Subject: Authority for refinancing County’s Ksh. 4.2 billion loan

        THAT, aware that borrowing by County Governments is provided for under Article 212 of the Constitution provides for borrowing by County Governments thus, a county government may borrow only—
  1. a) if the national government guarantees the loan; and
  2. b) with the approval of the county government’s assembly.
FURTHER AWARE that, Sections 58, 140, 141 and 142 of the Public Finance Management Act (PFM) 2012, amongst other things, further outline conditions on the authority for borrowing by county governments; NOTING that specifically under Section 140 of the PFM Act, 2012, such request for borrowing can only be allowed if the loan and the terms and conditions for the loan are set out in writing and are in accordance with—
  1. Article 212 of the Constitution;
  2. Sections 58 and 142 of the PFM Act;
  3. The fiscal responsibility principles and the financial objectives of the county government set out in its most recent County Fiscal Strategy Paper; and
  4. The debt management strategy of the county government over the medium term…;
HAVING RECEIVED a request for borrowing from the Ag. County Executive Committee Member for Finance and Economic Planning vide a letter dated 10th July, 2018, forwarded to the Assembly to request for authority to engage other lenders on the refinancing of the County’s Kshs4.2 billion loan with KCB due to unfavorable terms; OBSERVING that the Nairobi City County Government in April 2014 entered an agreement with Kenya Commercial Bank (KCB) seeking help to offset a 2.4 billion loan it had acquired from Equity Bank Limited, which loan the County Government has defaulted from any of the payments since February 2016; DEEPLY CONCERNED that the Ksh 4.2 billion loan and the County’s outstanding huge debt bill estimated at Kshs57 billion if not addressed risk greatly impacting the delivery of crucial County services, as the County struggles to settle the debt over the medium and long term; SATISIFIED that with the current request the County Government through the County Executive Committee Member for Financing and Economic Planning has demonstrated a renewed commitment to finding ways to refinance certain loans with unfavorable terms such as the KCB loan and mechanisms to cut down on the huge debt bill through open and transparent mechanisms as overseen by the County Assembly; This ASSEMBLY RESOLVES pursuant to the provisions of Article 212 (b) of the Constitution, Section 142 of the Public Finance Management Act, 2012, Section 8(1)(d) of the County Governments Act, 2012 and Standing Order 49 to AUTHORIZE the County Executive Committee Member for Finance and Economic Planning to engage the National Government as required by law and other suitable lenders with favorable terms with a view to refinancing the County’s Ksh 4.2 billion loan facility with the Kenya Commercial Bank Limited.
Notice of Motion 12th July, 2018
Mover Hon. Hassan I. Abdi, MCA - Leader of the Majority Party
Seconder Hon. Elias Otieno, MCA – Leader of the Minority Party
Division None
Dates Debated and/or Concluded 12th July, 2018
Remarks Adopted.
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