The administration of Johnson Sakaja has secured approval from the Nairobi City County Assembly to borrow up to Sh1.7 billion every month to ensure salaries for more than 19,000 county employees are paid on time.
Members of the County Assembly backed the plan after reviewing a Memorandum of Understanding (MOU) signed between the Nairobi City County Government and Sidian Bank, which will provide short-term financing whenever the county faces cash flow challenges.
The arrangement is meant to cushion the county from delays in funds from the national government or periods when locally collected revenue falls short.
According to Budget and Finance Committee chairperson Wilfred Odalo, the committee scrutinised the agreement before approving it to ensure the county maintains uninterrupted operations while safeguarding the welfare of its workers.
Under the deal, Sidian Bank will allow the county to access a monthly loan facility of up to Sh1.7 billion, which will primarily be used to cover salary obligations for county staff.
However, the facility comes with conditions. The bank will charge a 0.5 per cent fee if the borrowed funds are not repaid within 60 days.
Minority Leader Anthony Kiragu said the arrangement will help keep county services running smoothly by preventing the salary delays that have occasionally disrupted operations.
County officials revealed that Sidian Bank was selected for the arrangement after two other financial institutions withdrew from negotiations, citing higher charges for similar lending terms.
With the approval now in place, the county government is expected to use the credit facility to bridge financial gaps and ensure workers continue receiving their pay without interruption.
