Doing business with some county governments could be a risky venture that could easily plunge your thriving venture into financial nightmare.
Analysis of the latest county expenditure reports indicate that pending bills have shot up by Sh15 billion in 20 counties in a record three months.
The revelations expose suppliers’ pain as some bills remain unpaid, with some debts dating back to 10 years.
“The accumulation of pending bills negatively impacts public service delivery and disrupts business operations,” Controller of Budget Margaret Nyakang’o warned in her latest report.
Governors Johnson Sakaja and Jeremiah Lomorukai have been put on the spot after revelations their administrations accumulated close to Sh7 billion in pending bills in just three months.
The report shows that Lomorukai’s Turkana’s pending bills rose by Sh4.02 billion, while Sakaja’s Nairobi increased by Sh2.61 billion.
The sharp increase happened between June 30 and September 30.
There have been reports of some suppliers and contractors committing suicide and others dying of depression because of debts owned to them by both counties and the national government.
Auctioneers have often landed on their prime assets as banks move in to recover loans.
Overall, all the counties have pending bills of Sh168 billion, while the national government has pending bills of about Sh664 billion.
According to the reports by Nyakang’o, Turkana’s bills rose from Sh749.85 million in June to Sh4.77 billion in September.
For Nairobi, the pending obligations increased from Sh118.44 billion to Sh121.05 billion over the period.
The two counties are leading the pack in the accumulation of pending bills in what is emerging as a monster in the devolved units.
Governors Moses Badilisha’s Nyandarua, Ochillo Ayacko’s Migori and Patrick Ntutu’s Narok have accumulated close to Sh1 billion each in pending bills in just three months.
Nyandarua’s bills rose by Sh925 million to stand at Sh1.22 billion, Migori’s shot up by Sh880 million to stand at Sh1.75 billion, while Narok’s obligations increased by Sh736 million to hit Sh1.5 billion.
Other counties whose pending bills have increased sharply over the period include Nyamira, Bomet, Nandi and Kirinyaga. Nyamira’s bills rose by Sh642.62 million, Bomet’s shot up by Sh562 million, Nandi’s increased by 574.36 million and Kirinyaga’s rose by Sh439 million.
Others are Meru (Sh620 million), Nakuru (Sh400 million), Nyeri (Sh208.36 million) and Samburu (Sh410.63 million).
“The OCoB recommends that the county governments prioritise all eligible pending bills in the budget as a first charge,” the report states.
On the other hand, the analysis shows that governors Kenneth Lusaka’s Bungoma and Abdulswamad Nassir’s Mombasa reduced their pending bills by more than Sh1 billion each. Bungoma reduced its pending bills by Sh1.94 billion, from Sh3.52 billion in June to Sh1.58 billion in September.
Mombasa, on the other hand, slashed its pending obligations by Sh1.05 billion, from Sh4.44 billion to Sh3.93 billion. Kericho, Kilifi, Kiambu, Kakamega and Kwale posted impressive progress in reducing their pending bills.
Their pending bills were reduced by Sh803 million, Sh840 million, Sh580 million, Sh550 million and Sh470 million respectively. Others are Murang’a (Sh360 million), Mandera (Sh400 million), Tharaka Nithi (Sh325 million), and Kajiado (Sh440 million).
Tana River, Kitui and Laikipia’s bills neither increased nor reduced over the period. Cumulatively, the pending bills reduced from Sh181.98 billion in June to Sh168.62 billion in September.
Failure to clear pending obligations has continued to hurt businesses across the country “The accumulation of pending bills negatively impacts public service delivery and disrupts business operations,” Nyakang’o warned.
The county law on Public Finance Management stipulates, “Debt service payments shall be a first charge on the County Revenue Fund.”
The provision obligates the accounting officer to ensure this is done to the extent possible to prevent the county government from defaulting on its debt obligations.
Another provision requires that finalised and signed contracts are budgeted for before the accounting officer of a county government entity undertakes new projects.
“Further, we urge the counties to comply with their pending bills payment plan for FY 2024-25 submitted to our office,” Nyakang’o said in the report.
In May, the Senate passed a resolution compelling the devolved units to settle all verified pending bills of less than Sh1 billion by the end of the fiscal year 2023-24.
Pending bills exceeding Sh1 billion should be settled by the end of the fiscal year 2024-25 according to the senators’ resolution.
“Also, we request the county governments to adhere to the Senate
resolution communicated through
their May 9 letter, mandating that all
verified pending bills to be cleared
by FY 2024-25,” Nyakang’o said.
