Nairobi worst hit as counties accumulate Sh159.73 billion debts

County governments had outstanding pending bills of Sh159.73 billion as of March 31 this year, according to Council of Governors (CoG) chairperson Anne Waiguru.

The Kirinyaga governor, who spoke during the Status of Devolution meeting in Nairobi on Friday, June 30, 2023, said Nairobi County bears most of the debts, at Sh102.81 billion, or 64.4 per cent of what all counties owe.

"The high pending bills are largely attributed to delays in disbursing the equitable share by the National Treasury," Ms Waiguru said.

She added: "The negative impacts of delayed disbursements cannot be sufficiently underscored. On average, the National Treasury is usually three months behind in disbursement."

In total, Waiguru said county governments have received a total of Sh2.9 trillion of equitable share since the advent of devolution ten years ago.

Audited and approved revenues

The money, the governor said, translates on average to about 30 per cent of audited and approved revenues and 20 per cent of ordinary revenue.

Waiguru said National Treasury's delays in disbursing money to counties have often resulted in non-compliance with the timely payment of employees' salaries and statutory deductions. They have also incurred interest from bank overdrafts as the Kenya Revenue Authority attaches county governments' bank accounts.

Other effects have been stalled development projects occasioned by the delayed settlement of payments to suppliers and contractors, exposure to litigation, and under-utilisation of budgets.

"Our call to the National Treasury is to ensure timely release of allocations to county governments in order to guarantee Kenyans continuous access to public services," she said.

Waiguru said counties received ShSh213 billion in conditional grants from development partners and Sh147 billion in conditional grants from the national government over the same period.

She added: "Further, over the same period, county governments have received a total of Sh213 billion in conditional grants from development partners and Sh147 billion in conditional grants from the national government."

Waiguru's address was meant to give updates on the achievements counties have made in various sectors including finance, health, and infrastructure.

Waiguru said there remains one question that has been asked over and over on whether the allocations disbursed to county governments are adequate to enable devolved units to effectively deliver services as spelt out in the Fourth Schedule of the Constitution.

"The total projected revenue for budget implementation in the financial year 2022/2023 amounted to Sh484.1 billion, which consisted of equitable share allocation of Sh399.6 billion, including the Sh29.6 billion being the June 2022 allocation carried forward from the FY 2021-2022. There were additional allocations from both national government and development partners amounting to Sh22.52 billion and projected Own Source Revenue (OSR) of Sh61.98 billion," she said.

Equitable share

She added: "Out of these allocations, a total of Sh399.9 billion has so far been disbursed to county governments as equitable share, equivalent to 100 per cent, and Sh14.52 billion of the Sh17.16 billion additional allocations from development partners, representing 85 per cent of the total allocation."

As of the first nine months of the FY 2022-2023, county governments, she said generated a total of Sh28.77 billion OSR, translating to 46.4 per cent of the annual target of Sh61.98 billion. This, she said, was an improvement of six per cent compared to the Sh27.09 billion generated in a similar period of FY 2021-2022.

"Further, analysis of OSR as a proportion of the annual target indicates that Kitui, Kirinyaga and Samburu counties achieved the highest performance of 84.6 per cent, 80 and 69.8 per cent, respectively," said Waiguru.

On pending bills, as at the end of the third quarter of the FY 2022-2023, Waiguru said counties reported partial settlement of pending bills, to the tune of Sh26.21 billion.

Elgeyo Marakwet is the only county that has since settled all its debts.