The Nakuru government risks losing more than Sh8 billion to debtors due to failure by the county to enforce revenue collections, a report has shown.
In addition, the county loses millions of shillings annually because of its failure to maximise revenue collection in some streams and its continued use of an outdated valuation roll.
Coupled with erratic releases by the Treasury, Nakuru’s revenue has shrunk, landing it in a Sh1.35 billion hole with Sh1.01 billion stalled projects.
The revelations are contained in Auditor General Nancy Gathungu’s audit report for the Nakuru county executive for the 2020-21 financial year.
The report tabled in the Senate late last year reads that property owners owe the county Sh6.99 billion in land rates accumulated for several years.
“The management has not provided evidence to indicate effort being made to recover the outstanding amount, which is contrary to Section 157(2) of the Public Finance Management Act, 2012,” the report read.
Further, the county has failed to put in place compliance mechanisms to collect more than Sh439.75 million owed by tenants residing in its houses.
Nakuru, the report shows, has also failed to repossess 90 houses from the National Housing Corporation in Molo to increase its income.
The houses, which generate Sh741,132 in rent every month, are being managed by the Corporation after the county failed to pay a debt of Sh30.46 million.
The loan was taken by the defunct local authorities.
“No efforts have been made by the county government to take charge of these houses and recover the long outstanding rent,” the report adds.
Gathungu further said the county has failed to collect Sh2.84 million owed by traders for use of markets and trade centres.
“There was no evidence of the measures put in place by the management to enforce collection,” the report shows.
Nakuru also loses million in land rates due to failure to develop and implement a new valuation roll.
This is despite the county incurring Sh50.59 million for a contractor to develop a new roll that would have seen its revenue grow.
“The current valuation roll used for billing the plot owners expired in 2015 and ha not been updated with the new land subdivisions,” Gathungu said.
“Information available indicates that the new valuation roll had been finalised, there was no indication the county has started making use of it."
In what further denied the county much-needed revenue, Nakuru has also failed to maximise its revenue collection in some key streams.
For instance, the county has failed to gazette already identified prime parking places and painting and demarcating them for use by motorists and for generation of revenue.
The county is also not charging parking fees in some subcounties.
The revelations have affected the county’s financial health at a time when the National Treasury has delay releasing funds.
The report, for instance, shows the county received Sh890.47 million from the Treasury in July 2021. The funds were meant for the previous fiscal year.
The fall in revenue has had far-reaching effects, as the county has accumulated Sh.1.35 billion in pending bills.
The debt includes Sh781.29 million incurred by the county and Sh575.75 million debt inherited from the defunct authorities.
Further, completion of projects worth Sh2.02 billion has been delayed, due to suspected financial challenges as the county had not paid Sh1.11 billion, even though the contract periods have expired.
“Consequently, it could not be established when these projects shall be completed to enable the residents of Nakuru to enjoy better public goods and services,” according to the report.
Gathungu also revealed that other projects worth Sh1.05 billion have either stalled, were incomplete or stopped due to disputes or had not been handed over.
