Home Business Kilifi County terminates Ksh 300M revenue collection contract

Kilifi County terminates Ksh 300M revenue collection contract

Kilifi County Governor Gideon Mungaro

Governor Gideon Mung’aro has terminated a Ksh 300 million revenue collection contract Kilifi County signed with Rain Drop Limited in 2014.

The firm was awarded the contract to collect local revenues on behalf of the county for a period of fifteen years by former governor Amason Kingi’s administration.

Kilifi County government has now acquired a new automated revenue collection system at a cost of Ksh 130 million which Mung’aro says will boost collections and curb revenue leakages.

Mung’aro questioned the motive behind awarding Rain Drop Limited a tender for a period of 15 years yet a governor’s term is limited to ten years.

In June this year, revenue collection in the county hit Ksh 1.1 billion with Mung’aro saying that his target was to collect Ksh 2.5 billion this financial year.

In an open tender dated March this year, Mung’aro’s administration advertised a tender inviting bidders to design, supply, implement, test, and commission and maintain the Integrated Revenue Collection and Management Solutions.

“The County Government of Kilifi invites interested and eligible suppliers to submit their bids for Request for Proposal for Design, Supply, Implementation, Testing, Commissioning, and Maintenance of an Interrelated Revenue Collection and Management Solution through request for proposal for the financial year 2022/2023. Completed tender documents should be uploaded to GOK IFMIS TENDER PORTAL supplier.treasury.go.ke on or before 24th March 2023 at 10.30 AM,” read part of the tender document.

The governor also revamped the county inspectorate by equipping it with new vehicles and motorcycles for revenue collection.

In 2015, Kingi’s administration tried to terminate the deal, a move that attracted a legal battle that is still pending in court to date.

Kilifi North MP Owen Baya who was then the County Secretary claimed in a letter of termination to the firm that the firm had failed to automate the revenue collection system as per the contract.

He had accused the firm of failing to erect weighbridges and automated systems for revenue collection and also failed to provide automated systems for parking fees.

“This is to notify you of the termination of the above referenced agreement on the grounds that you have substantially failed to achieve the milestone envisaged in the contract as at the long stop date of 4th January 2015,” read part of the letter.

The letter attracted condemnation from the firm led by its Chief Executive Officer Shaib Hamisi Mgandi who termed the move as illegal and against the law. The company had entered a 15 year revenue collection deal on two revenue streams that included cess and parking fees.

The company had erected five modern and automated weighbridges and was in the process of building seven others across the county. It had also procured 200 pay system gadgets that reflected real time at the Kilifi Finance office and the Rain Drops Limited computers once a client had paid for either cess or parking.

He said that his company took over the collection of cess and parking revenue at a time when the County was collecting a paltry Ksh 3 million from the two revenue streams every month but with their involvement the collections climbed to Ksh 37 million per month.

He further said that his company has an operational contract of fifteen years starting 2013 and they collected Ksh 444 million in the first year of operation compared to what the county was collecting Ksh 36 million for the two streams.

Shaib also said that his company has invested Ksh 200 million in modern ICT systems and weighbridges that reflect immediately revenue is paid and that if it were not for the constant disruption then the company could have been collecting Ksh 50 million every month.

Kingi told journalists in 2016 that at the advent of devolution his administration inherited a very leaking revenue system as a result of manual revenue collection systems by five defunct local authorities.

“There was no automation and everything was being done in a manual way and therefore there were revenue leakages,” he said.

Kingi said that to curb leakages and to ensure improved revenue collection earnings, the systems had to be automated and that the investment needed was heavy and expensive in terms of hardware and software and Rain Drops Company Limited was contracted to deal with the automation of Cess and parking streams.

“Cess collection is charged on tonnage and we had to get the equipment to weigh vehicles but the county had no capacity and decided to outsource the two streams and this has improved collections,” he said.

Dash boards monitoring revenue collection in the two streams were mounted in selected County offices and officers could monitor progress in real time.

“If a lorry has mounted let’s say at Jaribuni weigh bridge and a ticket is issued it will show real time at the dashboard in my office and this seals the temptation of anyone trying to be smart to steal from the County government,” he said.

The Ethics and Anti-Corruption Commission (EACC) has since launched investigations into various allegations of corruption in the county touching on revenue collection.

It is investigating claims of embezzlement and misappropriation of funds and procurement irregularities in the tender for a revenue collection management system.

In a letter to the county, EACC Coast Regional Manager Ben Murei said that the tender was a scheme to misappropriate funds through the purchase of a system and payment of exorbitant commissions for revenue collected.