LIQUIDITY

Treasury to reign in ministries, counties with pending bills

Ministries, departments and agencies rolled over Sh64.7 billion in arrears to suppliers and contractors in the financial year ended June 2019 to the current year.

In Summary

•Treasury Acting CS Ukur Yatani vows to go hard on ministries, government agencies and counties in paying suppliers.

•As at December 18, overall outstanding pending bills by counties stood at Sh58.75 billion while National government owed suppliers Sh58.18 billion as at June last year.

Acting National Treasury Cabinet Secretary Ukur Yatani
Acting National Treasury Cabinet Secretary Ukur Yatani
Image: FILE

The National Treasury will not spare ministries, government agencies and counties with pending payments to suppliers, acting CS Ukur Yatani has warned.

Yatani's move is the latest of government's efforts to address the pending bills dilemma which is yet to be fully resolved, seven months since President Uhuru Kenyatta's June 1, 2019 directive, that all pending bills without audit queries be settled by end of last financial year.

This is in the wake of high pending bills owed to suppliers which has crippled several businesses in the private sector.

 
 

In a forum at a Nairobi hotel last Friday, Yatani said unpaid bills owed to suppliers and SMEs have directly affected the economy.

It has a direct effect on the stability and growth of the private sector, that is what we are confronting , making sure we reign in on all government agencies , ministries even the county governments , and ensure that what belongs to the SMEs and the private sector are paid adequately,” the CS said.

“When I supply goods and I am not paid for a year, five months, it has a direct effect on the state and wellness of the country , because you have taken my money and you don't want to pay me back. What is the difference between you and a thief in that case?,” he posed.

He said unpaid bills are partly to blame for what is seen as lack of liquidity in the market amid concerns the economy was not growing.He has asked private sector to also honour their obligations.

“You say we are not feeling this growth. It is because the flow of cash is limited, then what causes it, in personal view it is all about discipline both in government and the private sector,” Yatani said.

The government has failed to meet its targets in settling pending bills which are in excess of Sh73.74 billion as at December. Suppliers and service providers initially claimed over Sh100 billion in pending bills.

State ministries, departments and agencies (MDAs) rolled over more than Sh64.7 billion in unpaid bills to suppliers and contractors in the financial year ended June 2019 into the current year.

 
 

As at December 18, overall outstanding pending bills by counties stood at Sh58.75, treasury records show. Sh30.23 billion had been paid by then.

National government owed suppliers Sh58.18 billion as at June last year of where Sh43.19 billion was in contention. This left validated bills at Sh14.99 billion. About Sh10.22 billion had been paid at at December.

About 79 state agencies and independent bodies owe billions in unpaid bills which also affect manufacturers.

Liquidity has been a huge challenge to manufacturers due to pending payments by both public and private entities. Delayed payments have an impact on manufacturers, especially MSMEs as it leads to cash flow constraints,” Kenya Association of Manufacturers Chairman Sachen Gudka noted yesterday.

Latest Treasury data shows the State Department for Crop Development led the batch of entities with the highest pending bills where it owed suppliers Sh12.49 billion.

“The state department has paid Sh52.2 million and requested access to third and fourth quarter budgets to pay Sh78.2 million and additional budget Sh42.6 million,” Treasury's 'Status of Pending Bills' for national government and MDAs–December 23, 2019 states.

The historical bills comprise Sh3.96 billion debts owed to millers and merchants and Sh8.35bn relating to NCPB fertilizer subsidy programme which have been verified.

Other entities include State Department for Youth(Sh10.59 billion), IEBC(Sh4.33 billion), State Department for Broadcast and Communication (Sh2.97 billion), Regional and Northern Corridor(Sh2.33 billion).

Parliamentary Service Commission and the Health Ministry owed suppliers Sh1.09 billion and Sh1.03 billion respectively. Some entities have however reduced their amounts.

In December, Treasury attempted to withhold funding for at least 20 counties for failing to clear their pending bills.

During last year's Madaraka Day address, President Uhuru said pending payments have negatively affected many businesses, particularly those whose bulk of capital is now locked in non-payment.

"This has also reduced overall spending and business activity in our economy," Uhuru said.