Counties clear Sh23 billion pending bills in 6 months
Council of Governors Chairperson, Anne Waiguru joined by other governors addressing the media at the Council’s offices in Nairobi. FILE PHOTO | DENNIS ONSONGO | NMG
County governments cleared nearly half of their verified pending bills worth Sh48 billion between June and December last year, giving small businesses much-needed working capital that was locked up in county contracts.
An audit by the Office of the Auditor General done earlier last year had found that counties were sitting on a total pending bills pile of Sh156.19 billion as of June, out of which Sh48.1 billion was verified for payment while the remaining Sh108.5 billion was classified as “ineligible for payment due to lack of documentation to support services rendered or work done”.
Counties were then asked by the Treasury to prioritise payment of the verified claims as the government sought to alleviate capital problems for businesses in a bid to stimulate the economy that was struggling under the weight of rising global inflation.
The 2023 Draft Budget Policy Statement released this week shows that Mandera County was the only one that cleared its verified pending bills portfolio in the period, amounting to Sh195.6 million.
Lamu and Nyamira Counties cleared 99 percent of their verified dues, paying suppliers and contractors Sh163.9 million and Sh275.7 million respectively from claims worth Sh166.1 million and Sh278.1 million.
“A report by the Controller of Budget (CoB) indicates that by December 21, 2022, Counties had settled Sh22.9 billion (47.6 percent of the eligible pending bills) leaving an outstanding balance of Sh25.1 billion. During this period, the National Government released to the Counties significant resources to enable them to clear their pending bills,” said the Treasury in the budget document.
Nine other counties—West Pokot, Uasin Gishu, Taita Taveta, Nyeri, Samburu, Migori, Meru, Makueni and Bomet—also cleared more than 90 percent of clean claims, which ranged from Sh95 million to Sh607 million.
On the other hand, Wajir, Kwale, Nairobi and Kiambu were the worst-performing counties in clearing pending dues.
Wajir and Kwale failed to make any payments of their verified pending claims of Sh329 million and Sh30.4 million.
Nairobi and Kiambu, which hold the two biggest piles of unpaid supplier debt at Sh10.6 billion and Sh3.37 billion respectively, cleared just nine and two percent of these owings after paying Sh975.3 million and Sh53 million respectively.
Pending bills have been a perennial problem for both the national and county governments, having risen to a combined total of about Sh650 billion by the end of June last year.
Some contractors and suppliers have linked the non-payment of bills by the government to the collapse of their businesses and auctions by banks over loan defaults.
The businesses are also forced to seek alternative sources of credit to keep afloat as they wait for government payments, adding to the cost of doing business and leaving them at a loss given that the government does not pay interest on the pending dues.
For counties, several measures have been rolled out in the past year to compel the units to improve their payment performance, including a requirement to disclose in their financial statements details of all pending bills, including the date, beneficiary, description and amount and the reason why the amount was not settled by the due date.
