The National Treasury has now moved to address the Sh800 billion pending bills nightmare for both counties and the national government, accumulated from June 2005 to June 2022.
The government has ordered ministries and agencies to submit detailed reports and documents by February 2, 2024 to aid the former auditor-general Edward Ouko-led Pending Bills Verification Committee (PBVC) in doing this task.
“You are required to submit... all existing pending bills for both recurrent and development votes; all procurement, contracting, implementation and contract certification documents,” reads a letter by the PBVC.
The ministries and agencies are also required to attach “reasons as to why the bills have remained unpaid to date and any other necessary information which may assist the Committee in analysing the bills”.
The Cabinet had in June approved establishment of the Pending Bills Verification Committee, tasking it with the auditing of liabilities for the period between 2005 and 2022.
The committee constitutes the Attorney-General, the State Department of Roads, the State Department of Public Works, the State Department of Housing and Urban Development and the Public Procurement Regulatory Authority, among other representations. It is chaired by former auditor-general Edward Ouko.
“In order to come up with well-reasoned conclusions and recommendations regarding these bills, the committee is required to scrutinise and analyse the existing stock of national government pending bills,” explains Mr Ouko in the letter.
The ballooning pending bills has over the years sounded more pain to businesses in various sectors which have been starved of cash, with the government holding close to Sh800 billion by September.
According to the National Treasury, the national government pending bills increased by Sh63 billion in just three months to end of September to hit Sh630.6 billion.
The pending bills by counties, on the other hand, hit Sh164.8 billion by end of June, having risen from Sh37.64 billion by 2015.
Cumulatively, the two levels of government’s pending bills totalled Sh732 billion by end of June, a Sh633 billion increase from the level they were at just four years ago.
At the same time, the debts to local businesses and suppliers increased by Sh74.5 billion between July 2022 and June 2023.
Former Auditor-General Edward Ouko at a past event. Mr Ouko chairs the Pending Bills Verification Committee.
Photo credit: Francis Nderitu | Nation Media Group
The committee aims to tame the menace of the bulging pending bills in the national and county governments. This is yet another stab at addressing the problem of pending bills in government, which follows intense calls by various stakeholders in Kenya’s public finance space – including the Controller of Budget (CoB) and the Auditor-General – who have expressed concerns previously.
The CoB in June noted that despite the formation of internal committees at counties to verify pending bills when new governors entered office last year, county pending bills still shot up by 11 percent to Sh164.8 billion by June 2023.
“Nairobi City County had the highest pending bills as of June 30, 2023 which represented 65.1 per cent of the total county governments pending bills at Sh107.33 billion. Other county governments with a high level of pending bills are Kiambu (Sh5.96 billion), Wajir (Sh5.51 billion), Mombasa (Sh4.29 billion), Murangá Sh3.65 billion) and Mandera (Sh3.10 billion),” the COB stated.
Ms Margaret Nyakang’o, the COB, attributed the high level of pending bills to delays in disbursing the equitable share by the National Treasury, the change of county administrations and the requirement to undertake a verification process of pending bills which took time, untimely approval of supplementary budget estimates to adopt prior-year pending bills in the current budget and political interference and refusal by successive governments to honour obligations.
Controller of Budget Margaret Nyakang’o.
Photo credit: File | Nation Media Group
By end of September 2022, Pending Bills in the national government amounted to Sh439.2 billion, which rose to Sh630.6 billion by end of September 2023. The national government pending bills have increased by 89 percent from Sh334 billion in 2020.
On the other hand, county governments continue to grapple with the mounting pending bills which have shot up by 338 percent since 2015 when they were Sh37.6 billion, hitting Sh164.8 billion by June this year.
The committee is expected to examine and submit a report to Treasury Cabinet Secretary, after which the government committed to honour all obligations that will be verified.
“The move is aimed at establishing the integrity of all bills and cushioning small enterprises against liquidity inadequacies. It was agreed that the Committee will present its final report within a year,” a statement from State House following the Cabinet decision said.
