Some state entities are not able to pay their debts and some suicides cases have been reported by indebted suppliers not paid by the government Doing business with the government — once considered a lucrative venture — has now become a risky gamble that could sink your life investments.
A new report shows that national government suppliers and contractors are still owed billions of shillings, some dating back 10 years.
Treasury Cabinet Secretary John Mbadi has repeatedly admitted Kenyans are financially strained because of the huge pending bills but says President William Ruto is not to blame for the mess.
“If we are complaining about the bad economy, that life is difficult, why is life difficult? Two reasons: number one public debt, number two pending bills. Are you telling us the pending bills were incurred when Ruto was the President?” Mbadi asked on Friday, saying the challenges will not be sorted in a single day.
A new report by Controller of Budget Margret Nyakang’o shows that pending bills for the national government alone stand at Sh528 billion.
Counties separately owe suppliers and contractors Sh168 billion. Some suppliers and contractors reportedly committed suicide and others reportedly died of depression because of debts owed to them by both counties and the national government.
Auctioneers have often landed on their prime assets as banks move in to recover loans. Bills owed by state corporations accounted for the highest amount at Sh410 billion, while ministries, state departments and agencies were yet to settle bills worth Sh117.7 billion.
The CoB data shows that dealers of consumables and general supplies were owed about Sh40 billion, while project contractors were yet to be paid Sh249 billion.
The report reveals that apart from suppliers and contractors, the agencies’ staff could also be facing troubles with their lenders — banks and Saccos.
The government in the review period was yet to remit Sh2.5 billion in staff loan deductions, Sh2.6 billion in Sacco deductions, and Sh500 million in of National Social Security Fund deductions.
Some ministries, departments and agencies and parastatals also owed Kenya Revenue Authority Sh23 billion in Pay as You Earn, while bills classified as “others” amounted to Sh57 billion.
“We recommend continuous monitoring and allocation of funds for projects to stay on track and curb cases of pending bills and interest on outstanding payments, which may result in additional costs for the projects,” Controller of Budget Nyakang’o says in the report. To improve the situation, the budget boss wants the government to ramp up revenue collection “to ensure planned activities are funded”.
The report shows state corporations’ bills alone have accumulated Sh15 billion in penalties and interest. It has also emerged that some of the bills have continued to swell without a clear plan for settlement.
The report shows that pending bills owed by the Nairobi Metropolitan Services have increased to Sh13 billion from Sh11 billion reported in the same period last year.
During a recent budget review with MPs, State House said it had no money to settle the outstanding payments, while Nairobi Governor Johnson Sakaja said they could not budget for NMS, because it is a national government function.
Whereas State House settled most of its Sh1.8 billion pending bills to leave a balance of Sh386 million, those of the deputy president’s office have increased tremendously.
The report shows that the bills were Sh1.4 billion as of September 2024 as compared with Sh38 million reported in the same period in September 2023.
Bills owed by the police have also increased by Sh2 billion to hit Sh6 billion, and so have prisons’ pending payments, which have increased to Sh4.3 billion from the previous year’s Sh1.6 billion.
The Defence ministry’s outstanding payments also increased two-fold from Sh8 billion reported in September 2023, to Sh17.3 billion in the current review period.
The National Youth Service remains among the entities with huge pending payments at Sh15 billion, followed by the Agriculture ministry with an unpaid Sh9 billion.
The Transport department owes Sh6 billion. The Independent Electoral and Boundaries Commission owed Sh3.9 billion, Treasury (Sh3 billion), Teachers Service Commission (Sh3.4 billion), Medical Services department (Sh5.6 billion), Wildlife department (Sh2.9 billion), Devolution (Sh2.6 billion) and the National Land Commission (Sh1.6 billion).
Generally, MDAs owed Sh85 billion in recurrent spending and Sh31 billion for development projects. For state corporations, those in the energy and infrastructure as well as education sectors had the largest amounts.
Among the big names in the list of energy agencies are Ketraco, which owed Sh22 billion, Kenya Power (Sh20 billion) and Sh13 billion for the National Oil Corporation of Kenya. In the roads agencies category, Kenya National Highways Authority pending bills stood at Sh87 billion, Sh67 billion for the Kenya Rural Roads Authority and Sh14 billion for Kenya Urban Roads Authority.
Kenya Railways had pending bills of Sh9 billion and Sh12.4 billion for the East Africa Portland Cement. KRA had an unpaid Sh8 billion in its debt stock.
The Lake Basin Development Authority owed Sh4.6 billion.
To mitigate these problems, Treasury says state agencies should not initiate new projects.
“State corporations should therefore not initiate implementation of new projects prior to ensuring all pending bills are cleared,” Mbadi said in a circular. Kenyatta University had an unpaid Sh12 billion, the University of Nairobi (Sh11.9 billion), Sh9 billion at Technical University of Kenya, Jomo Kenyatta University of Agriculture and Technology (Sh8.6 billion), Egerton (Sh7.9 billion) and Moi University (Sh6.2 billion).
Posta has also been cited among big debtors, with an unpaid Sh6.8 billion, while KBC owed suppliers Sh6.4 billion, Kenyatta National Hospital (Sh2.3 billion), NHIF (Sh2 billion), and Kemsa (Sh4 billion).
CoB data further indicates that sugar companies owed suppliers billions, with Nzoia accounting for Sh4 billion, a tremendous reduction from the Sh62 billion reported in the last review period.
The government wrote off some of the bills owed by sugar companies, coming to the rescue of the companies such as Muhoroni whose bills dropped to Sh1.3 billion from Sh26 billion.
Auditor General Nancy Gathungu has frequently flagged agencies for breaching the rule that requires that they make pending bills a first charge in their budgets.
