Senate probe exposes Sh2.1bn risk in Kilifi revenue deal

A disputed 2014 revenue collection arrangement in Kilifi County has come under fresh Senate questioning, with lawmakers warning that the long-running deal could expose the county to a Sh2.1 billion compensation burden amid claims of weak controls, heavy commissions and disputed payments to a private firm.

Kilifi County is now at the centre of a Senate review over a revenue automation contract awarded to Raindrops Limited, with concerns that the agreement may trigger a costly payout after years of dispute and legal battles.

The contract, signed on February 20, 2014 and later adjusted on July 4 the same year, gave the firm the task of automating and collecting county revenue such as parking fees and cess for 15 years. Under the arrangement, the company was entitled to 30 per cent of all collected revenue, a share senators described as unusually high compared to similar county deals.

Appearing before the Senate County Public Accounts Committee led by Homa Bay Senator Moses Kajwang’, Kilifi Governor Gideon Mung’aro said the agreement was poorly structured from the beginning and blamed earlier county leadership for locking the county into risk.

“The mistakes were done from day one, including having an escrow account and the percentages given. I hope the responsible people can be brought to book,” Mung’aro said.

Lawmakers are now reviewing findings from Auditor-General Nancy Gathungu for the year ending June 30, 2025, which pointed to irregular and unsupported payments made to the firm over several years.

Mung’aro further told the committee that individuals linked to the deal are still occupying public roles. “Some of the officers who were part of the mess are with you in the Senate, one is a MP and the former county attorney is currently with the Senate too,” he said. The claims have not been tested in court.

Revenue figures under the spotlight

Senators were presented with records showing that in the 2014/2015 financial year, Raindrops Limited collected Sh545.5 million against a target of Sh1 billion. While this marked an improvement of Sh85.92 million from the previous year, the county’s net earnings reduced after deductions.

The firm is reported to have retained about Sh136 million, leaving the county with Sh409.1 million, a lower return than the previous financial year. Lawmakers also questioned why the contract required the county to still cater for 218 employees, even as the private firm earned a large percentage.

Senator Kajwang’ questioned the arrangement, saying: “This contract was badly conceived. How do you agree to give away 30 per cent and still pay salaries for 218 employees?”

Audit concerns and escrow payments

The Auditor-General’s report further highlighted Sh44.35 million paid to the company through monthly deductions of Sh3.69 million from an escrow account held at SBM Bank, formerly Chase Bank.

Senators were told the escrow system allowed the firm to withdraw its share directly, a structure that later became a major point of disagreement between the county and the company.

Senator Kajwang’ raised concerns over the continued payments, saying: “Some of these payments sound like a scam. For how many years has Sh44 million been paid for no visible work?”

Governor Mung’aro defended the payments, stating they were enforced following court intervention after the dispute moved to the High Court. “Payment was done on account of a court order. The court allowed the firm to deduct directly from the escrow account,” he said.

The county ended the contract in February 2015, triggering a legal fight after Raindrops Limited challenged the decision at the High Court in Malindi. On July 9, 2015, Justice Said Chitembwe directed that the dispute be handled through mechanisms set out in the agreement, a ruling that prolonged the matter and later drew in the Ethics and Anti-Corruption Commission.

Ownership questions and calls for audit

Attention also turned to the ownership structure of Raindrops Limited. Business records show Shaib Hamisi Mtuwa as a director, while court documents reference Taib Ali Taib and Benjamin Kai Chilumo.

Nyamira Senator Okong’o Omogeni said the county should have properly verified the company before entering the deal, while Nandi Senator Samson Cherargei described the arrangement as a planned scheme to drain public resources.

“Kilifi County is a crime scene. These people executed a Sh1 billion misadventure,” Cherargei said.

Isiolo Senator Fatuma Dullo pushed for a forensic audit to establish the true owners of the firm and trace how funds were managed under the contract.

The committee resolved to involve the Ethics and Anti-Corruption Commission to probe how payments continued over time despite limited service delivery benefits.

Kajwang’ said: “We must establish how money was paid for years without commensurate service delivery,” as investigations continue.