Salary delays will no longer be a headache for Nairobi County staff once an MoU between Nairobi County Government and Cooperative Bank comes into effect.
To end the unexpected delays, City hall has entered into an agreement with the Cooperative Bank of Kenya to provide payroll support services on a need basis.
This is according to a report by the county assembly Finance, Budget and Appropriation Committee on the MoU that was adopted by the house on Tuesday.
“…the agreement is meant to ensure timely payment of salaries to public and state officers serving within the rank and file of the County government. In line with the signed documents, the authority of the county assembly is required before rolling out the memorandum,” reads the report in part.
The committee’s chairperson Robert Mbatia told the Star on Thursday that with the MoU, it means that in case of salary delays, City Hall will be able to borrow funds from the Cooperative Bank to go towards payments of the workers’ dues at no extra cost.
He pointed out that due to a delay in the payment of salaries for the month of July which was occasioned by a delay in upload of the budget for the Financial Year 2021-22, City hall opted to enrol services of the bank.
“We have been having salary delays, especially in the months of July and August since we have to wait for the budget to be uploaded,” Mbatia said.
“With the MoU in place, County staff, MCAs and assembly staff will not be inconvenient when there is a delay between the Controller of Budget and the Treasury. As long as money will be reimbursed, the bank will give us the funds.”
As highlighted in the agreement, funds borrowed will be repaid monthly and that the bank shall charge a 0.5 per cent late payment fee for any amounts that shall remain outstanding after 30 days from the due date of settlement.
The MoU on payroll support services details has a tenure of 24 months and shall also be renewed automatically unless terminated by either party.
However, it restricts the county from going into another agreement with another bank for the same purpose, for the period stated.
As per the MoU, the county government is to ensure that they settle the payments by the 10th of the subsequent month and no payroll shall be processed before the settlement of the last account to the bank.
The bank shall however seek exceptional support through a formal request for the start of financial year exchequer disbursement delays especially around the month of July and August when the Integrated Financial Management Information System (Ifmis)is usually locked for new budget loading.
“City Hall should inform the bank within seven days of any actual or threatened stoppage of funds by the controller of Budget, Parliament or CBK or of any other threat or material changes that will affect the actualization of the operations of this agreement,” reads the document.
On the other side, the Cooperative bank will be required to open the salary processing account in the nearest county headquarters that will be designated as the domicile branch for the account.
It will also receive the payment from the County Executive for Finance and submit the same to the payroll account held at the bank.
“Cooperative Bank will also collect and verify payroll details submitted by the county Government as well as receive payroll and approvals from the CEC finance, together with a confirmation that a request for transfer of funds has been requested from the Central Bank of Kenya (CBK),” reads the document.
Having received and confirmed all the necessities needed, the bank will process the employees’ salaries by debiting the designated payroll account and crediting their accounts as provided in the payroll within three days.
The bank will also be obligated to share the payment report with CEC finance and thereafter submit the monthly statement to the county with the information on total transactions received and processed during this month.