Local authorities in the country are sagging under the weight of debts, a Local Government ministry official said on Tuesday.
The 175 councils were indebted to the tune of Sh17.2 billion as of October last year, signalling a weak financial base for county governments set to be established after next year’s General Election.
County governments are expected to take over the assets and liabilities of the local authorities and offer services previously provided by the councils.
Mr Philip Owade, the secretary in charge of local authority administration in the Local Government ministry, told a conference on urban governance in Nairobi that the councils, for instance, owed banks more than Sh10 billion.
He said they also had salary arrears of Sh1 billion, noting that only 44 local authorities in the country could comfortably pay salaries from their own sources of revenue.
Mr Owade said the councils also had numerous debts owed to various suppliers, creditors and other institutions, including statutory organisations like the National Hospital Insurance Fund and the National Social Security Fund.
He also raised the alarm over the high “over-employment” rate in the councils.
A recent PricewaterhouseCoopers report, for instance, showed that the Nairobi City Council has 11,392 workers against the required 7,716. Most of the workers, says the report, are semi-illiterate, unskilled or semi-skilled.
Due to this high number of employees, the council spends more than 70 per cent of its recurrent expenditure on salaries.
Mr Owade said: “While taking over assets (by county governments) is gratuitous, debts are problematic since they are substantial.”
He said that as the country moved towards implementing county governments, there was a need to address the various “fundamental issues” that include the numerous debts and staffing problems.