A recent report by the Controller of Budget reveals that eight county governments in Kenya have outstanding trade payables of Sh70.23 billion, which have remained unsettled for over three years. The counties in question are Mombasa, Wajir, Nairobi, Kiambu, Embu, Machakos, Garissa, and Taita Taveta. This debt has significant implications for suppliers, contractors, and staff who have not been paid.
Nairobi holds the largest historic debt among the eight counties, with Sh49 billion still unpaid. Other counties with substantial debts include Kiambu with Sh3.2 billion, Mombasa with Sh2.95 billion, and Wajir with Sh1.9 billion. The report highlights that over half of all trade payables in these counties have remained unsettled for at least three years, with Mombasa recording the highest share of old trade payables at 88 percent.
The Controller of Budget’s 2025/26 Budget Implementation Review Report also notes that county trade payables reached Sh172.53 billion by June 30, 2026. This amount comprises Sh126.40 billion for recurrent activities and Sh46.15 billion for development projects. County assemblies contributed Sh6.4 billion to the total, while Nairobi alone accounted for Sh86.9 billion, representing just over half of all trade payables.
The report expresses concern that several counties have not adhered to their payment plans, despite regulations mandating prioritisation of eligible trade payables in the next fiscal year. Furthermore, salary arrears and statutory deductions for county employees totalled Sh100.24 billion, with Sh98.44 billion attributable to county executives; more than half of this amount has been outstanding for at least three years.
The Controller also highlighted concerns that some counties may have deducted employee benefits without remitting them to pension schemes, potentially jeopardising retirees’ entitlements. This situation could have severe consequences for county employees and retirees. The report emphasises the need for counties to prioritise their payment plans and ensure that employee benefits are remitted to pension schemes.
County spending patterns show a wage-to-revenue ratio of 47 percent, above the statutory ceiling of 35 percent, driven by compensation costs that exceeded development spending by roughly Sh109 billion. This indicates that counties are allocating a significant portion of their revenue towards employee compensation, potentially at the expense of development projects and other essential services.
The Controller of Budget’s report serves as a reminder of the financial challenges facing county governments in Kenya. The eight counties with outstanding debts must develop strategies to settle their trade payables and ensure that employee benefits are remitted to pension schemes. Ultimately, this will help to promote financial stability and accountability in county governments.
Key points
- Eight Kenyan counties owe a combined Sh70.23 billion in unpaid debts older than three years.
- Nairobi holds the largest historic debt among the eight counties, with Sh49 billion still unpaid.
- County trade payables reached Sh172.53 billion by June 30, 2026, with Nairobi accounting for just over half of all trade payables.
