Businesses squeezed as government pending bills climb by Sh25 billion
The mounting backlog of unpaid government bills continues to hamper their operations, despite repeated calls from stakeholders for faster settlement.
Businesses contracted by the government, particularly in construction and supply, are facing growing financial strain due to delayed payments, a new report has revealed.
This is due to the growing backlog of unpaid government bills, which continue to strain their operations, despite sustained calls from stakeholders for the government to expedite payments.
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The latest Budget Implementation Review Report of the 2024/25 financial year by the Controller of Budget shows the national government’s pending bills have risen by Sh24.9 billion year-on-year to March 2025.
Margaret Nyakang’o’s report puts the total pending bills by the national government at Sh511.75 billion as of March 31, 2025, up from Sh486.81 billion recorded at the same time last year.
This marks a 5.1 per cent jump year-on-year.
The bills in the period under review comprised Sh421.63 billion (82 per cent) for state corporations and Sh90.12 billion (18 per cent) for ministries, departments, and agencies (MDAs).
“State Corporations’ pending bills have increased by Sh16.35 billion compared to the Sh405.28 billion recorded in the same period of FY 2023/24,” the report reads.
“Meanwhile, the MDAs’ pending bills rose by Sh8.61 billion compared to the Sh81.51 billion recorded in the corresponding period of FY 2023/24.”
Historical bills
MDAs’ pending bills are mainly historical bills, comprising Sh67.13 billion (74 per cent) for recurrent expenditure and Sh22.99 billion (26 per cent) for development expenditure.
On the other hand, the state corporations’ pending bills include payments due to contractors/projects, suppliers, unremitted statutory and other deductions, and pension arrears for the Local Authorities Pension Trust.
These figures point to an arguably concerning picture of cash flow challenges in the economy, despite repeated government assurances to clear arrears.
Notably, the data reveals that the "Contractors/Projects (Development)" category is the hardest hit, now accounting for 51 per cent of all pending bills, amounting to Sh259.7 billion.
Capital-intensive infrastructure
These are firms at the heart of the government's development agenda, comprising private companies or individuals hired by government ministries, departments, or agencies to carry out capital-intensive infrastructure or service delivery projects.
Experts in the country have previously warned that persistent delays in settling pending bills owed to development project contractors risk stalling critical public works, including road construction and health facility upgrades.
Another significant category owed by the government is consumables and general supplies, which account for 8 per cent of the total pending bills, amounting to Sh40 billion.
The delays, according to research firm KIPPRA, for instance, risk worsening liquidity problems for contractors and suppliers, many of whom rely on timely government disbursements to pay workers, service loans, and keep operations running.
For smaller firms, especially those without access to affordable credit, the situation often becomes increasingly unsustainable.
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