Building and construction are turning out to be the anchor of Nairobi’s economy, with a report showing the sector as the leading source of revenue for City Hall.
Controller of Budget’s latest report for the first quarter of the financial year shows that the county generated 22 per cent of its own source revenue from the fees paid from building permits and inspections.
This was the highest source of the county taxes, overtaking parking, which was traditionally the leading source of local generated revenue for the city.
The report shows that in the three months ending September 2024, the devolved administration collected Sh484 million from the subsector.
“The highest revenue stream, Sh484.39 million, was from plans and inspections (building permits), which contributed 22 per cent of the total OSR receipts during the reporting period,” the report stated.
Parking fees, which brought in Sh434 million, is the second highest revenue source at 20 per cent.
The county’s total revenue so far amounts to Sh2.26 billion generated from its own sources for the Financial Year 2024-2025.
The rise in building permits revenue, an 86 per cent increase from Sh260.5 million in the same period in 2023, is attributed largely by the national government’s push for affordable housing as well as Chinese private developers in areas like Kilimani and Hurlingham.
Other sources of revenue included unified business permits, which generated Sh275.81 million and fees from hospital and other health facilities, amounting to Sh382 million.
Overall, the report shows that the Sakaja administration continues to beat its targets in own source revenue collection, giving hopes that it could attain the Sh20 billion mark for the financial year.
“During the first quarter of FY 2024/25, the county generated Sh2.26 billion from its sources of revenue, including Appropriation In Aid and Facilities Improvement Financing.
"This amount was an increase of 31 per cent compared to Sh1.72 billion realised in a similar period in FY 2023/24 and was 11 per cent of the annual target and 133 per cent of the equitable revenue share disbursed,” the report says.
However, the county is struggling with settling pending bills to suppliers, thereby tying up traders’ cash in county debts. While some efforts have been made, they are largely a drop in the ocean, the report states.
The county reported pending bills amounting to Sh121.78 billion as of June 30, 2024, comprising pending payments by the county executive and the county assembly.
“The County Executive’s pending bills consist of Sh115.95 billion for recurrent expenditures and Sh5.31 billion for development expenditures. In the reporting period, the county executive settled pending bills amounting to Sh175.37 million for recurrent expenditures, while the county assembly settled recurrent pending bills worth Sh31.73 million. Therefore, the outstanding bills were Sh121.57 billion as of September 30, 2024"
This comes in the wake of concern by city residents of lack of transparency in the issuance of building permits, with developers allowed to put up skyscrapers in a poorly planned manner.
The concern was sparked last year by instances of collapsed buildings.
MCAs and activists have been demanding reform in the issuance of building permits and the oversight of construction in Nairobi.
The Urban Planning Technical Committee was on the MCAs’ radar over alleged irregularities in issuing approvals.
The County Assembly Sub-Committee on Planning chaired by nominated MCA Nasra Nanda claimed that permits were issued to developers without the input of authorities that are mandated to do the work.
The panel’s investigation unearthed that on March 8, 2024, governor Johnson Sakaja led a meeting where 154 building plans were discussed and 131 approved.
The committee declared the approvals illegal as they
were not sanctioned in the governor’s office, a function
that should be overseen by the CEC responsible for
urban planning
