Nairobi Governor Johnson Sakaja has revealed that national government ministries owe the Nairobi City County Government KSh2.7 billion in outstanding land rates, as the county steps up efforts to recover billions of shillings owed by property owners and public institutions.
Sakaja made the disclosure while appearing before the Senate County Public Investments and Special Funds Committee, where he was questioned about Nairobi’s revenue collection and efforts to strengthen the county’s financial position.
The governor said the KSh2.7 billion debt specifically relates to unpaid rates owed by national government ministries. He added that other public institutions, including police stations, prisons and military barracks, have even larger outstanding obligations to the county.
The revelation places the national government among the significant debtors Nairobi is seeking to pursue as the county intensifies its revenue collection campaign.
Sakaja said the county had already written several letters to ministries that had failed to settle their rates obligations. However, rather than immediately pursuing a confrontational approach, he proposed negotiations between the county and national government to establish what each side owes the other and agree on a settlement mechanism.
He suggested that a meeting involving the Head of Public Service could provide a framework for resolving the outstanding debts.
“The conclusion of the matter is having a meeting with the Head of Public Service at State House, where we see how these monies can be paid, what we as the country owe them and what they owe us,” Sakaja said.
The proposed approach reflects a wider challenge facing relations between national and county governments, particularly where government institutions occupy valuable land and properties within Nairobi but have accumulated rates obligations over several years.
Nairobi targets billions in unpaid rates
The governor’s disclosure comes as Nairobi steps up its efforts to improve its own-source revenue.
Sakaja told the Senate committee that Nairobi has the potential to collect as much as KSh80 billion in own-source revenue if land rates and other revenues are collected effectively. He argued that stronger revenue collection would give the county greater capacity to finance services and development without relying as heavily on transfers from the national government.
The county has consequently adopted more aggressive measures against long-standing defaulters.
The Nairobi Revenue Authority has appointed six specialised debt-recovery firms, with each firm assigned responsibility for revenue recovery within one of the city’s six boroughs. Their mandate includes pursuing outstanding land rates, together with accumulated penalties and interest.
The campaign is not limited to government institutions. Nairobi has also been pursuing private property owners with substantial outstanding rates.
In July, the county launched a wider crackdown on land-rate defaulters, with reports indicating that landlords owed Nairobi more than KSh50 billion in unpaid rates accumulated over the preceding years.
The scale of the arrears highlights the importance of land rates to Nairobi’s finances. With hundreds of thousands of properties across the capital, even relatively small unpaid amounts can accumulate into billions of shillings over time.
Digital revenue collection
Sakaja also defended the Nairobi Revenue Authority’s role in improving collection and reducing leakages.
According to the governor, the authority has helped digitise the collection of 125 revenue streams, reducing reliance on cash payments and making it easier for residents and businesses to transact with the county.
He cited the single business permit as an example of the changes, saying residents can now apply, pay and print the permit online without having to visit City Hall.
Sakaja said Nairobi’s own-source revenue had risen from about KSh8 billion to KSh15.4 billion during his administration.
The county is also operating under the National Rating Act, 2024, which Sakaja identified as an important legal framework for strengthening Nairobi’s revenue base.
The legislation provides a framework for property rating and is expected to support counties in improving the administration and collection of land rates.
Senate pushes for accountability
The Senate committee has indicated that the issue of unpaid rates requires direct engagement with the institutions involved.
Committee chair Taita Taveta Senator Johnes Mwaruma said the relevant institutions should be summoned before the committee to address the outstanding obligations and work towards a lasting solution.
For Nairobi, recovering the KSh2.7 billion owed by ministries would provide an immediate boost to its finances. But the larger issue is whether public institutions can be persuaded to consistently meet their obligations to county governments.
Sakaja has argued that increased compliance is essential if Nairobi is to develop into a globally competitive city.
He compared the capital’s ambitions with major international cities, arguing that residents, businesses and government institutions must all contribute through payment of legally required charges.
The governor’s remarks come as Nairobi prepares to introduce new land rates for 2027. A county notice issued earlier this month stated that the new rates will take effect on January 1, 2027, under the National Rating Act, 2024.
The latest push to recover unpaid rates therefore signals a broader attempt by City Hall to make property taxation a more reliable source of revenue.
For the national government ministries owing KSh2.7 billion, the disclosure puts renewed pressure on them to settle their outstanding obligations. For Nairobi County, recovering the money could mean additional resources for a city facing growing demands for better roads, drainage, waste management, healthcare and other essential services.
The proposed negotiations between the two levels of government may ultimately determine whether the billions in outstanding rates are recovered and how quickly Nairobi can turn its substantial property base into the revenue it needs to run the capital.
