Nairobi City County government has been relying on an amorphous entity known as the Nairobi Revenue Service (NRS) controlled by an unknown individual to collect its revenue despite the expiry of agreement as a service provider in September 2022.

 Documents tabled before the Nairobi City County Assembly ad hoc committee investigating why revenue in Nairobi has been declining indicated the contract for NRS — put in place by the Kenya Revenue Authority (KRA)— expired in March 2022 but was extended for a further six months to September 2022.

 After the expiry of the term of service in September, the taxman handed over the revenue collection function to the Nairobi City County government.

It is then that the devolved unit opted to retain NRS as the revenue collector for the devolved unit without any formal agreement and contractual obligations.

 During the committee hearing, it also emerged that NRS is currently controlled by an unknown individual while the county executive only has access rights as a user. As a user, the county can only view on a dashboard the revenue that is collected but it has no control on its collection.

 The mysterious individual according to the Chief Officer for Smart Nairobi Tairus Njoroge is identified as one Benson Njoroge, who is the system developer.

Proof of payment

The name of Njoroge, according to committee submissions was seconded to the county government from the national government through the Ministry of Information Communications and Technology (ICT). Njoroge does not work for the ministry of ICT and the county government has never met him.

 The chief officer, who was being grilled by the committee led by Makongeni MCA Peter Imwatok said the county only contacts Njoroge when the system is down. He has also never met Njoroge in person.

 “When we want to contact NRS, we do so through the ministry of ICT at the National government. When the system is down, we formally contact the ministry of ICT to rectify the issue. The ministry gave us the contact for Benson Njoroge to inquire in case of anything,” Njoroge said.

 The Nairobi City County government is also currently relying on two bank accounts opened by KRA where the revenue collected is deposited.

 County Finance minister Charles Kerich in defense of the county executive clarified that the county only relies on NRS for the provision of proof of payment and that the platform does not handle the revenue collected on a daily basis by the county government.

 “There is a notion that revenue collected by the county is remitted into NRS which is not true. The case is that the NRS system is a platform that is used for generating invoices and receipts and updates to show that you have paid your dues. The money itself from the customer is banked into the account of the Nairobi County government. The money does not go to NRS. All the money collected goes into our two bank accounts at Cooperative Bank and Equity Bank.” Kerich said.

 Kerich also told the committee that City Hall was currently in the process of developing its own revenue collection system through a company identified as TechnoBrain.

 Kerich would not however explain why the county government is still operating bank accounts opened by KRA through NRS and did not provide any proof of agreement that NRS is the principal revenue service provider for the devolved unit when required to do so by the committee.

 The county government through the Smart Nairobi sector also relies on the individual for the provision of access rights to the system.  The ad hoc committee is currently investigating the underperformance of the City Hall revenue collection. Despite the automation of 135 revenue streams, the county is unable to meet its revenue targets.

Revenue disparities

Since 2013, Nairobi has consistently fallen short of its revenue targets, posing challenges to the city’s fiscal health. Notable disparities between revenue projections and actual collections have raised concerns.

 For instance, in the fiscal year 2017-18, the city managed to collect just Sh10.17 billion, considerably below the target of Sh17.23 billion. In the preceding year (2016-17), City Hall aimed to generate Sh19.57 billion but only managed to secure Sh10.93 billion.

 The highest revenue collection over this period occurred in 2015-16, amounting to Sh11.71 billion. However, even this achievement remained well below the Sh15.3 billion target, highlighting the persistent gap between revenue aspirations and realised income.

 In March 2023, it was revealed that the Kenya Revenue Authority is still in charge of the revenue collection at Nairobi City County.

 This is despite the current administration coming into power last year in August.

The 13-member committee has 60 days to table its report before the Nairobi City County Assembly.