A recent report by the Office of the Controller of Budget (OCoB) has revealed a worsening financial crisis across Kenya’s counties. For the Financial Year 2023-2024, 30 out of 47 counties are grappling with pending bills exceeding Sh1 billion each, marking a significant increase from 22 counties in the previous year.
A Nationwide Burden
As of September 30, 2024, counties collectively owe an alarming Sh185.46 billion in unpaid bills. This figure accounts for 95.6% of all pending bills at the county level. The magnitude of these arrears has caused widespread concern among businesses, contractors, and suppliers who rely on county payments to sustain their operations.
Nairobi’s Overwhelming Share
Leading the list is Nairobi County, under Governor Johnson Sakaja, which alone accounts for a staggering 62% of the total pending bills. With arrears amounting to Sh121.06 billion, Nairobi’s financial burden is a significant contributor to the national crisis. Other counties with high levels of unpaid bills include:
- Garissa: Sh6.07 billion
- Kiambu: Sh5.9 billion
- Turkana: Sh4.78 billion
- Machakos: Sh4.42 billion
- Mombasa: Sh3.93 billion
Impact on Businesses and Services
The backlog of unpaid bills has created severe challenges for businesses, many of which took loans to fulfil contracts with county governments. The financial strain has led to operational disruptions and increased frustration among suppliers and contractors. Additionally, essential services at the county level have been hindered, jeopardizing day-to-day operations and long-term development projects.
Senate’s Intervention
In response to the escalating crisis, the Senate passed a resolution on May 9, 2024, requiring counties to settle all verified pending bills under Sh1 billion by the end of FY 2023-2024. For counties with arrears exceeding Sh1 billion, the deadline has been extended to the end of FY 2024-2025.
The Office of the Controller of Budget has emphasized the importance of prioritizing these payments. County governments have been directed to treat debt clearance as a first charge under the Public Finance Management (County Governments) Regulations, 2015. According to OCoB, “County governments should adhere to the Senate resolution communicated through their May 9, 2024 letter, mandating that all verified pending bills be cleared by FY 2024/25.”
Breakdown of Pending Bills
The counties’ outstanding arrears include:
- Sh149.50 billion in recurrent expenditures
- Sh44.51 billion in development expenses
A Race Against Time
With billions of shillings still owed and deadlines looming, the path forward remains uncertain. County governments must navigate this complex financial landscape, ensuring they address their debts while maintaining essential services. Failure to act could deepen the crisis, further affecting economic stability and public trust.
