possible responses

across national entities or national and county entities, and also the need for high-level political support to set fair compensation for the counties involved.

NCWSC is also a case of disputed assets or a case where several asset and liability claims need clarification, verification, and settlement. Parties involved include NCC, NCWSC, the Ahti Water Service Board (subsequently became defunct), the National Water Regulatory Board, and the Public Debt Management Directorate in the National Treasury. This is also part of the disputed and unfinished handover of assets from national entities that has not yet started and needs to be regulated, guided, and commenced in due course. NCWSC has been taken over by NCC, but there are lots of disputed assets and liabilities between NCC and the water board.

CALC verification and report. NCCG has been the forefront on asset verification and takeover and established the CALC early on and assigned numerous field verification teams to accomplish and support the work in accordance with the legal notices 858, 2701, and 4370. NCCG prepared a vast CALC report (over 600 pages) in a timely manner despite shortages of money, staff, vehicles, and sometimes even fuel for field verification. The field teams have identified large numbers of land parcels and buildings unidentified in the TA report, including capturing all land parcels that host the various water and sewer plants, lines, or other facilities that were missing from the TA report that presumably considered water assets as not under NCC ownership. In short, the NCC CALC report (2017) is a valuable document that supports establishing a reliable asset register in the medium term, even though the report also has remained in draft form, due to circumstances just noted.

Other progressive counties

The county case studies summarized in part II of this book exemplify remarkable progress and pragmatic approaches on county AM in counties much smaller than Nairobi in terms of population, budget, or economic power. Achievements include (1) all seven surveyed counties have appointed teams for AM under finance departments (albeit most with limited focus on accounting aspects); (2) counties ensured uninterrupted provision of key local services by assigning floor managers and also refurbishing and sometimes expanding important facilities such as schools, health facilities, and offices; (3) most surveyed counties have settled overdue staff emoluments in a course of reorganization of staff and human relations; (4) Laikipia and Bomet counties have drafted AM policy documents by emulating the example of Nairobi; and (5) Bomet and Kiambu counties hired qualified companies to verify and revaluate all land parcels in their jurisdictions, and this enables identification and market valuation of land owned by the county.

THE COVID-19 PANDEMIC IMPACTS ON CITIES AND POSSIBLE RESPONSES

The COVID-19 (coronavirus) global pandemic has had unprecedented negative impacts on cities’ and citizens’ livelihoods as well as on economic performance, health, education, and all sorts of life factors. It challenged the management and financial capacities of national and local governments alike (Blake and Wadhwa 2020). Preliminary data show that local governments faced 10–25 percent revenue shortfall, and meanwhile spent 10–15 percent more than planned on current

expenses such as health, education, sanitation, and social assistances (Lall and Wahba 2020; Null, Rubnitz, and Smith 2020). In turn, many radically cut expenditures on development, repairs, and maintenance (EGI 2021; Maria et al. 2020; Kopanyi and Awan 2020).

The negative financial impacts will require several years to correct (Dzigbede, Gehl, Willoughby 2020), especially because the national governments also face shortage of finances, and thus will have moderate capacities to support financial recovery of local governments. The longer the crisis, the deeper the effects on financial capacities, health, and investments of local governments. Therefore, the assets and recovery investments should be approached strategically (IMF 2020). Without recognizing and utilizing the strategic role of assets, Kenyan counties and local governments may accumulate debts and some will be forced into quick sales or face confiscation of their assets without supporting recovery (Glasser and Wright 2020).

Experts predict a strong economic boom after the crisis ends (OECD 2020a), although when and how it will happen is still to be seen. Assets will undoubtedly play a strategic role in this process. First, the delayed developments and repairs need strategic corrections; second and more important, assets can be used strategically to fund financial and economic recovery of municipalities (Kaganova 2020). Furthermore, many envision that “The COVID-19 crisis entails an excellent opportunity for planners and policy makers to take transformative actions toward creating cities that are more just, resilient, and sustainable” (Sharifi and Khavarian-Garmsir 2020, 1).

Strategic use of assets is a challenge for developing countries. Local governments in developed countries have good experience in strategic use of assets for development financing, while most local authorities in developing countries lack expertise and management capacities for doing so. However, most municipalities in Kenya and the developing world do have a large stock of surplus assets suitable for strategic financing of postpandemic recovery. On the other hand, they lack reliable asset records, stable AM systems, strategies, and procedures that would be vital for using assets strategically to fund recovery. Said shortcomings can and should be corrected soon.

Governance, administration, and management shortcomings may prevent local entities from using assets in a timely manner and strategically. These underscore the importance of enhancing AM urgently in Kenya, to accelerate general development and pandemic recovery or avoid expensive mistakes. Fiscal and infrastructure deficits1 of Kenyan counties are likely to grow substantially in the 2020/21 fiscal year and beyond (Kopanyi and Awan 2020; Maria et al. 2020). In turn, cities may waste an enormous volume of assets if they are divested rapidly and without a strategy to pay overdue bills. It is much better to account for and divest assets strategically and use some of the proceeds to pay the bills, instead of accumulating overdue bills and selling assets in a rush or letting creditors seize them to work out burning liabilities (likely the case of Mombasa asset swap).

Pandemic impacts on environmental, socioeconomic, urban design, and governance factors

Cities worldwide are on the front line of pandemic mitigations in all aspects, from education, health, and poverty to other social issues, while facing decreased revenues and stress on the local economy (Wahba et al. 2020; OECD 2020b).

The COVID-19 pandemic has encouraged the academic and practitioner communities to immediately analyze impacts in dozens of scientific areas. The Scopus abstract and citation database includes 140 articles on COVID-19 impacts on city planning, design, finance, and management, published in the first eight months of the crisis (Sharifi and Khavarian-Garmsir 2020).2 The four major themes on cities include environmental impacts, socioeconomic impacts, management and governance, and transportation and urban design. Most papers covered environmental issues such as meteorology, temperature, humidity, wind, pollution levels, and air and water quality and their measurable or assumed impacts of spreading diseases, in part because of the importance of these issues but also because of data availability.

Socioeconomic issues such as measuring inequality, finance, or development required data that would be available only with a time lag. Many studies addressed long-standing structural inequalities and found that pandemics have hit minorities, migrants, and the bottom of social strata disproportionately (Blake and Wadhwa 2020; OECD 2020b; Wahba et al. 2020). The thinking about options for postpandemic recovery was based on initial findings and heuristic assumptions such as changing urban design, improving urban mobility and transport, housing for the poor, or green development (Ijjasz-Vasquez and Kaza 2020; Ortiz 2020; Tiverno and Lakovic 2020). Some emphasize that, not only change, but transformational changes are required, such as generating more actionable data, investing in cities as systems, building economic resilience by enlarging the safety net, and ensuring access to core services for all (Dasgupta 2020). During the first phase of the pandemic, interventions focused on mitigating immediate effects and curbing the spread of the virus—these required huge operating expenditures. In the second phase they could focus on long-term and sustainable recovery that requires investing in assets both public and private.

The pandemic has also had some positive impacts on cities and has resulted in some promising trends. The air quality has improved, telework options appear to be long-lasting and reduce the pressure on city transport, and digital technology has proven to be an available and powerful tool in managing pandemic and other city operations. Big data collection and analysis and smart city practices and options offer promising tools for managing pandemic and postpandemic recovery (Bhardwaj et al. 2020). Detailed analysis of the impact of city density showed that the density itself is not a concerning factor on spreading diseases. Rather, the overcrowded neighborhoods and living units and the poor municipal governance are the major challenges (Fang and Wahba 2020; Hamidi 2020; Hamidi, Sabouri, and Ewing 2020). Cities simply need to be better planned or reorganized (Lall and Wahba 2020). Finally, integrated urban governance has enabled some cities to successfully prevent the spread of the virus by being able to rapidly detect infected individuals through increased testing and improved surveillance (as in Singapore and Seoul) and timely lockdown and social distancing actions (Duggal 2020). However, for successful postpandemic recovery, a major concern is a city’s economic geography: the interplay between its economic and physical setting (Lall 2020).

A major challenge, however, is that the most negative impacts of the pandemic crisis (revenue losses, extreme poverty, delays in addressing infrastructure gaps) seem to be growing. And positive effects, such as improved air quality and information technology, may hardly improve further. Meanwhile, some factors such as health care, poverty, and inequality may keep growing and will remain burdens on cities in the medium to long term. A quick assessment of

Nairobi and Mombasa has reconfirmed that such effects prevail and are substantial in Kenya too. This raises the question: How can strategic investments help to reduce the negative effects and boost the positive effects of the pandemic crisis and shorten the recovery period?

Pandemic impacts on national and local finances

The negative impacts on city finances struck with a dangerous “scissors effect” of rising expenditures and falling revenues. The S&P Global Ratings estimated that US local governments faced a scissors effect with 17 percent extra expenditures and a 21 percent revenue drop in 2020 (S&P 2021). Likewise, the US National League of Cities (NLC) reported a severe and long-lasting negative financial impact on US cities, with around a 21.6 percent loss of OSR in 2020 fiscal year (Yadavalli and McFarland 2020). NLC found that local governments face limited options for levying new taxes or raising existing ones. Increases in sales, income, or other types of tax rates are even less likely, and in the current economic climate, would prove fruitless. Studies on developing countries show similar scissors effects: over 20 percent revenue drop and over 10 percent increase of expenditures (Kopanyi and Awan 2020; Maria et al. 2020; Null, Rubnitz, and Smith 2020).

The strong negative impacts on cities’ fiscal health (OECD 2020b; Beatty 2020) and stability leads to a question of how the projected, proposed, or foreseen transformative changes in the urban sphere would be financed when both national and local resources could face shortages in the medium term, especially in developing countries (IMF 2020; Kunzmann 2020). Findings are univocal on impacts: the tax base of many cities has declined and reduced their ability to implement urban development plans. “As cities are expected to experience significant financial deficits, they may need to prioritize investments and postpone or cancel some plans that they may deem less important, such as environmental and cultural investments” (Eltarabily and Elgheznawy 2020, 75). Figure 2.7 presents an Emergency Governance Initiative survey result that reflects the significant delay and cancellation of capital investment projects in nearly twothirds of surveyed cities. But the unexpected further extension of the pandemic crisis is likely to move cities from a group of unimpacted to delayed and from delayed to cancellation of development projects. This effect is visible in Kenya. Nairobi and Mombasa reduced development expenses substantially in the 2019/20 fiscal year, while Makueni reduced investment expenses to one-tenth of previous average expenses.

Meanwhile the demand for investments is growing, and experts state that cities need to bring laser-sharp focus on investing in infrastructure and housing for better health, well-being, and resilience for the urban poor. “It means improving infrastructure in informal settlements across the developing world to bridge the urban services divide. And it means building infrastructure that is intentionally geared toward a low-carbon future” (Dasgupta 2020, 4). One can see, however, that most of these articles ignore or approach assets only as development targets rather than considering assets also as sources of postpandemic recovery.

Experts emphasize that the fiscal impacts of the pandemic on cities also depend on the degree of decentralization, particularly the assignment of spending responsibilities; the structure of own-source revenues; “fiscal flexibility” (that is, the ability to absorb stress and align expenditures and revenues); fiscal health or financial conditions (budget balance and debt, cash reserves); and support from higher