President William Ruto’s administration has approved the clearance of Sh206 billion in outstanding payments. This decision follows the first report by a review committee chaired by former Auditor General Edward Ouko. The initiative primarily targets small businesses owed less than Sh10 million, providing much-needed relief to suppliers who have struggled with cash flow issues.
National Treasury Cabinet Secretary John Mbadi confirmed that the government is set to begin disbursing payments. The review committee assessed approximately Sh474 billion in pending bills from a total of Sh665 billion submitted for scrutiny. The Sh206 billion approved for settlement consists mostly of payments to small and medium-sized enterprises (SMEs), a sector critical to Kenya’s economic health.
The committee comprises representatives from key government agencies, including the Attorney General’s office, the State Department of Roads, the Public Procurement Regulatory Authority, and the Ethics and Anti-Corruption Commission. Professional bodies such as the Law Society of Kenya and the Institute of Certified Public Accountants of Kenya are also involved, ensuring transparency and credibility in the review process.
As of September 2024, the national government owed suppliers over Sh528 billion, while counties had accumulated Sh168 billion in unpaid dues. State corporations, which account for Sh410 billion of the debt, have been particularly notorious for delaying payments to contractors, suppliers, and pension schemes. Economists warn that such delays have stifled economic growth, pushing businesses into financial distress, with some entrepreneurs even facing severe mental health crises due to mounting debts.
The government’s decision aligns with President Ruto’s promise to clear outstanding bills to SMEs, stimulating economic activity. The Treasury has committed to incorporating the payments in the second supplementary budget, which will be presented to the National Assembly this month.
Both the Kenya Federation of Employers and the Kenya Private Sector Alliance have raised concerns about the adverse effects of non-payment, emphasizing the need for timely settlement to prevent business closures and job losses. The clearance of these bills is expected to inject liquidity into the economy, providing relief to struggling enterprises and suppliers.
While the focus is currently on SMEs, Mbadi reassured larger contractors that their pending payments would also be addressed. The government is working on a strategy to clear bigger debts, ensuring a fair and systematic approach to settling outstanding obligations. This move marks a crucial step in restoring confidence in government contracts and revitalizing economic growth.
