Businesses on the brink as counties’ pending bills soar to Sh176 billion - CoB
While most counties struggle, Nairobi has managed to reduce its pending bills by Sh36.78 billion, bringing the total to Sh86.77 billion. Mombasa’s unpaid bills dropped from Sh4.44 billion to Sh3.86 billion, and Kwale’s from Sh2.13 billion to Sh1.89 billion.
Doing business with county governments is proving increasingly dangerous for entrepreneurs and companies, with unpaid bills becoming a heavy burden that can push firms to the edge of collapse.
Instead of serving as avenues for growth, county contracts are turning into financial traps, where delays in payments leave businesses unable to meet their obligations and sometimes even force closure.
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A recent report by Controller of Budget Margaret Nyakang’o exposes the scale of the problem in striking detail.
By June 30, 2025, counties collectively owed Sh176.90 billion to suppliers and contractors. County executives accounted for Sh171.75 billion, while county assemblies were responsible for Sh5.16 billion.
The age of these debts is alarming. Over Sh85.42 billion has been pending for more than three years, Sh20.34 billion for two to three years, and Sh19.78 billion for one to two years. Only Sh48.87 billion has been pending for less than a year.
“The significant amount of bills under one year is concerning, especially since full disbursement of the equitable share for FY 2024-25 had been provided,” the report notes.
For businesses, the consequences are severe. Companies that fulfil their contracts often find themselves entangled in endless paperwork, chasing payments, or facing court cases. Many struggle to pay staff or loans, while others are forced to close their doors.
Entrepreneurs describe the process as a slow, painful cycle: deliver goods, wait years for payment, navigate bureaucracy, and risk financial ruin.
The report highlights sharp increases in pending bills in several counties over the past year. Bomet’s unpaid bills jumped from Sh448.76 million in June 2024 to Sh1.52 billion in June 2025.
Busia’s grew by Sh1.8 billion, Nakuru by Sh2.57 billion, Machakos by Sh2.53 billion, Kiambu by Sh1.4 billion, and Kilifi by Sh8.03 billion.
Other counties with rising debts include Murang’a (Sh533 million), Bungoma (Sh89 million), Migori (Sh864.39 million to Sh1.05 billion), Kajiado (Sh2.44 billion to Sh2.64 billion), and Makueni (Sh672.04 million to Sh818.2 million).
Nyakang’o identified several reasons behind the growing debt crisis. Overestimating local revenue has created hidden budget gaps, while delays in verifying ineligible bills and prolonged court disputes have slowed payments.
Cash flow shortages caused by late transfers from the National Treasury have also worsened the situation.
“Counties such as Turkana, Bungoma, Lamu, and Kajiado were among those where these challenges were observed, highlighting persistent weaknesses in expenditure management and pending bills resolution,” she said.
To tackle the crisis, the Controller of Budget has advised counties to adopt realistic revenue targets, fast-track the verification of ineligible bills, and integrate pending payments into their budgets.
Counties are also required to submit payment plans and progress reports for monitoring.
However, the report reveals that several counties are not sticking to agreed schedules, deepening the problem.
Regulation 55(2)(b) of the Public Finance Management (County Governments) Regulations, 2015, mandates that eligible pending bills be settled as a first charge in county budgets, a legal requirement that many counties are neglecting.
While most counties struggle, Nairobi has managed to reduce its pending bills by Sh36.78 billion, bringing the total to Sh86.77 billion. Mombasa’s unpaid bills dropped from Sh4.44 billion to Sh3.86 billion, and Kwale’s from Sh2.13 billion to Sh1.89 billion.
“County treasuries are advised to settle outstanding debts using the first-in-first-out principle, in line with Regulation 55(1)(b) of the Public Finance Management (County Governments) Regulations 2015,” the report adds.
The CoB also unveiled a new pending bills template, approved during the 27th IBEC session, which counties must adopt for tracking and reporting debts in the 2025-26 financial year.
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