought new, what do you call those Dell things? [2:12:12] Firewalls, you know, that are required. [2:12:17] But not just for this. [2:12:18] You have ERP systems. [2:12:19] You have, I can show you right now, I have a system that I can track any vehicle of the county, [2:12:26] wherever it is right now, know who the driver is, and switch it off if there's a problem. [2:12:30] And I see all of them. [2:12:31] All of those are hosted within that environment. [2:12:34] So this was not, the data center was not for, it's not an exclusive place for revenue system. [2:12:42] A revenue system is just one of the things within an IT environment that can be hosted at a data center. [2:12:49] Yeah, Chair, I think that is clear, Governor. [2:12:51] The question is, the auditor is saying there's still capacity for us to host that system there, [2:12:58] in addition to all the other systems, and maybe from their perspective, [2:13:02] if we took away the hosting component, it would be cheaper and value for money. [2:13:09] Is this tier one server room capable of that? [2:13:14] That is what we need to do. [2:13:15] No, it's... [2:13:17] Because it costs us 850 million, Governor. [2:13:19] I think... [2:13:20] I'll answer the same question, then you can answer. [2:13:22] Yeah, sorry. [2:13:23] On the UTG agreement, can CONSA then allow you to host that server? [2:13:29] I would not even ask them for it. [2:13:31] Yes. [2:13:32] It's a bad idea. [2:13:34] When they need to change a firewall or to buy new equipment, [2:13:38] because this equipment moves every two, three years, [2:13:40] that would be a cost on us. [2:13:42] Right now, with this arrangement, that is a cost on them [2:13:45] to continue upgrading and maintaining that hosting environment. [2:13:51] And so I would use my data center for other things that do not require as much cybersecurity, [2:13:56] as much, you know, sensitivity as revenue collection. [2:14:01] So I would not even ask them for it. [2:14:03] Unless... [2:14:05] Let me ask... [2:14:06] It is the ICT guy, but just from what I've seen, it costs. [2:14:08] You know, just... [2:14:09] Someone comes and shows you one thing like this, [2:14:11] compare 20 million shillings, and you're like, that can do so much more. [2:14:14] Then the question comes, Governor. [2:14:15] Why do we keep putting money there if it is being underutilized? [2:14:19] It's used for other things. [2:14:20] Why do we keep putting money there? [2:14:22] In our data center? [2:14:23] Yes. [2:14:24] Our data center is used for many other things that are not as sensitive. [2:14:27] You know, it is still used. [2:14:28] You know, we still have to... [2:14:29] There are many needs that our data center serves. [2:14:33] But the kind of cybersecurity and kind of, you know, just as I've read out, [2:14:37] level of maintenance and upgrades on this system. [2:14:41] And remember I told you the cost of it being down just for two hours. [2:14:44] You know? [2:14:45] If it's down for five hours, it costs me... [2:14:46] There are days I collect 200 million. [2:14:48] If it's down half day, I've lost a hundred. [2:14:50] You know? [2:14:51] And even hiring the people to keep running it, [2:14:53] I would rather that becomes a software as a service. [2:14:56] That is, in fact, part of the cost-benefit analysis they will show you, [2:14:59] is the cost of just the equipment. [2:15:00] You know? [2:15:01] It is much more. [2:15:02] It will take people years to recoup it. [2:15:03] Auditor, the query was on underutilization. [2:15:07] That explanation that the governor is giving, [2:15:09] do you think then it doesn't matter because they are doing other things [2:15:15] with the server center? [2:15:16] That they don't need to host Nairobi page? [2:15:20] In this server? [2:15:21] Does that mitigate this query? [2:15:24] Thank you, Chair. [2:15:26] That mitigates. [2:15:27] The concern to begin with was there was no evidence that they had assessed [2:15:37] the readiness of the support from the server room before now they moved, [2:15:44] handed over the host to the Konza. [2:15:49] So there was no evidence that it had been taken into consideration. [2:15:52] From the initial time it was G to G. [2:15:54] And that's why it was hosted by Konza. [2:15:56] That's my understanding. [2:15:57] What he's saying is that if an analysis of the capacity we have internally [2:16:03] was taken into account during that conversation, [2:16:07] maybe the hosting component would not have been given to Konza [2:16:11] and it would have been cheaper for the people of Nairobi. [2:16:14] And my reading is, I don't know, maybe governor, okay governor, let's see what we have to say about that. [2:16:19] I think I've just explained for me, and maybe we should just bring the numbers. [2:16:23] The cost benefit analysis and the convention that the world is going to is that [2:16:31] I don't have to buy a pig to have breakfast for one sausage, you know. [2:16:37] If you can own the pig, keep producing sausages, I'll buy the sausage that I want. [2:16:40] The service makes sense where it is. [2:16:43] Because I don't have to buy servers every two, three years. [2:16:45] I don't have to keep buying equipment and laptops and whatnot. [2:16:48] Chair, session chair, we were together in the parliament of South Africa [2:16:57] when our counterpart committee was looking at the city of Kuruleni. [2:17:04] Kuruleni is a metropolitan city, hived off Joburg, [2:17:08] and it covers the area where Oartambo is. [2:17:12] And so it's a very, very rich city. [2:17:14] I was with Senator Wambua and Senator Mwaruma. [2:17:17] The city of Kuruleni lost two billion rands through cybercrime incidents. [2:17:27] And we sat through the hearings of the committee, and we had very interesting things. [2:17:33] That insiders colluded with hackers, or hackers working with municipal insiders, [2:17:40] infiltrated the city's billing system, and manipulated property debt records, [2:17:45] created fake invoices, issued fraudulent rates, clearance certificates. [2:17:50] In fact, at the end of that session, the chair asked about the instant fines, [2:17:55] because they make a lot of money from instant fines. [2:17:58] These things that you are handing over to NTSA. [2:18:01] But that's a conversation for another day. [2:18:03] And the municipality said that it was a management decision to turn off instant fines. [2:18:10] And Senator Wambua, you remember how that sounded. [2:18:14] In total, the city lost two billion rands. [2:18:17] Two billion rands is easily 14 billion Kenya shillings, [2:18:21] as a result of compromised systems. [2:18:24] Now, the reason why I bring this up is that Nairobi might want to host all these systems internally. [2:18:33] But the question would be, what is their capacity? [2:18:36] And that's why it's important for us to look at the results of a systems audit that focuses on security and controls. [2:18:44] Because you don't want a situation where, fine, you've got this nice server room, [2:18:49] but there's someone inside that server room who tells you if you want me to clear your rates, [2:18:54] Nipe Kitukidogo, and then I can go into the system and do that. [2:18:58] So for me, the greater concern should be to assure the people of Nairobi that whether it's hosted on a cloud at Konza [2:19:06] or hosted on premise in your data center, that there are appropriate security controls, [2:19:12] there is proper integrity to avoid the repetition of what we saw in Joburg. [2:19:19] I say that just to illustrate that it's not theoretical. [2:19:22] It is something that is happening. [2:19:23] It's a big, big scandal in South Africa, even though I think just like Kenya, [2:19:28] they are used to big scandals. [2:19:30] They've grown thick skins. [2:19:31] So it can happen here if you do not take proactive measures, Chair. [2:19:35] Okay, Governor. [2:19:38] Chair, the substantive Chair has really affirmed my position. [2:19:43] Keep it where safety, the security, the focus, that's all they do, you know, [2:19:50] as opposed to where you will not have the continuous upgrading and whatnot. [2:19:55] And it's a service that you want, yeah? [2:19:57] The objective of the county is not to host, it is to get revenue. [2:20:03] And to get it in a safe way, efficient way, without downtime. [2:20:07] So if they can provide that, of course it can be a matter of pride to say today we host. [2:20:11] But even when the world is moving, there are less and less physical spaces for hosting. [2:20:15] It's in the cloud, you know? [2:20:17] So, Chair, that is my position. [2:20:19] I just talked about it, but Governor, just confirm to us. [2:20:23] In the contract, do you have a deal on the uptime for the census level agreement? [2:20:31] What's the percentage? [2:20:33] I don't know the contract of it, but, what, 99%? [2:20:36] 99%. [2:20:37] 99%. [2:20:38] Yeah. [2:20:39] And they're achieving it. [2:20:40] 99%. [2:20:42] For the most part, we can come substantively on this matter and explain it. [2:20:47] But I promise you, everyone, every county should use this system, if they are really serious [2:20:52] about revenue. [2:20:53] But you see, the hesitation with some people is that, Hapa, they are going to deal, you [2:20:58] know? [2:20:59] So, come up, why should I move into that one? [2:21:01] So you stay with the vendor. [2:21:03] Yeah, I mean, Governor, from what you have said, where you're saying it's, you know, [2:21:07] you'd rather put your data on a cloud rather than on-premise. [2:21:10] Along the same lines, I think we all agree that it's better to keep your cash not under [2:21:15] the mattress but in a bank. [2:21:16] Thank you, Mr. Chair. [2:21:18] You missed the substantive part. [2:21:21] Can you just come? [2:21:23] We even spoke about buckets. [2:21:26] Members, I think, okay, Nairobi Senator. [2:21:31] I'm waiting for you to call for AOB. [2:21:33] Okay. [2:21:35] Um, this was can't be flogged further. [2:21:38] But we've made progress, members, auditors. [2:21:40] I think for all of us, we've made tremendous progress on this issue. [2:21:45] The more we look at it, the more we discuss it, I keep also understanding it more and more. [2:21:50] Let's go to closing remarks and I would start with the Gav. [2:21:55] Let me just, with your permission, Chair. [2:22:01] Okay. [2:22:02] You know, yesterday the governor was... [2:22:04] What is he closing or... [2:22:05] No, this is just as AOB because he's here. [2:22:08] Okay. [2:22:09] Yesterday the governor was before the finance committee and I tried to raise this AOB. [2:22:13] But because I was playing away, they decided to, yes, they decided to call it offside. [2:22:21] But now that I am at home and this committee is going to go there. [2:22:29] Governor, there is an issue that is current that I really wanted us to just, even if you [2:22:35] don't have those answers now, you need to calm the anxiety of the people of Nairobi regarding [2:22:41] this proposal that we hear, that you wanted to borrow an amount of money, you know, from [2:22:48] a private bank, essentially to be able to complete development projects. [2:22:53] And unfortunately today, because we have covered the Receiver of Revenue report, we didn't go [2:22:58] into the main report so that we could see the sort of projects that are earmarked for that [2:23:03] conversation. [2:23:04] But just to calm the anxiety of the people, you need to explain just briefly the rationale [2:23:11] for this decision, the legality of the decision, whether you have secured the necessary approvals [2:23:17] from and guarantees from the national government, whether there have been engagements with the [2:23:24] county assembly, for instance, on these issues, and just what assurance that once this thing [2:23:31] goes through, you know, here we talk about ring fencing of money for specific, you know, [2:23:37] purposes, what assurance we can get that, you know, we are getting value for money, number [2:23:43] two, that the money will go to the projects that are earmarked, and number three, governor. [2:23:50] The general terms of that agreement, whether they are legal and whether the people of Nairobi [2:23:56] can take comfort that the right thing is being done. [2:23:59] Chair, that is the only issue I wanted to bring yesterday, I thought it would be ideal [2:24:02] there, but if he can, he can comment, if not, he can say. [2:24:06] Are you able to comment on that? [2:24:09] Ever ready. [2:24:10] I'm always ready, Chair. [2:24:11] Go ahead. [2:24:12] Chair, let me first explain, as I have said when I started, the biggest challenge in this [2:24:21] city has been that we have not set up the financing structures over capital as should [2:24:30] be. [2:24:32] That's why you always operate on a huge deficit. [2:24:34] And I was explaining, you know, when I say in 2022 I found pending bills of 109 billion, [2:24:40] or 119. [2:24:42] Those have been, you know, 118 billion for a county that was collecting eight is just [2:24:48] astronomers. [2:24:49] But that problem will never be solved until you unlock proper financing. [2:24:55] Joburg, where you are, is listed, you know, on the Johannesburg Stock Exchange and collects [2:25:00] so much more, its value is bigger than South Africa in terms of brand, you know, and so [2:25:05] on and so forth. [2:25:06] And so we keep exploring what options we have, even as we push, and I'm glad you're helping [2:25:13] us, as we push our own source capacity. [2:25:16] But we will explore all avenues through which we can be able to sort out outstanding liabilities. [2:25:24] Because now, one engine was big, but it's come to 86 billion. [2:25:27] So even as we want to sort those out, how we have a sustainable method of financing the [2:25:36] capital. [2:25:37] Which is why I was very happy to run into the corporation. [2:25:39] Because that injected to me another 80, you know, a billion worth of projects. [2:25:43] Not done necessarily by one entity, but worth of projects. [2:25:46] 80B would take me a hundred years of collecting packing, you know, in town. [2:25:51] So Chair, it is a thought we had. [2:25:55] Now the law, Senator Sifuna, makes it so difficult for a county to borrow. [2:26:02] It is extremely, an extremely difficult and convoluted process. [2:26:07] Article 212 of the Constitution says that a county may borrow only if it gets one, [2:26:13] national government guarantee, and two, approval of the county assembly. [2:26:18] Then you go to the PFM, Public Finance Management Act. [2:26:23] PFM, Section 140 of PFM, gives you the considerations. [2:26:31] The CECM of finance may raise a loan on behalf of the county executive, [2:26:36] so long as it is in line with Article 212 of the Constitution that I've told you. [2:26:41] And Section 58, again, of PFM, it must be part of your county fiscal strategy paper [2:26:46] in terms of the projects you want to undertake. [2:26:49] And the limit is set in the county debt management strategy paper. [2:26:53] Then when you go to 141, it again gives you other criteria. [2:26:58] Look at 141 of PFM. [2:27:00] About the limit being set. [2:27:02] Market value, that it must be the lowest possible cost in the market consistent [2:27:08] with the appropriate degree of risk, meaning you cannot single source any credit facility, [2:27:17] because it must be the best market value out there. [2:27:19] You must go to the market and to make sure the public debt level is sustainable. [2:27:23] 142 talks about what counties do all counties. [2:27:27] The short-term borrowing that must be paid within a year, that people do for salary advance. [2:27:31] Now, if you go to Section 58 is where our problems begin, Senator. [2:27:34] Because Section 58 talks about the National Government Guarantee. [2:27:37] That National Government Guarantee, one, the CS has been given procedures. [2:27:44] In fact, four of PFM regulations, Regulation 177, breaks it down. [2:27:53] It's like the door and the door. [2:27:55] Capital project capacity to repay, loan and interest, etc. [2:27:59] The limit passed. [2:28:00] And then he loads it onto the National Government debt limit. [2:28:04] And then he must go to National Assembly and come to the Senate for the guarantee. [2:28:11] The loan guarantee to account cannot be done without the Senate. [2:28:16] So there's a procedure, you know. [2:28:18] Katiba, PFM 140, 141, 58, Part 14 Regulations, Regulation 177, 76. [2:28:24] And it's very convoluted. [2:28:26] In fact, if we started the process today, we would not finish it in a year or so. [2:28:33] So while you're considering many avenues, a lot of what you're hearing out there, my good Senator, is propaganda. [2:28:39] If we make that proposal, it will have to come to this House. [2:28:44] It will have to come to your Budget Committee. [2:28:46] The House will have to approve it. [2:28:47] In short, there is no such thing. [2:28:48] No, no, no. [2:28:49] Okay. [2:28:50] We want to, we've conceded. [2:28:51] But then again, the limitation of 20%. [2:28:53] So you see, such a convoluted process will give you 6.9, which is 20% of voted revenue. [2:28:59] I think we need as Parliament and even the Senate to look at how we can assist counties to do borrowing. [2:29:08] Because governments must borrow. [2:29:09] You know, the national government says, the president says, okay, I want to do one, two, three, four, five. [2:29:13] I can collect one, two, three. [2:29:15] We borrow the rest. [2:29:16] As is how much can we collect and then you cut your size. [2:29:19] There's no deficit financing. [2:29:21] Deficit financing is one part of Chapter 12 of the Constitution that I think we have failed [2:29:26] to explore completely in the case of county governments. [2:29:29] So, Senator Sifuna, if we decide to explore that truth, you will definitely know. [2:29:34] But... [2:29:35] So, there is nothing. [2:29:36] Yeah, just leave it here. [2:29:37] So, how much did you want to borrow just for my interest and how did you want to pay it? [2:29:42] So, if I calculate it, what do you want to do? [2:29:45] Or is it... [2:29:46] No, what we wanted to do was to borrow 6.9, which was the 20% of the voted revenue, to target specific projects. [2:29:56] When I got in, I found many store projects. [2:29:59] Some would just need a 20 million or what not to move over while still we are doing our projects. [2:30:05] So, it would be re-fenced to those specific projects. [2:30:07] But I'm seeing it is not worth it. [2:30:09] Either not worth the amount, the effort, or the political process. [2:30:14] So, what I would rather do is what I've done this morning, as we continue to do, [2:30:18] is to get the debt collector to get me my 62 billion owed to me out there. [2:30:24] That one does not need a national guarantee, it is our money. [2:30:27] Instead of using... [2:30:28] You know, there's something called political capital. [2:30:30] You'll expend so much political capital for so little. [2:30:33] It's not worth it. [2:30:34] Okay. [2:30:35] Senators, do you want to... [2:30:37] Anybody wants to make a closing remark? [2:30:38] Because then, I will give the substantive chair... [2:30:42] Or, would you say something? [2:30:43] Yeah. [2:30:44] I'll be very brief, because today I'm just a member of the committee. [2:30:49] I think, while I was following the conversation online, [2:30:53] Chair, it will be good for you to pronounce yourself [2:30:56] that we have just dealt with revenue today. [2:30:59] We have not dealt with expenditure. [2:31:00] And I think it's on expenditure that there are great concerns. [2:31:03] And we can agree on when the county governor shall appear to address the expenditure issue. [2:31:09] The issue of borrowing, and I've heard you, Governor, talk about green bonds, municipal bonds, or infrastructure bonds, like IPA did it. [2:31:19] You were with us in the Senate. [2:31:21] It came, and we know why it suffered. [2:31:25] It was because of timing. [2:31:27] And there was a lot of politics in it. [2:31:29] Even though it was a very good idea, unfortunately they started procuring before the bond was approved. [2:31:35] So now we have serious spending bills arising out of it. [2:31:38] And how much did they get there? [2:31:40] No, no. [2:31:41] It was not approved. [2:31:42] It was approved by the Senate. [2:31:43] No, no. [2:31:44] It was not even approved by the Senate, because it was so close. [2:31:47] It was so close to campaigns. [2:31:49] And I remember the senator then said, the governor is looking for campaign financing. [2:31:54] And that's how it died. [2:31:56] So even you, if you are to bring it to parliament now, trust me, politics will shoot it down. [2:32:01] But if you did it earlier in your administration, I believe a municipal bond or a green bond that is ring-fenced, [2:32:08] and people can see where that money is going to. [2:32:12] Maybe it's on BRT. [2:32:13] Maybe it's on traffic management and control. [2:32:16] And Governor, I still insist that you guys as a COG, these things NTSA is doing, of taking fines on your roads and in your jurisdiction, [2:32:26] without your involvement, are things that you must address. [2:32:29] If you made that part of your own source revenue, we would not be talking about 13 billion. [2:32:33] But that can only work if you improve the transport, the traffic control, management systems. [2:32:40] And you can raise a bond for that if it's done at the right time. [2:32:43] I hope that when you look at the expenditure side, there was a famous borrowing of 5 billion. [2:32:48] That amount of, that money that kept moving from one bank to the other. [2:32:51] I think you were in the Senate when you were querying it. [2:32:53] I hope it has been settled. [2:32:55] Because the last time we checked, the interest payment on it exceeded what you are collecting from your markets around Nairobi. [2:33:02] But we can deal with that later. [2:33:03] Finally, Chairman, you and I having been to South Africa, where we have borrowed a lot in terms of decentralization. [2:33:13] All the members, I'm still convinced that, I think it's Section 12.3 of the Urban Areas and Cities Act, [2:33:22] which says that the city county shall be administered the same way as a county. [2:33:29] So we've got the law that applies to Homa Bay and Tarakanithi is a law that applies to Nairobi. [2:33:35] It won't work. It can't work. [2:33:38] And it does not matter who's the governor. [2:33:40] Whether it's going to be Kajwang or Sifuna or Sakaja or anybody else. [2:33:45] With the structure that you have in Nairobi, it won't work. [2:33:48] And we have seen other jurisdictions, South Africa, which I keep referring to. [2:33:54] And I think it's very close to ours. [2:33:56] They have a house of provinces that is similar to a Senate, a national assembly that is similar to ours, [2:34:02] provinces, municipalities. [2:34:04] You came up with boroughs, but boroughs was your creation for efficiency. [2:34:10] You need to lobbyists to find a way of amending the Urban Areas and Cities Act [2:34:15] or coming up with a separate Nairobi city county act that provides detailed provisions like Kampala City. [2:34:24] I think Kampala City authority is established by an act of parliament. [2:34:29] Please engage us on that so that you are not just engaging us when the police is chasing you. [2:34:34] Engage us on these substantive things so that you can also leave a legacy in Nairobi [2:34:39] that you are the one who reorganize the structure in cooperation with the Senate [2:34:42] and that will guarantee success for anybody else who comes in next term or subsequent term, [2:34:48] whether it's going to be one term or two term, whatever the case. [2:34:50] But the structure as is, is designed to fail. [2:34:53] Thank you, Chair. [2:34:54] Senators, full and closing. [2:34:55] Some of us have to really travel. [2:34:57] Thank you, Chair. [2:34:58] I will not take longer than a minute. [2:35:00] I can appreciate the skepticism from the Senate of Omabe. [2:35:04] I personally believe that if we had goodwill from the national government devolution would actually work. [2:35:10] Nairobi can work. [2:35:11] It depends on the sort of support because that same law that you, you know, you cited [2:35:19] has recognized the special needs of the city and it just requires that there be special support from the national government, [2:35:25] although not the way that you did it, Governor, following the law and the Constitution, you know. [2:35:29] So, and then, of course, the goodwill in terms of getting money to our devolved units, [2:35:34] and not just money but timely payments out to devolved units. [2:35:38] If you follow the debate on the Division of Revenue, Governor, one of the things, the points that we were raising is that [2:35:44] we are still using 2022-2023 audited accounts, and there's an extra 500 billion in terms of revenue growth from that time. [2:35:54] If you apply 15% of that, it's over 60 billion Kenya shillings going to devolved units. [2:35:58] Some of these problems can be sorted out. [2:36:00] So, lastly, Governor, I am relieved that you have put it on record, and please don't change the way that you changed this issue of ownership of the system, [2:36:08] that you come back later and you tell me that you have agreed to take this loan. [2:36:13] I think 6.9 billion shillings, you've said it yourself. [2:36:16] It is just the anxiety that comes even with the timing. [2:36:19] As the Chair has said, these are some of the things probably if you propose in the first year of, you know, [2:36:24] because you came in and you found all those toll projects from the previous administration. [2:36:28] Maybe it would have gotten more support and people would not be thinking that you are looking for money for campaigns. [2:36:33] So, I think for me as the Area Senator Chair, we appreciate these conversations and we wish that they would be more regular. [2:36:41] Because today we have only deal with the ROR Chair, I want to request this committee that in the next few weeks, [2:36:48] not longer than three weeks, I think the Governor should be back here for us to be able to deal with the question of the projects and the executive. [2:36:56] Thank you, Chair. [2:36:57] Governor, if I can open your mouth before the Governor comes in, let me just go to the last mouth. [2:37:02] Yes. Governor, this is food for thought, for you. [2:37:06] How is it that you collect parking fees in the city, on your roads, on your parking bays? [2:37:15] You have erected robots, streetlights. [2:37:20] And when a vehicle that was parked in your parking bay, when it overruns the robots, somebody else collects that fine. [2:37:31] I mean, as the Chair is saying, I think the County Government also need to look the National Government in the eye and tell them that some of these revenues that they are collecting from counties, those revenues belong to counties. [2:37:50] Thank you. [2:37:51] Now, briefly, already the vehicle for Senator for Kitwi is facing Kitwi. [2:37:58] View your domicile here. Let's see. In closing. [2:38:05] Thank you so much, Chair and colleagues. I call you colleagues because I was in the Senate. [2:38:11] I'm very proud of the time we had here and what we were able to achieve. [2:38:15] I thank you for the time that we've spent looking at these issues. [2:38:19] There are many things to be considered if I start with the issue of financing. [2:38:24] And it's true, South Africa has a similar structure of a unitary state but with fiscal decentralization. [2:38:32] And they may have kept on a good friend of mine. He's called Jordan Hill. [2:38:36] In fact, I was trying to organize for you guys to meet him. [2:38:38] He's a young man, I think two years younger than me. He's now the leader of the opposition party there. [2:38:43] Just like my brother here is also, you know. [2:38:46] You know, there are a lot of similarities. But the creativity of structuring, financing, you know, products for a capital city is extremely important. [2:39:03] It must be figured out, you know. No matter how you try it, until you figure that out. [2:39:09] I've been with colleagues from across the world who, when I explained to them the predicament, [2:39:15] how much we have versus the number of people you must serve versus the number of staff we have. [2:39:20] You know, when you say I have 19,000 staff, you think it's many. [2:39:23] But that same party, I told you, of two million people has 53,000. [2:39:26] Because those are service areas. [2:39:28] So I really like the idea by Senator Kajuan about looking at special legislation for posterity around the governance of the capital city. [2:39:38] But then I also agree, the goodwill and the nature in which the national government, and for me I've been, you know, fortunate to an extent. [2:39:48] You know, in terms of things I've been able to get done because of partnership with the national government. [2:39:52] But it should not depend on the relationship of the day. [2:39:55] You know, it should not depend on that because I and the president and the same party, things will work. [2:40:01] No, it must be something that is hardwired. [2:40:04] Because this, again, is a city that produces almost 30% of our GDP, you know, for the whole country. [2:40:11] And so we must look at it like that. [2:40:13] The NTSA fines, I don't say that I can draw, but I'm waiting for them to put the infrastructure. [2:40:23] Because if you go to Dubai, the whole of Dubai police and their salaries, equipment, vehicles, etc. [2:40:31] are funded by the road fines completely. There's no other appropriation that are done to them. [2:40:38] We did a study here on the 200 junctions that we're doing. [2:40:41] Each junction will produce 1.5 billion in terms of fines. [2:40:45] And it's small fines of seat belts, you know, you've crossed 1,000 shillings. [2:40:50] You've overspared or you've overlapped. [2:40:52] So let them do the infrastructure. But we know our position on it. [2:40:56] Because now they'll say, okay, let's not do it, you guys. [2:41:00] So what we're very clear on is any infraction on, first of all, as a bare minimum, on county roads belong to counties. [2:41:07] But I am extremely, extremely clear. [2:41:10] We can debate now Kenha roads, national roads, which are very few, you know, that we can debate. [2:41:18] But 70% of the road infrastructure in this country is county roads, you know, so really that should come to us. [2:41:25] I think, Chair, I'll leave it at that. I'm always happy to come to this house. [2:41:30] And let's look forward to our next engagement. [2:41:33] Thank you so much for your time, all of you, Senator. [2:41:36] Let's end it here. Members, we've looked at the ROR. [2:41:40] We would have opportunity to look at the expenditure side. [2:41:44] That is the executive report. As soon as possible, the Senator is proposing three weeks. [2:41:53] Just find out when we can have opportunity to meet them. [2:41:56] This meeting is adjourned. [2:41:58] But then on the issue of money for campaign, I'm looking. [2:42:02] Please, if you know people who can contribute, we'll be very happy. Thank you. [2:42:08] We are adjourning until Monday at 9.30. [2:42:11] If we went to these people's houses, Governor, we can raise campaign money. [2:42:16] We are adjourned. [2:42:17] We are adjourned at 60 million.