The Nairobi county government is in a race to avert a looming auction. City Hall has since initiated plans to conduct a clearance sale of its idle assets including land, office furniture over a defaulted Ksh4.4 billion loan from a financial institution.
Other than auctioning its assets, City Hall is also mulling at introducing a new tax to some of the services offered to Nairobi residents to raise funds to offset the debt, a decision that is likely to invite outcry.
This latest move follows a ruling by the High Court allowing a top tier local bank to seize and auction its property over a defaulted loan valued at Ksh4.4 billion.
The land targeted includes those lying idle in various parts of the city and also old apartments. The plan is also set to weed out land grabbers and cartels who run the show in the country's capital city.
According to Nairobi Finance and Economic Planning CEC Allan Igambi, City Hall is also mulling over creating a special type of levy with the specific purpose of clearing the debt.
This strategy is contained in the Nairobi City County Medium Term Debt Management Strategy Paper for the financial year ending June 30, 2023. The action plan to prevent auction was also adopted in a bid to lower county's ballooning debts.
"This paper recommends that we conduct an auction for all obsolete and idle assets and furniture and the proceeds realised be used to reduce the outstanding loan," states the document.
It further states,"Also recommends that one source of our revenue, cess collection, to go towards repayment of this loan. The county Treasury will come up with modalities of how this can be best implemented."
According to the county, land and furniture sale are the only low hanging fruits for the devolved unit to raise funds to clear its debt, within a short period of time.
However, this is not the first time City Hall has been compelled to surrender some of its prime assets due to debt. In 2013, the county transferred its Mariakani Estate to the Local Authorities Pension Fund to clear a Ksh2 billion debt.
The old estate located in South B has 30 blocks of eight flats and sits on a-10.1- acre-piece of land.
The county which is headed by Governor Anne Kananu is now seeking a similar deal to avoid losing its assets.
The financial institution is seeking to seize Nairobi County assets following the verdict delivered by High Court judge Chacah Mwita in January over continued default of the loan.
The lender moved to court in 2020 seeking to have the loan repaid and judge stated there was no dispute that the parties agreed to go for arbitration, settled on the sole arbitrator and proceeded before him.
