Igembe South MP Mithika Linturi has filed a notice of intention to
petition Parliament to start a process that may lead to the removal of
the Serem commission on 10 grounds that “it grossly violated the
Constitution” in reviewing the MPs’ salaries. FILE
Nation Media Group
By EDWIN MUTAI
In Summary
- Treasury may have to add Sh5bn to Parliament’s Sh3bn revolving mortgage fund.
- The House mortgage scheme is financed to the tune of Sh3bn but each of the 349 MPs and 67 Senators is entitled to Sh20 million.
- Parliament’s home loans are repayable at an interest rate of three per cent per annum and must be cleared within five years.
Taxpayers are facing an additional burden
financing the lavish remuneration packages awarded to Members of
Parliament even as the legislators fight to increase their salaries.
It has emerged that the Treasury may have to set
aside additional Sh5 billion to fully finance the mortgage entitlements
for the 418 MPs or more than double the amount that is currently
available.
People familiar with the state of Parliament’s
finances said the House mortgage scheme is financed to the tune of Sh3
billion but each of the 349 MPs and 67 Senators is entitled to Sh20
million, adding up to a total of Sh8.36 billion.
Parliament’s home loans are repayable at an interest rate of three per cent per annum and must be cleared within five years.
Michael Sialai, the senior deputy Clerk of the National Assembly, told the Business Daily
that the parliamentary mortgage scheme, which started in 2002, has
about Sh3 billion but it remains to be seen if it can fully cater to the
MPs’ needs.
“We have about Sh3 billion that operates as a revolving fund,” he said.
Parliament fully finances the MPs mortage scheme
and has been partly recapitalising the fund over the years through the
national budget.
“Unused funds are not returned to the exchequer at
the end of the financial year but is retained for use by other members
who are qualified to benefit from the scheme,” Mr Sialai said.
It is not known what fraction of the 418 MPs will
take up the mortgage loans but the fact that more than three quarters
are new means the applications are likely to be more than the amounts
available.
“Those already owning homes in Nairobi or those
serving their second, third or fourth terms do not need the home loans
easing pressure on the Parliamentary Service Commission,” Mr Sialai
said.
Additional revenue will be generated from the pool
of money from the fully-paid loans that were disbursed to Members of
the 10th Parliament.
Should the demand for loans exceed the Sh3
billion, Parliament will have to ask the Treasury for fresh injection of
funds into the mortgage scheme — adding a fresh financial burden to an
already overstretched exchequer.
The Treasury is facing a herculean task of
balancing a budget whose limits have been significantly extended by the
lavish promises that Jubilee alliance made to the electorate in the
just-concluded election as well as the birth of a new government
structure with 47 devolved units and a bicameral parliament.
A slowdown in revenue collection and slow
disbursement of donor funds have left the government in a tight
financial position forcing it to run on borrowed money that has pushed
the national debt level to half of the GDP.
Higher parliamentary remuneration packages,
including a Sh7 million car loan entitlement, are inconsistent with
President Uhuru Kenyatta’s quest to reduce the public wage bill that
currently stands at 12 per cent of the Gross Domestic Product (GDP)
The situation will get even worse should the MPs succeed in
reversing the recent cut in their salaries to the Sh800,000 per month
that their counterparts in the 10th Parliament earned.
Parliament is also relying on the fact that it
takes four to six months to process a mortgage loan, giving it time to
capitalise the fund.
“It can take between four and six months to
conclude conveyance — including identification of property, charging the
title deed among other approval processes,” Mr Sialai said.
MPs have been agitating for higher pay since
parliament was officially inaugurated on April 16 with the Sarah
Serem-led Salaries and Remuneration Commission (SRC) as their main
target.
The commission early this year nearly halved the
MPs salaries from a high of Sh851,000 that the legislators in the 10th
Parliament earned to Sh543,500.
Igembe South MP Mithika Linturi has filed a notice
of intention to petition Parliament to start a process that will lead
to the removal of the Serem commission on 10 grounds that “it grossly
violated the Constitution” in reviewing the MPs salaries.
The petition is due to be formally introduced to
the House Tuesday afternoon. MPs argue that the reduced salary is not
commensurate to their work and “is too little to meet their needs”
including servicing the mortgage and a Sh7 million car loan.
Mr Sialai said the repayment period for the
mortgage or the car loan, which also attracts a three per cent annual
interest, is too short given the limited time MPs have to pay.
“Most MPs will find that the repayment period is
too short given that the Constitution demands that the next General
Election must be held on the second Tuesday of August every five years,”
Mr Sialai said.
MPs or Senators who take the loan by next month
will have at least four and a half years to pay. The 11th Parliament’s
term will end at least three months to the General Election meaning that
the House will dissolve sometime in May 2017.
“Most will find that the required level of monthly
debt servicing is too high and this could turn into a big
discouragement for the MPs,” Mr Sialai said.
A number of MPs are still undecided whether take the mortgage given the SRC’s decision to slash their salaries.
“How will you take mortgage of Sh20 million on a
salary of Sh542,500? How will you repay it? What an MP takes home after
taxation of the salary is not even enough to meet the repayment amount,”
said Barua Njogu, the Gichugu MP.
It will be virtually impossible for many MPs to own homes in Nairobi
through the mortgage scheme because of the low salaries, he said.
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