MCAs' mortgages and car loans cost counties Sh4bn

Politics and policy

Controller of Budget Agnes Odhiambo. PHOTO | FILE | NATION MEDIA GROUP 

By BD REPORTER

In Summary

• Attention now shifts to the MCAs ability to service the huge loans given their salaries and allowances, which are currently estimated at Sh220,000 per month.

Members of County Assemblies (MCAs) in 31 counties have borrowed cheap car loans and mortgages worth Sh4 billion in four months to June. The ward representatives have access to a Sh3 million mortgage and a Sh2 million car loan, meaning that the counties need to allocate Sh12.6 billion to cater for the 2,526 MCAs.

“A further Sh4 billion was issued to the MCAs for the car loans and mortgages which attract an interest of three per cent as per the SRC circular,” Controller of Budget Agnes Odhiambo says in her latest review of how the county government spent its money in the past financial year.

Bungoma representatives borrowed the highest amount at Sh315 million. This means its Sh5 million short of exhausting the Sh320 million set aside for the county’s 64 MCAs. Other top borrowers and where all representatives have borrowed the maximum Sh5 million are Kisumu (Sh250 million), Uasin Gishu (Sh225 million) and Vihiga (Sh200 million).

READ: Which MCAs got Sh235,000 each for meetings?

Nairobi needed to allocate Sh640 million, but its 128 ward representatives had borrowed Sh254 million in the three months to June. At three per cent per annum, the car loans and mortgages are priced lower than the prevailing commercial lending rates of about 16 per cent.

READ: Kisumu MCAs get more funds than health

The car loan and mortgage are among the terms of return-to-work formula that the ward representatives struck with the Salaries and Remuneration Commission to resume duties last November after a strike.

The MCAs cited the generous MPs’ pay package that includes Sh20 million mortgage, a Sh7 million car loan and a Sh5 million car grant. President Uhuru Kenyatta said the ward representatives push for car grant similar to the MPs’ was valid given that they like the legislators serve the interests of Kenyans and should be treated equally.

But the SRC maintains that the MCAs will not be offered grants but loans. Some counties have struck deals with banks to manage car and mortgage schemes while others have opted for internal schemes.

Attention now shifts to the MCAs ability to service the huge loans given their salaries and allowances, which are currently estimated at Sh220,000 per month.

An MCA who takes a maximum Sh5 million for a car loan and mortgage will be required to pay back Sh124,168 per month during the repayment period tied to the five- year election cycle. This is in breach of the rule that requires workers to take home at least a third of their gross salaries. But the MCAs are using sitting and travel allowances to boost their pay.

The Controller of Budget report shows the ward representatives blew Sh2.4 billion on sitting allowances and Sh3.7 billion on foreign and domestic travel in the period to June.

Uasin Gishu MCAs received the highest amount in sitting allowances with each representative on average earning Sh235, 743 per month. Other top earners are from Trans Nzoia (Sh172, 445), Migori (Sh161, 029), Busia (Sh143, 810) and Wajir (Sh137, 779).

Many Kenyans view elected representatives, including MPs, as greedy opportunists who seek public office for personal gain in a country besets with unemployment rate of about 40 per cent.

But the leaders argue that they need the high compensation because constituents expect them to provide charitable support.