Counties accumulate Sh25.8 billion in fresh debts, worsening crisis for unpaid suppliers

Contractors and suppliers to counties will continue to suffer as devolved units fail to honour their pledges to settle outstanding debts, accumulating an additional Sh25.8 billion.

According to the Controller of Budget (CoB), pending bills increased by 16.6 per cent to close at Sh182 billion by the end of December 2024, as most counties walked back on their own payment plans, heightening the risk of business closures across the country.

At the beginning of the 2024-25 fiscal year last July, most counties submitted payment plans, pledging to clear their arrears by June 2025.

However, the CoB Margaret Nyakang’o noted in her budget implementation report for the six months to December 2024 that many counties failed to honour these commitments.

"The delay in disbursing the equitable share for December 2024 and underperformance in own-source revenue contributed to this lack of compliance. The efforts by some county governments to clear their debts remain insufficient," she said.

She noted that the delayed release of equitable revenue by the Treasury has further compounded the crisis. The Treasury, which has been pushing counties to treat pending bills as a first charge on their budgets, in 2023 established a special team, the Pending Bills Verification Committee, to address the issue.

Little success

However, Nyakang’o said the committee has achieved little success.

According to the CoB, pending bills increased from Sh156.34 billion in December 2023 to Sh182.13 billion a year later.

"The consequences of not paying these pending bills, as reported by suppliers from various counties to the CoB, are severe. They include financial distress for individual suppliers and the closure of businesses, all of which contribute to reduced economic activity," she said.

During the six months to December 2024, Nairobi County paid pending bills amounting to Sh3.5 billion, exceeding its initial commitment of Sh1.3 billion for the period.

However, despite these payments, the county’s pending bills still grew by Sh11.2 billion (10.5 per cent) in 2024, closing at Sh118.26 billion in December, up from Sh107 billion at the end of 2023. Nairobi accounted for 65 per cent of all pending bills in county government records by the end of 2024.

Several counties also failed to adhere to their payment plans. Elgeyo Marakwet County, for instance, only paid 82.7 per cent of its pledged amount in the first half of the fiscal year.

"The county executive submitted a pending bills payment plan at the commencement of FY 2024-25, committing to pay Sh103.64 million in the first half of the fiscal year. However, the county did not adhere to this payment plan, as it cleared only Sh85.74 million for the Executive," reads the CoB report.

Kajiado County promised to clear Sh1.36 billion in the six months but managed only Sh809 million. Kericho County paid Sh523 million out of the Sh780 million it committed to, while Nakuru County settled just Sh127 million out of the Sh169 million it had planned to pay.

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• National
• Controller of Budget
• Margaret Nyakang'o
• pending bills
• county budgets
• counties bills
• Counties accumulate Sh25.8 billion in fresh debts
• worsening crisis for unpaid suppliers

Suppliers and contractors continue bearing the brunt of the financial uncertainty, facing liquidity challenges and the looming threat of business closures.