Doing business with national and
county government agencies has continued to be a risky enterprise as the
entities perennially fail to pay their
contractors and suppliers.
The latest report says the two levels of government have accumulated
Sh706.20 billion in pending bills as
of December 31 last year.
This implies that traders and businesspeople who supplied the entities
with commodities and did works such
as construction of roads and bridges,
are in agony.
It emerged that some of the suppliers are unable to clear their bank
loans, with reports indicating some
of them have been auctioned for defaulting on their loans.
“Defaults are high because LSO should be a respected document. A
lot of businesses rely on loans, so once
we are unable to pay on time because
our LSOs have not been respected, defaults rise,” Association of Public
Sector Suppliers secretary general
Simon Gichuki said in January.
The latest expenditure reports of the National and county governments, by Controller of Budget Margaret Nyakang’o, reveal a shocking
scenario.
The report, covering the
first half of the current fiscal year,
reveals that the national government
— ministries, departments and agencies — has accumulated pending bills
amounting to Sh524.04 billion as at
December 31, 2024.
The counties owe Sh182.13 billion.
Nyakang’o said the consequences
of not paying these pending bills, as
reported by suppliers from various
counties to the Controller of Budget,
are severe.
They include financial distress for
individual suppliers and the closure
of businesses, all of which contribute
to reduced economic activity.
“County governments should
strive to avoid accumulating pending
bills, regardless of their challenges.
They can achieve this by entering
into agreements or contracts based
on their cash flow availability and budget allocations,” the report states.
The debt has accumulated over
a long period as the entities pile up
more bills.
This is despite the law and various
directives by the presidency as well as
Cabinet and other budget watchdogs
to the agencies to clear their bills.
According to the reports, some of
the state agencies and department
with huge pending bills include the
State Department of Public Service
– the National Youth Service which
owes Sh14.27 billion.
The executive of the President
(debt accumulated by defunct Nairobi Metropolitan Services) owes
Sh13.57 billion, the Ministry of Defense owes Sh10.27 billion and the
State Department of Agriculture owes
Sh7.90 billion.
Others are State Department of
Transport (Sh6.12 billion), State Department of Medical Services (Sh5.56
billion) and Department of Correctional Services (Sh5.06 billion).
