Kisumu MCAs have allowed Governor Anyang' Nyong'o to borrow Sh400 million from Kenya Commercial Bank for workers' salaries.
The county assembly approved a motion tabled by the Budget and Appropriations Committee chair, Steve Owiti, following a September 1 request by Finance executive George Okong’o.
Nyong'o's administration sought an overdraft of Sh400 million from KCB to pay wages because of the delayed disbursement of funds from the National Treasury. The loan will attract 0.5 per cent interest every month after a 30-day interest-free period.
In a letter addressed to assembly speaker Elisha Oraro through county secretary Godfrey Kigochi, Okong'o said late payment of salaries has led to strikes by the workers, especially in the health sector.
“To address this problem, the county government has concluded negotiation with a leading commercial bank for provision of a short-term credit facility by the bank to pay all staff salaries by a specific date of the month, despite the unavailability of exchequer releases,” the letter reads.
Okong'o said the administration estimates that except for occasional cases, the county will pay the loan within 30 days. This would mean no interest accrues.
In another letter on September 3, the Finance executive said the facility will only be used to pay salaries on time when disbursements from the National Treasury are delayed.
“As such, the approval sought from the assembly is to be limited to the gross payroll value and restricted to cash flows for salaries payment only,” he said.
The MCAs said the deal will address the challenges brought about by delayed salary payments. East Seme MCA Seth Okumu said it will bring an end to frequent strikes by health workers over salaries so they can focus on saving lives.
Speaker Oraro directed that the Hansard report be made to the executive to give them the go-ahead for the deal.
(edited by o. owino)
