Nairobi County Assembly has cleared City Hall to borrow up to Sh1.7 billion each month from Sidian Bank to ensure timely payment of salaries for its more than 19,000 employees.
The arrangement aims to shield the county from delays caused by late disbursements from the national government or shortfalls in local revenue collection. Officials said the facility would also help maintain uninterrupted delivery of services to residents.
The proposal was reviewed by the Finance, Budget and Appropriations Committee, which tabled its report to the House under Standing Order 205. Committee chairperson Wilfred Odalo said the facility is designed to keep county operations running smoothly and guarantee that workers are paid on time.
“We evaluated the proposal, and to ensure that county government workers are paid and that services continue to be delivered, we have approved this deal,”Odalo said.
Under the terms of the MoU, City Hall can access up to Sh1.7 billion every month for salary payments, while Sidian Bank will charge a 0.5 per cent late payment fee on any amount outstanding 60 days past its due date.
Minority Leader Anthony Kiragu welcomed the approval, noting that the deal will stabilise county operations.
“This agreement will allow the county’s operations to run smoothly. We have scrutinised the figures for the past four months and realised that everything is in line with the law and requirements,” he said.
County officials explained that Sidian Bank was selected after discarding two other banks whose fees were considered high. The approval comes months after Nairobi moved its main banking services to Sidian Bank, a shift that had raised concerns among some MCAs about transparency and the timing of the payroll financing plan.
Beyond payroll support, the bank will also manage revenue collection, the Facility Improvement Fund through fee-free ledger accounts linked to mobile payments, and donor-funded project accounts without additional ledger fees.
However, the committee noted gaps in the information provided, particularly regarding the cost of payroll services under the new arrangement.
“While the committee appreciated this positive development, it could not ascertain the cost of the payroll services, nor determine whether the previous bank was charging higher interest rates for repayments, or if these costs were due to delays in payments,” the report stated.
The committee also referenced a similar arrangement during the Second Assembly with Cooperative Bank, which imposed a 0.5 per cent late payment fee for any outstanding amount after 30 days, highlighting continuity in the county’s approach to payroll financing.
