Mudavadi defends Sh80 billion Ruto-Sakaja cooperation deal

Prime Cabinet Secretary Musalia Mudavadi has defended the Sh80 billion cooperation agreement between the national government and Nairobi County Government, terming it a lawful and constitutionally grounded framework aimed at sorting out some of the challenges the city faces.

Mudavadi told the Senate Devolution and Intergovernmental Relations Committee, chaired by Wajir Senator Sheikh Abbass, that the agreement preserves the constitutional allocation of functions while enhancing the capacity of both levels of government to deliver critical services to the residents of Nairobi City.

He said the government remains committed to ensuring that its implementation results in tangible improvements in service delivery, infrastructure development and overall quality of life within the capital.

“Nairobi County is unique; it is the face of Kenya and the economic and diplomatic hub of Eastern Africa. A special, lawful arrangement of the present nature is not only appropriate but essential. It respects every letter of the Constitution while providing our capital city with the structured national partnership it needs to fulfil its unique responsibilities," said Mudavadi. 

He said the package outlines a wide range of priority projects aimed at improving service delivery across the capital, with key allocations including Sh3.7 billion for the installation of approximately 50,000 street lights, Sh1.5 billion for electricity connections in informal settlements. 

The project includes Sh3.3 billion for settlement upgrading through prepaid metering, transformers, and lighting. The plan also sets aside Sh2.1 billion to boost water supply in areas such as Ng’ethu, Gigiri, and Shauri Moyo, alongside Sh33 billion for major sanitation and sewer infrastructure, including expansion works and a new treatment plant.

“Further investments include Sh8.7 billion for roads, bridges and drainage improvements and Sh6 billion for enhanced solid waste management systems. A major highlight is the Sh50 billion earmarked for the Nairobi River regeneration programme, targeting restoration of the river corridor and surrounding infrastructure,” said Mudavadi.

He pointed out key projects already outlined under the agreement, including a major allocation of over Sh25 billion for drainage improvements to address perennial flooding, as well as enhanced street lighting and widespread road recarpeting down to the ward level.

Mudavadi said plans are underway to enhance urban security with the establishment of a Nairobi Metropolitan Police Unit expected within 60 days, stating that this cooperation will address both current and long-standing issues, including drainage along the Nairobi River.

The Prime Cabinet Secretary said that all interventions in respect of Nairobi Metropolitan Services pending bills amounting to Sh14 billion are being undertaken within existing legal mandates and do not arise from any transfer of functions under the Cooperation Agreement.

“As per the Auditor-General’s report for the financial year 2021-22, the Nairobi Metropolitan Services recorded pending bills amounting to Sh14.8 billion. These comprised Sh553 million for the financial year 2018-19, Sh267 million for the financial year 2019-20, Sh1.3 billion for the financial year 2020-21, and Sh12.6 billion for the financial year 2021-22, respectively,” said Mudavadi.

He said the National Treasury has put in place settlement options to clear claims recommended by the Pending Bills Verification Committee across all sectors. The recommended pending bills relating to the defunct Nairobi Metropolitan Services form part of the bills earmarked for settlement under this arrangement.

Mudavadi said that this will require the National Treasury to create a fiscal space of the entire amount of Sh155.3 billion to be factored in the fiscal year 2025/2026, with this straining the already strained fiscal framework and may affect ongoing priority Government programmes or increase the fiscal deficit to above 5.0 per cent. 

“This will require the National Treasury to weigh the available options for securitisation of the entire amount either through issuance of Government Bond or Treasury Bills for the entire amount of Sh155.3 billion,” said Mudavadi.

 He said this will not be popular with Micro and Small Enterprises, who require the resources now to settle pressing matters such as bank loan facilities and immediate family needs; however, it can be done for Medium Enterprises and well-established corporations/companies with pending bills arrears of above Sh50 million.