- Nairobi’s debt increased to Sh84.01 billion from Sh54.32 billion in June last year.
- Machakos has accumulated Sh2.80 billion in pending bills with Tana River yet to clear Sh2.41 billion.
Image: ANDREW KASUKU
A debt crisis that could spell the death of several businesses has hit counties as pending bills balloon by Sh32.96 billion in six months.
The latest report on county expenditure shows that contractors and suppliers of counties are not being paid for their services.
This is adversely affecting operations and threatening businesses as they struggle to recover from the ravages of the Covid-19 pandemic.
The budget implementation review report by Controller of Budget Margaret Nyakang’o reveals that the counties’ debt stood at Sh128.94 billion as at December 31, last year.
This, according to the report released last week, increased from Sh96 billion as at the beginning of the financial year on July 1, last year.
Nyakang’o flagged the ballooning debt saying it is a crisis and a ticking time bomb and that requires immediate action.
“The Controller of Budget advises county governments to prioritise pending bills as a first charge in the 2021-22 budget before embarking on new financial commitments,” Nyakang’o said in the report.
Regulation 41 (2) of the Public Finance Management (County Governments) 2015, states that “debt service payments shall be a first charge on the County Revenue Fund.
The provision mandates accounting officers to ensure this is done to the extent possible that the county governments do not default on debt obligations.
Shockingly, the debts have continued to swell despite President Uhuru Kenyatta’s directing all the national and county government agencies to clear the debt.
Last year, Treasury CS Ukur Yatani threatened to withhold funds to counties and national government agencies that do not settle their bills.
“I direct government ministries, departments and agencies and the county governments to clear all their pending bills by June 30, 2021,” Yatani said.
He spoke during the unveiling of the 2021-22 budget estimates at Parliament in June last year.
Late cash disbursement by the Treasury for the huge pending bills, underperforming own source revenue and failure by the counties to prioritise payment of debt have been blamed for the ballooning bills.
During the period under review, the counties received Sh144.98 billion out of Sh370 billion allocated to counties in equitable share of revenue raised nationally.
However, the devolved units collected only Sh14.06 billion from their own source revenue collection.
This represents 24.3 per cent of the annual target of Sh57.80 billion.
Ideally, the counties should have hit 50 per cent of their annual target by December 31, 2021.
According to the report that could focus a spotlight on the devolved units, counties with the highest level of pending bills include Nairobi, Kiambu, Mombasa, Wajir, Machakos and Tana River.
Nairobi’s debt increased to Sh84.01 billion from Sh54.32 billion in June last year, Kiambu’s stood at Sh5.12 billion, Mombasa’s at Sh4.29 billion and Wajir's at Sh3.82 billion.
Machakos has accumulated Sh2.80 billion in pending bills with Tana River yet to clear Sh2.41 billion.
In a similar report released for the first quarter of the fiscal year, Nyakang’o fingered 30 county governments that had not prioritised payments of pending bills despite owing their suppliers and contractors billions of shillings.
They include Baringo, Bungoma, Busia, Elgeyo Marakwet, Homa Bay, Isiolo, Kajiado, Kilifi and Kisumu.
Others are Kwale, Lamu, Machakos, Marsabit, Meru, Migori, Nairobi, Nakuru, Nandi, Narok, Nyamira, Nyandarua, Samburu, Tana River and Tharaka Nithi.
Trans Nzoia, Turkana, Uasin Gishu, Vihiga, Wajir, and West Pokot had also failed to make any payments towards the clearance of debts.
In the latest report, however, the 47 devolved units paid Sh11.2 billion out of the Sh140.14 billion that they had accumulated over time. This left a balance of Sh128.94 billion.
(Edited by Bilha Makokha)