Eight counties in Kenya are struggling with a cumulative debt of Sh70.23 billion that has remained unpaid for at least three years. This has resulted in suppliers, contractors, and county workers waiting for payment. According to a report by the Controller of Budget, Margaret Nyakang'o, Nairobi has the largest share of the historical obligations at Sh49 billion. The debt has significant implications for the affected counties, which are facing financial strain.
The report indicates that Mombasa has the highest proportion of trade payables that are at least three years old, accounting for 88 per cent of its outstanding bills. Other counties with high proportions include Wajir at 80 per cent, Nairobi at 76 per cent, Kiambu at 67 per cent, Embu at 65 per cent, Machakos at 54 per cent, Garissa at 52 per cent, and Taita Taveta at 51 per cent. These counties are headed by governors with varying terms in office, including some who are serving their first terms and others who have returned to leadership.
The individual debt amounts for each county vary significantly. Nairobi's historical debt stands at Sh49 billion, while Kiambu has Sh3.2 billion, Mombasa has Sh2.95 billion, Wajir has Sh1.9 billion, Machakos has Sh1.39 billion, Taita Taveta has Sh1.2 billion, Embu has Sh822.3 million, and Garissa has Sh182.98 million. The large pending-bills portfolio poses significant risks for county executives in settling their bills.
The Controller of Budget's report also highlights other counties with substantial debts. Vihiga, for instance, has Sh790.57 million in bills that have been outstanding for more than three years. By June 30, 2026, counties collectively owed Sh172.53 billion in trade payables, with recurrent activities accounting for Sh126.40 billion and development activities linked to Sh46.15 billion. County assemblies accounted for Sh6.4 billion of the total.
The report expresses concern that some counties have not followed their plans for settling outstanding obligations. According to the Public Finance Management (County Governments) Regulations, 2015, eligible trade payables should be treated as a first charge in the financial year that follows. Despite this, counties have continued to accumulate fresh debts, with more than Sh95.44 billion incurred since 2022.
The financial strain is also affecting county employees, with salary arrears and unpaid statutory deductions reaching Sh100.24 billion by June 30. County executives accounted for Sh98.44 billion, while county assemblies owed Sh1.80 billion. The Controller of Budget raised concern over cases where counties may have deducted employee benefits but failed to remit the money to pension schemes.
County spending patterns indicate further pressure on finances, with employee compensation consuming Sh235.96 billion, which is about Sh109 billion more than the amount spent on development. The combined wage-to-revenue ratio stood at 47 per cent, exceeding the statutory limit of 35 per cent. Development expenditure also fell short of county budgets, with an absorption rate of 54.21 per cent.
Key points
- Eight Kenyan counties owe Sh70 billion in unpaid debts accumulated over three years.
- Nairobi has the largest share of the historical obligations at Sh49 billion.
- Counties have continued to accumulate fresh debts, with more than Sh95.44 billion incurred since 2022.
