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State entities pay Sh31bn pending bills in nine months
Controller of Budget (CoB) FCPA Dr. Margaret Nyakang’o makes her remarks during the launch of the Macro Fiscal Analytic Snapshot (MFAS) Kenya-2026 at the Sarova Stanley on January 22, 2026.
Photo credit: Francis Nderitu | Nation Media Group
State entities cut their pending bills and associated penalties by a combined Sh31.37 billion in the nine months to March this year, helping ease cash flow woes that contractors are grappling with due to unpaid debt.
An analysis of data from the Controller of Budget (CoB) shows that the stock of pending bills by 115 State-owned enterprises and Semi-Autonomous Government Agencies (SAGAs) fell to Sh358.56 billion as at March this year from Sh379.04 billion in June last year.
Penalties and interest tied to the bills dropped to Sh14.4 billion in March from Sh25.29 billion in June last year as most of the indebted agencies led by Kenya Rural Roads Authority (KeRRA) and the Kenya National Highways Agency (KeNHA) settled part of the fines.
Delays in settling debt owed to contractors and firms continue to be a nightmare for the private sector, leading to lay-offs of staff, scaling down operations or closure of shops.
Dr Margaret Nyakang’o, the CoB, has over the past few years raised concerns on the failure to clear the pending bills, citing it as legal breach which is significantly hurting the economy.
“The Controller of Budget recommends payment of verified pending bills on a First in, First Out basis by the accounting officers,” Dr Nyakang’o said.
“The payment will unlock cash flow into the economy, both to business enterprises and to the government through tax remittances, therefore supporting economic growth.”
Some government entities cut their unpaid debt substantially while others continued to accumulate pending bills.
KeRRA cut its stock of unpaid bills and penalties to Sh28.54 billion in March this year compared to Sh50.6 billion in June 2025 while KeNHA reduced its share to Sh57.6 billion from Sh72.5 billion in the same period.
Kenya Urban Roads Authority paid Sh4.87 billion in the period, reducing its pending bills to Sh4.67 billion while State-owned oil marketer, National Oil Corporation of Kenya reduced its share of pending bills and penalties to Sh5.54 billion from Sh8.8 billion.
Reluctance by State and county agencies in settling pending bills has turned out to be a headache for the government, prompting several directives and warnings in a bid to enforce payment.
The accumulation of the pending bills is attributed to fiscal indiscipline where some of the entities illegally divert money approved to pay the debt.
Budgetary cuts from the National Treasury, especially to State-enterprises and SAGAs that primarily rely on the State for funding have also made it difficult to pay the debts.
There are also allegations that some rogue officials at these entities collude with unscrupulous businesses to file fictitious claims that are paid at the expense of genuine works.
Businesses and contractors have gone under due to the financial woes, others auctioned by banks. Some have also been forced to lay off workers to remain afloat besides scaling down operations.
There have been calls to withhold budgetary allocations and rejection of budget proposals for non-compliant entities in a bid to enforce an expeditious clearance of the pending bills.
The data from the CoB shows that nine State entities had penalties on their unpaid bills as at March this year. These are KeRRA, KeNHA, Nock, KURA and Kenya Electricity Transmission Company. The others are Kenya Medical Research Institute, Pyrethrum Processing Company of Kenya, Export Processing Zones Authority and the Nairobi Metropolitan Area Transport Authority.
