The Kenya Revenue Authority (KRA) is at the centre of a dubious revenue collection system at City Hall, Nairobi County, that is shrouded in mystery.
The national tax authority introduced Nairobi Revenue System (NRS), an electronic module, to collect revenue for the defunct Nairobi Metropolitan Services (NMS) on behalf of the county government.
Last week, Nairobi County Assembly Committee on ICT was told the NRS module is not gazetted, a requirement for such electronic systems to be offered as solutions.
“Soon as the committee raised the matter, I consulted with the County Director of Revenue and realized that NRS was not gazetted”, Chief Officer Finance, Joseph Gathiaka told the Committee.
He added: “It was a big oversight but we shall look into how we can correct that anomaly”.
The House committee wondered why City Hall uses vendors to collect revenue yet the county government had invested over Sh1.2 billion in a data centre funded by the World Bank, with modern ICT equipment.
However, investigations by The Informer established that the World Bank data center is yet to be functional despite illegal payment amounting to Sh89million made to Copy Cat Group with the help of Nairobi County ICT department officials to oeprationalise the multi-billion project.
Copy Cat Group is said to have received the irregular payment for alleged supply and installation of smartnet licenses to operationalise the multi-billion World Bank funded data centre but ended up supplying nothing despite gobbling up colossal amounts of money from the public coffers.
Initially, the Sh890million tender was awarded to Techno Brain Kenya Limited but a petition was filed to Public Procurement Regulatory Authority (PPRA) after the evaluation committee forged the tender document to and raised mobilisation fee payable to the vendor from the requisite 20 per cent to 30 per cent.
Effectively, Copy Cat Group was paid for an already awarded tender and paid for not work done.
Fellow tenderers who participated in the bid filed the petition after discovering substantive tender document had been altered.
The data centre has been lying idle since it was launched by President Uhuru Kenyatta in 2017 for lack of smart network license and visualisation software to make it operational.
Investigations by The Informer established that Copy Cat Group received the payout for work not done.
Instead, currently, the county is still relying on the Nairobi Revenue Services (NRS) system to run county functions including revenue collection owned and operated by National Bank of Kenya (NBK) alongside the Kenya Revenue Authority (KRA).
The lucrative contract was to enable the county government have its own Enterprise Resource Planning (ERP) to support all operations including revenue collection.
Further, the evaluation committee is said to have demanded kickbacks to a tune of Sh40million to award Techno Brain the contract and benchmarking trips fully paid up by Techno Brain to Ethiopia, Botswana and Namibia.
One of the beneficiaries is said to have bought a house in Kitengela, a new vehicle and a hotel using the loot.
These revelations surfaced when the acting County Executive Committee Member for Finance Lawrence Wambua, his ICT counterpart Newton Munene and top officials from the two sectors appeared before the House committee on November 30, 2022.
The NMS contracted KRA as the principal revenue collector when it took charge of some key functions of Nairobi county government that were transferred to the National Government for two years, in a deal spearhead by retired President Uhuru Kenyatta to improve service delivery.
However, the county officials failed to disclose how much revenue the system modules in use were collecting and the projected collections.
They also technically evaded any blame regarding the NRS module saying they inherited it from the NMS.
“The governor is aware about this revenue system because he was taken through by KRA and he thought it was good enough for our collection process”, Wambua said.
The Committee chaired by Kawangware Member of the County Assembly (MCA) Fredrick Njogu is interrogating authenticity of the NRS module that was used by KRA to collect revenue for NMS.
It also seeks to establish how much revenue the system had collected progressively while under the NMS regime and currently under the county government, plus its projected daily collections.
But senior officials from the County Treasury and the ICT sector told the Committee they do not know where servers for Nairobi Revenue System were being hosted.
The lengthy session was treated to a light moment when Munene, the ICT Executive Committee Member, said the NRS servers were hosted in the cloud.
“Chief Officer, where are the system servers?”. The committee chairman quipped.
“The servers are hosted by either KRA or the National Government but we do not know exactly where. In a meeting held in September (2022), we asked that question and we were told the servers are hosted in the cloud.” Munene responded.
One Wamae, an officer from KRA was mentioned as the system administrator for the NRS module.
The county legislators questioned whether user contracts for the NRS module were signed, about CR12 documentation regarding details of the company directors and authenticity of the revenue collection system.
Kileleshwa MCA Robert Alai, a member of the ICT Committee, unleashed a salvo when he asked Wambua to confirm whether the NRS module being used by the Nairobi County government was gazetted as a revenue solution.
Alai put it to the county Finance minister that for any solution to be offered by the National or County government, it must be gazetted.
Interestingly, however, the NMS whose two year – term lapsed after the August 9, 2022 General Election has already handed over to the county government all functions which had been transferred.
Wambua said before KRA came on board, the county government used the Local Authority Integrated Financial Operations Management System (LAIFOMS), Jambo Pay and NBK for revenue collection.
The Committee heard that currently, the county government was rebranding to Nairobi Pay as the new module for revenue collection.
Munene told the committee the county officers are unable to determine the capacity of NRS solution because they cannot see the back end of the system since KRA still controlled the servers.
The NRS was initially introduced in Nairobi county as a pilot project on the understanding that it would be rolled out to the rest of the counties, the committee was told.
“To customize our needs, we have been given a leeway to give our unique needs which are not in other counties”, said Gathiaka.
In a warning shot, Kangemi MCA Hamisi Maleya noted that if the Executive and the County Assembly do not start on the right footing, the county government was bound to fail Nairobi residents in terms of anticipated service delivery.
The Committee has directed the county executive to table contract documents for all vendors dealing with automation and digitization of revenue collection.
It has also summoned Kenya Revenue Authority to shed light on the NRS servers among other concerns raised by Members about the revenue module.