A financial storm is brewing in Kenya’s counties as pending bills hit an alarming Sh15 billion in just three months. The revelations, detailed in the Controller of Budget (OCoB) Margaret Nyakang’o’s latest report, paint a grim picture for businesses reliant on payments from devolved units. With debts dating back as far as a decade, suppliers are bearing the brunt, some even succumbing to depression or losing their assets as financial institutions move to recover loans.
Mounting Debts: A Risky Business
Counties are accumulating staggering amounts of pending bills, threatening not only service delivery but also the survival of businesses. Between June 30 and September 30, Nairobi and Turkana counties topped the list, with their obligations surging by Sh2.61 billion and Sh4.02 billion, respectively. Governor Johnson Sakaja’s Nairobi now owes Sh121.05 billion, up from Sh118.44 billion, while Governor Jeremiah Lomorukai’s Turkana saw its bills rise from Sh749.85 million to Sh4.77 billion.
Nyakang’o warned that the “accumulation of pending bills negatively impacts public service delivery and disrupts business operations,” underscoring the dire situation for contractors and suppliers awaiting payment.
Counties Deep in Debt
An analysis of the report reveals that other counties, including Nyandarua, Migori, and Narok, also saw significant increases in their debts.
- Nyandarua: Pending bills rose by Sh925 million, reaching Sh1.22 billion.
- Migori: Sh880 million was added, raising the total to Sh1.75 billion.
- Narok: Bills increased by Sh736 million to hit Sh1.5 billion.
Similarly, Bomet, Nandi, Kirinyaga, and Nyamira recorded sharp increases, signaling a broader challenge in the devolved units.
The Pain for Suppliers
The unresolved debt crisis has left many suppliers grappling with financial ruin. Reports of suicides and severe depression among contractors underscore the human cost of this economic burden. Auctioneers have descended on suppliers’ assets as banks intensify recovery efforts.
Progress in Reducing Bills
Despite the grim statistics, some counties have made commendable strides in reducing their pending obligations. Bungoma, under Governor Kenneth Lusaka, cut its bills by Sh1.94 billion, while Governor Abdulswamad Nassir’s Mombasa reduced debts by Sh1.05 billion. Other counties, including Kilifi, Kiambu, and Murang’a, also posted significant progress in clearing their bills.
Cumulatively, pending bills across all counties reduced from Sh181.98 billion in June to Sh168.62 billion in September.
Compliance Challenges
The County Public Finance Management law mandates that debt payments take priority in the budget, yet many counties have failed to adhere to this directive. This failure disrupts economic stability, undermines service delivery, and raises concerns about fiscal discipline.
In response, the Senate passed a resolution in May compelling counties to clear verified pending bills under Sh1 billion by the end of the 2023-24 fiscal year and bills exceeding Sh1 billion by the end of 2024-25. However, adherence remains a challenge.
A Call for Action
Nyakang’o has urged county governments to prioritize pending bills in their budgets as a first charge and to implement payment plans for the 2024-25 fiscal year. She emphasized the need for compliance with Senate resolutions to clear arrears, ensuring financial stability and continuity in service delivery.
Conclusion
The sharp rise in pending bills reveals a systemic challenge in Kenya’s devolved units, posing risks to businesses and public services alike. While some counties have taken positive steps to reduce their debts, others must act swiftly to prevent further economic fallout. With suppliers and contractors already reeling, the time for decisive action is now.
Governors must embrace fiscal discipline, prioritize debt repayments, and restore trust in county government operations to avoid a full-blown financial crisis.
