Counties in Kenya Grapple with a Whopping Ksh165 Billion in Pending Bills

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Author: Dennis Njore

In a fiscal rollercoaster, Kenya's counties find themselves engulfed in a financial quandary, with a staggering Ksh165 billion in pending bills from the last financial year. The situation was unveiled by the Office of the Controller of Budget (CoB), sending shockwaves across the nation. Nairobi County, in particular, bore the brunt, reporting the highest tally of pending bills for the year 2022/2023, amassing a jaw-dropping Ksh107.33 billion. On the flip side, Elgeyo Marakwet emerges as the outlier, with a mere Ksh18 million left to clear, according to the County Budget Implementation Review.

Dr. Margaret Nyakang’o, the Controller of Budget, has weighed in on this dire situation, emphasizing that settling these pending bills should be the foremost priority for county governments, as it aligns with the law. Furthermore, Dr. Nyakang’o has urged counties to draft realistic budgets with attainable revenue targets and address ineligible pending bills through legal means.

Shockingly, the audit has illuminated a proclivity among counties to disproportionately allocate funds toward personnel emoluments, contravening the stipulated 35% limit of total revenue set by the Public Finance Management (County Governments) Regulations, 2015. The data reveals an overwhelming Ksh195.09 billion allocated to personnel emoluments, which, alarmingly, constitutes 45.5% of the total expenditure, indicating an increase from the previous financial year.

Digging deeper into the fiscal abyss, counties have expended Ksh135.83 billion on operations and maintenance while development spending has witnessed a marginal dip, now standing at Ksh97.98 billion. The silver lining is that a select few counties, including West Pokot, Mandera, Samburu, Kericho, Nandi, and Homa Bay, have maintained high absorption rates, surpassing the 80% threshold for development budgets. In contrast, Kilifi, Kisii, Kiambu, and Nakuru counties recorded the lowest absorption rates, highlighting the diversity in financial management across the nation.

Interestingly, some counties, such as Turkana, Tana River, Mandera, Kwale, and Samburu, have successfully adhered to the 35% ceiling for personnel emoluments, serving as beacons of fiscal prudence.

Turning the spotlight on county executives' budgets, the figures for the fiscal year totaled an astounding Ksh515.18 billion. Although the financial landscape shows signs of turbulence, there are glimpses of hope. Local revenue collection by counties has increased from Ksh35.9 billion in the previous fiscal year to Ksh37.8 billion, constituting a commendable 66% of the Ksh57 billion annual target. A select group of counties, including Lamu, Kirinyaga, and Kitui, have outperformed their annual revenue targets, showcasing fiscal dexterity.

Nevertheless, a less rosy picture emerges for 44 counties that fell short of achieving their revenue targets. Nyamira, Marsabit, Mandera, Murang’a, Wajir, Kisumu, and Kericho reported figures below 50% performance, illustrating the variances in revenue collection efficiency.

Controller Nyakang’o has pinpointed several factors contributing to this fiscal conundrum. Under-performance in revenue collection, low development budget expenditure, the looming specter of high pending bills, bloated personnel emoluments, and delayed submission of financial and non-financial reports have collectively derailed effective budget execution. She has fervently called upon counties to revamp revenue collection strategies and prioritize the implementation of development programs to uplift the living standards of their constituents.

In the wake of this financial storm, Kenya's counties find themselves at a crossroads, with the imperative of prudent fiscal management and responsible governance becoming more pressing than ever before. The road ahead will undoubtedly be challenging, but the nation's future prosperity hinges on how effectively these issues are addressed and resolved.