How Nairobi County is losing millions of market revenues

The Nairobi City County government could be losing millions of shillings in annual revenues from city markets, thanks to a mafia-like network calling the shots in the sector, The Nairobian can reveal.

The cash is pocketed by a clique of county officials working in cahoots with brokers through well orchestrated deals. The collusion involves instructions for sidekicks to achieve set levy collection targets.

In most markets, new traders are regularly licenced, but this is never communicated to top bosses in the county. The collection generated ends up in the pockets of some county personnel and their foot-soldiers.

In 2014, the County Assembly Committee on Trade, Tourism and Co-operatives unearthed the malpractices taking place in the markets. The 17-member committee chaired by Roysambu MCA, Peter Warutere, revealed that millions of shillings in revenue from the markets were unaccounted for.

Weekend collections

The committee reported that revenue generated in four weekends from Maasai Market ‘disappeared’ with the knowledge of city officials. The Nairobian has established that this was not an isolated case. As one a source told us, “Cartels control revenue collection from almost all the markets and determine how much to remit to the county government and the amount retained as their share.”

Collections, particularly during weekends, from Wakulima Market (popularly known as Marikiti), City Park, Muthurwa, Toi and City markets and others, line other people’s pockets, while some markets have on several occasions declined to remit cess and rental charges.

In the current financial year ending in June, the county government expects to generate Sh470 million. But in the first quarter between July and September 2014, only Sh84.4 million against a target of Sh117.5 million was raised. This is according to the county’s 2014/2015 Quarterly Report on Revenue and Expenditure.

While the county could be surpassing its financial targets, only a fraction of collections is remitted. In some markets, a section of traders are charged ‘discounted’ rates that are not receipted. This is the nature of the well-coordinated embezzlement scheme.

Traders interviewed in various markets said that though the daily levy is Sh50, they are at times charged Sh30 on condition they do not demand for receipts. That money is ‘eaten’.

“Those running peripheral businesses within the markets are required to make payments. The amount runs into millions of shillings, but is never unaccounted for. We have established that such traders are not included in the county’s revenue base,” a market official who is not authorised to speak on behalf of the county government told The Nairobian.

Though the 90-year Kariokor Market is bustling with all manner of businesses, the county receives revenue from only 206 rental stalls. But the market has other peripheral stalls that account for 2,500 traders. Cess collected from scores of other businesses in and around the facility is unaccounted for, like Burma Market, which is grouped among “other markets” in the 2014/2015 Quarterly Report on Revenue and Expenditure.

Discounted rate deals

Monthly rent for Kariokor stalls ranges from Sh1,800 to Sh3,300. The market is expected to generate at least Sh411,000 monthly. But despite all the spaces being fully occupied, the monthly income from the market is less than Sh330,000.

Traders in the rental stalls claim that the Sh50 collected daily from each of the over 2,000 traders around and outside the market is never remitted. It is likely that some crooked officials are pocketing over Sh3 million monthly from Kariokor Market.

Muthurwa Market’s monthly collection increased from Sh2.3 million in July to Sh3.9 million in September last year. But according to a source, Muthurwa has over 3,000 stalls that should generate revenues in excess of Sh4.5 million monthly. Hundreds others run businesses in the open spaces and peripheries but the city government does not receive even a cent from those collections.

In addition, the market also generates income from the bustling farm and animal produce section. Products brought to Muthurwa attract a charge of between Sh70 and Sh1,000 depending on their mode of transportation to the market. The charge is largely determined by the weight and quantity of the produce. It is believed that the market earns double the amount being recorded monthly.

“Traders and officials are colluding in a discounted rate deal, with the money collected remaining with the city officials,” said an official privy to the illegal schemes.

The committee established that Wakulima Market generated Sh30.4 million in the first quarter of the 2014/15 financial year, against a target of Sh37.5 million. City Park remits a monthly income of Sh500,000, but should actually generate an additional Sh1 million.

The collection from Jogoo Market was Sh514,000. But the 461 stalls in the market should easily net the county government Sh787,000. Warutere said it was also found out that no rent was collected at Kenyatta Market.

Official resistance

From the Tenants Purchase Scheme (TPS) on market rents, the county government hoped to collect Sh25 million quarterly, but netted only Sh22.7 million. Twenty-four of the county’s 45 markets have a total of 6,559 rental slots going for between Sh500 and Sh25,000 monthly.

When issues were raised on alleged misappropriation of funds in regard to the TPS, a senior market superintendent attempted to derail efforts to probe the scheme. He subsequently quit his job.

Rent payments by Burma Market traders were remitted at the TPS office but there was no issuance of receipts. Interestingly, the accounts seemed to have been adjusted and the money seemingly ‘flushed’ off the system. Reportedly, traders at City Park were being issued with receipts meant for City Market, while those in Kangemi and Old Ngara markets apparently refused to remit rent.

Kangemi Market has been a subject of conflict over ownership between the county and private developers. The market allotment letter issued to the defunct City Council of Nairobi by National Lands Commission was purportedly taken by a private developer.

The Nairobian tried reaching the County Trade and Tourism Executive Officer, Ann Othoro, for a comment without success.