Controller of Budget Dr Margaret Nyakang'o.
County governments increased their borrowing from banks by 77 per cent to Sh3.2 billion in the three months ended September this year, as the cash-strapped units increasingly turned to lenders for financial support.
Disclosures by the Controller of Budget (CoB) show that the debt stock rose from Sh1.8 billion at the close of a similar quarter last year, reflecting increased reliance on short-term bank loans to keep county operations running.
County governments have been grappling with delayed cash disbursements from the National Treasury forcing them to take loans to pay salaries and run other day-to-day operations.
Nairobi held the largest share of outstanding commercial debt, with Sh1.9 billion owed by the end of the review period, making it the single biggest county borrower.
Of this amount, the Nairobi County Executive owed Sh1.5 billion while the County Assembly had outstanding obligations of Sh316.7 million, according to the CoB disclosures.
“The County Executive has a bank overdraft facility with the Co-operative Bank of Kenya Limited to cover its personnel emoluments, which average Sh1.6 billion per month,” wrote CoB Margaret Nyakang’o.
“As of September 30, 2025, it had an overdraft balance of Sh1.54 billion and had paid Sh68.38 million in the form of bank charges, commissions, and penalties during the period under review for use of the facility.”
Council of Governors Chairman and Wajir Governor Ahmed Abdullahi (centre) with fellow governors during a press briefing in Nairobi on September 1, 2025.
Machakos followed with outstanding borrowings of Sh544.3 million by the county executive, placing it a distant second behind Nairobi in terms of exposure to commercial lenders.
Homa Bay ranked third, with its county executive owing Sh471.5 million, while Kisumu County Executive had outstanding borrowings amounting to Sh289.1 million at the end of September 2025.
Laikipia County Assembly posted the smallest exposure among the indebted devolved units, with an outstanding commercial debt of Sh24 million at the close of the period.
According to the CoB, most of the borrowings reported in the quarter took the form of bank overdrafts, which counties used largely to clear salary obligations and meet other immediate operational needs.
The rise in use of overdraft points to liquidity constraints facing counties at the start of the current financial year, as they sought stop-gap financing from banks.
The CoB disclosures do not indicate long-term borrowing arrangements during the review period, pointing instead to short-term facilities as the primary source of commercial debt growth.
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