City Hall suffers Sh2.2 billion deficit after missing Latf

By Mutinda mwanzia

The City Council of Nairobi is grappling with Sh2.2 billion-budget deficit following the move to deny it Local Authority Transfer Fund (Latf) this year.

City Treasurer John Ngugi said the deficit would greatly affect the implementation of many capital projects and hamper service delivery.

"It is true that the move to deny us the Latf has hit us hard financially. We must find ways of raising funds to cover the deficit," said Ngugi. The Chairman of the Licensing Committee councillor Jaffer Kassam said provision of key services would be hampered due to the financial deficit.

Kassam added that Latf is the main source of the council’s revenue that is channelled to various projects.

"That’s why the Government should rescind its decision and release the funds to the council," said Kassam.

The City Council of Nairobi missed out of the Sh4 billion Latf disbursed to local authorities by the Government last week following its move to withdraw from the workers’ pension fund, Lap Trust.

Statutory deductions

City Hall owes Lap Trust Sh8.2 billion in unremitted statutory deductions.

All local authorities must get clearance certificates from their staff retirement benefit schemes to confirm that they do not have any debts before Treasury releases any Latf money to them.

Yesterday, Kassam said the council was shopping for a fund manager to manage the pension scheme for over 11,000 employees.

Ngugi said among the projects that will stall include rehabilitation of roads, sewers and drainages, the erection of high mast floodlights in slum areas and garbage collection.

He added that Latf mainly funds Local Authority Service Delivery Action Plan (Lasdap) projects.