The Kenyatta International Convention Centre in Nairobi. A contractor is yet to be paid Sh350 million three years after renovations.
Contractors in the 2023 controversial Sh1.9 billion Kenyatta International Convention Centre (KICC) renovations are still owed Sh350 million, close to two years since the completion of the project, the State facility has said.
However, this is not an isolated case as it is proving to be a dog’s life for most contractors and suppliers who do business with both the national and county governments.
Suicide cases have been reported by families of suppliers and contractors who are owed by both the national and county governments as they come under pressure from lenders while those who weather the storm opt to close their businesses.
Appearing before the Senate National Cohesion and Regional Integration Committee on Monday, KICC Chief Executive Officer James Mwaura said they are still waiting for the amount from the Tourism Promotion Fund (TPF), which funded the renovations.
Mr Mwaura said TPF is still clearing the outstanding debt which currently stands at Sh350 million.
He further clarified that the renovations cost only Sh1.9 billion as opposed to reports that the project cost was inflated to a whopping Sh3.2 billion.
James Mwaura has been appointed the CEO of KICC effective 26th March 2024.
“The KICC renovations cost Sh1.98 billion and the funds were from the Tourism Promotion Fund. We are still getting money from the Fund to settle the cost and Sh350 million is still remaining,” said Mr Mwaura.
Last year, MPs launched investigations into claims that the government spent Sh3.2 billion to renovate KICC despite only Sh1.9 billion being approved by Parliament ahead of the Africa Climate Change Summit in September 2023.
The renovations, he said, was a total overhaul of the facility which involved the refurbishment of various conference rooms, hallways, pavements, and flower gardens.
However, controversy rocked the project with some 14 local sub-contractors complaining that they were owed some Sh674.6 million despite undertaking more than 80 percent of the works that were being supervised by the Kenya Defence Forces.
This was despite Sh1.25 billion being disbursed to the Ministry of Defence for payment to the main contractor, Chinese’s China Wu Yi.
As of September 2024, the national government owed suppliers and contractors more than Sh528 billion but that has grown to Sh664.7 billion.
State corporations owed the highest amount at Sh410 billion while ministries and state departments had not paid Sh118 billion.
The corporations' pending bills included payment to contractors and projects, suppliers, unremitted statutory and other deductions, and pension arrears.
In what could spell more doom to the contractors and suppliers, a pending bills verification committee chaired by former Auditor-General Edward Ouko has raised questions over Sh268 billion worth of bills it received for payment by the national government over lack of proper documentation.
No documentation
According to a preliminary report tabled before the National Assembly, part of the Sh268 billion pending bills lack documentation while some their papers are not in order hence cannot be paid.
The verification committee only cleared for payment of Sh206 billion of the bills so far verified after analysing only 48 percent of the Bills presented to it.
Small businesses that have been struggling with cash shortages owing to the outstanding debts owed to them.
The nightmare also extends to counties with the increasing burden of pending bills in counties has also reached alarming levels with outstanding debt owed to contractors and suppliers hitting Sh194 billion as of September 2024.
This marked an increase of close to Sh13 billion in a record three months with the figure at the end of the financial year ending June 30, 2024 standing at Sh181.9 billion.
At the close of the financial year ending June 30, 2023, the pending bills stock for counties was at Sh164.76 billion.
Nairobi County leads other counties with the lion’s share of the pending bills stock with Sh121.1 billion, representing 62.4 percent of the entire stock of pending bills, as of September 2024.
This is despite the National Treasury issuing circulars that pending bills should be treated as a first charge in the subsequent fiscal year’s budget.
Last year, President Ruto promised prompt payment of all pending government bills to micro, small and medium businesses to stir the overall economic growth.
The pending bills are both current and historical ones dating back to more than 10 years. The Bills are categorised as either goods, services, works, employee-related, court award, legal representation, on lent loans and human-wildlife related ones.
Meanwhile, the committee led by Marsabit Senator Mohamed Chute also sought to know why the KICC management allowed the painting of the historical building to have different colours.
“Can a client be allowed to interfere with the original paint of the historical building? The mess that was done by the military is terrible,” said Busia Senator Okiya Omtatah.
However, Mr Mwaura clarified that the State Corporation allows clients to foot such renovations to suit their taste, adding that the client in this case was the government that sought the renovation to host the Summit.
“Africa Climate Change Summit had some specifications of what they wanted. In this case, it was the government that was the client. We could not refuse and the renovation was done by the military,” said Mr Mwaura.
The KICC boss told the committee that although the facility only makes Sh200 million in profits after tax from the more than Sh1 billion in revenue annually.
He, however, said the premier conference facility has the capacity to make more than Sh700 million per year in profits.
Mr Mwaura defended the profit numbers following questions from senators, arguing that there are no State facilities’ making such profits.
“How many State facilities make such profits? We are funded from trading activities as we don’t receive any funding from the Exchequer. The money is informed partly by renovations done as we are now fully booked all year round and also holding global functions,” he said.
In order for KICC to meet its full potential in revenue growth, Mr Mwaura told the senators that they are in the process of installing Dancing Fountains which will reinforce KICC’s commitment to offering world-class experiences.
According to the KICC boss, the fountains will be designed with cutting-edge technology, advanced robotics and artificial intelligence, enabling the water jets to move in perfect harmony with traditional and contemporary Kenyan music.
“The fountains will attract both local and international visitors and boost Nairobi’s profile as a global tourism and conference destination,” charged Mr Mwaura.
He further explained that the aim of the project is to provide an exceptional experience for delegates attending conferences, exhibitions, and corporate events, serving as an additional attraction, and offering a visually stunning and culturally immersive experience.
“The KICC tower is set to be transformed into a digital advertising platform, providing businesses with a high-visibility space to highlight their brands.”
