PENDING BILLS

Counties owe Sh96bn as own source revenue dwindles — COB

Nairobi county accounts for 56.6 per cent of the stock of pending bills at Sh54.32 billion

In Summary
  • During the reporting period, county governments missed targets by 35.8 per cent.
  • All the 47 devolved units generated a total of Sh34.44 billion against a target of Sh53.66 billion.
Controller of Budget Margaret Nyakango takes oath of office at the Supreme Court, Nairobi, on December 4, 2020.
COB: Controller of Budget Margaret Nyakango takes oath of office at the Supreme Court, Nairobi, on December 4, 2020.
Image: COURTESY

Low own source revenue collection and over commitments in budgets condemned county governments to a Sh96 billion debt in the last financial year, a new report shows.

The Budget Implementation Review Report by Controller of Budget Margaret Nyakang’o reveals the counties accumulated huge pending bills in the last financial year.

“Pending bills may be attributed to over-commitment of budgets by county governments due to failure to adhere to approved work plans and weak internal control mechanisms,” the report reads.

According to the report released on Wednesday, counties are struggling to meet their revenue targets to finance their budgets, plunging them into heavy debts.

During the reporting period, county governments missed collection targets by 35.8 per cent.

All the 47 counties generated a total of Sh34.44 billion against a target of Sh53.66 billion.

This represented 64.2 per cent of the annual target.

It was a decrease compared to Sh35.77 billion generated in FY 2019-20.

“The under-performance of own-source revenue collection implies that some planned activities may not be implemented in the financial year due to lack of funds and may therefore lead to accumulation of pending bills,” Nyakang’o reported.

Two weeks ago, the CoB released a corresponding report for the national government, revealing that ministries, departments and agencies owed suppliers Sh36.35 billion as at June 30, 2021.

The counties accumulated the debts despite President Uhuru Kenyatta’s directive to all the state agencies to clear their bills.

The National Treasury has also been putting the counties on notice, with CS Ukur Yatani threatening to withhold funds for non-compliant regional governments.

On June 10, CS Yatani ordered all government ministries, departments and agencies (MDAs) and counties to clear their pending bills before June 30.

“We still have challenges with the county governments that still owe various suppliers huge amounts.

"In this regard, I direct government ministries, departments and agencies and the county governments to clear all their pending bills by June 30, 2021,” the CS ordered.

According to the report released on Wednesday, however, the directive has been largely ignored as the devolved units continued to accumulate debts.

The report shows that Nairobi county accounts for 56.6 per cent of the stock of pending bills at Sh54.32 billion.

Other counties with huge pending bills are Mombasa (Sh4.46 billion), Kiambu (Sh3.50 billion), Murang’a (Sh1.89 billion), Migori (Sh1.88 billion), Meru (Sh1 billion) and Machakos (Sh1.23 billion).

Others are Kwale (Sh2.29 billion), Kisumu (Sh1 billion), Kilifi (Sh1.98 billion), Kajiado (Sh1.25 billion) and Embu (Sh1.81 billion).

“We recommend that county governments prioritise the payment of pending bills as a first charge in the budget implementation cycle for the 2021-22 before embarking on new financial commitments,” Nyakang’o said in the report.

Mandera county is the only county government that did not report any pending bills for the period under review.

Other counties with low debt burden are Elgeyo Marakwet (Sh52.26 million), Bungoma (Sh95.26 million), Baringo (Sh195.26 million) and Isiolo (Sh283.32 million).

To curb what seems to be a deepening crisis, Nyakang’o recommended counties to develop and implement alternative measures to ensure the budget is fully financed.

“Further, the setting of own-source revenue targets should be driven by historical trends of revenue generation,” she added.

 

(Edited by V. Graham)