A report by Controller of Budget Margaret Nyakang'o on the financial performance of county governments for the 2025/2026 financial year reveals that Nairobi and Nakuru counties have the largest outstanding revenue debts. Nairobi's debt accounts for 52.15% of the total unpaid revenue, while Nakuru's debt accounts for 14.69%. The report highlights the challenges in revenue collection, enforcement of laws, and financial management, which hinder the counties' ability to provide services and fund development.
The majority of Nairobi's debt comes from land rates, with property owners owing Sh51.34 billion. The county is also owed Sh5.64 billion in public utility charges, Sh440.6 million in house rates and market stall fees, and Sh283.7 million from outdoor advertising and banners. The Kenya Power and Lighting Company is one of the largest debtors, owing Sh5.6 billion in public utility charges. In Nakuru, land rates account for Sh11.8 billion of the debt, while house rates account for Sh782 million.
According to the report, the total debt owed by all 47 counties is Sh113.3 billion, with Nairobi and Nakuru's combined debt exceeding two-thirds of this amount. The Revenue Authority has noted that counties have the capacity to collect at least Sh260 billion annually but are currently collecting less than Sh100 billion. In the 2025/2026 financial year, counties collected Sh96 billion, up from Sh60 billion the previous year.
Experts, including governance expert David Ngugi, have noted that recovering the Sh113.3 billion in outstanding revenue would significantly enhance the counties' ability to fund essential services and reduce their reliance on the national government. Ngugi stated that the funds could be used to upgrade healthcare services, finance major water projects, and improve infrastructure.
The report recommends that counties improve their revenue collection systems, leverage technology, and take stringent action against debtors to increase revenue and reduce dependence on the national government. Controller of Budget Margaret Nyakang'o has emphasized the need for counties to take proactive measures to address the revenue shortfall and ensure sustainable financial management.
Other counties with significant revenue debts include Mombasa (Sh13.68 billion), Kiambu (Sh5.63 billion), Kitui (Sh2.2 billion), Busia and Kakamega (Sh1.7 billion each), Laikipia (Sh1.4 billion), Kisii (Sh1.3 billion), and Nyeri and Bomet (Sh1.2 billion each). The report highlights the need for all counties to prioritize revenue collection and financial management to ensure effective service delivery.
The findings of the report underscore the importance of strengthening revenue collection and financial management in counties to ensure that they can provide essential services to their residents. The Controller of Budget's recommendations are expected to guide counties in implementing measures to improve their financial sustainability and reduce their reliance on the national government.
Key points
- Nairobi and Nakuru counties owe a combined Sh75.7 billion in unpaid revenue.
- The total debt owed by all 47 counties is Sh113.3 billion.
- Recovering the outstanding revenue would enhance counties' ability to fund essential services and reduce reliance on the national government.
