Suppliers and contractors have stormed the Kisumu County Treasury protesting inordinate delays in payment of pending bills .
They are demanding immediate settlement of their dues.
Similar delays have been replicated in all county governments, county assemblies, national government ministries, departments and parastatals.
The order by The National Treasury Cabinet Secretary Ukur Yattani to have all pending bills settled by end of last financial year that ended on June 30, 2021 has been widely interpreted as mere empty public relations exercise.
Majority of the institutions are yet to get allocation from the National Treasury despite the much publicised debt settlement plan of all the pending bills before closure of the just ended financal year.
Yatani had asked Parliament to suspend funds allocations to public entities which do not adhere to his directive of clearing pending bill before the end of the financial year.
“Though progressive progress in settling these pending bills by the national government, we still have challenges with county governments that still owe suppliers huge amounts. I urge the house to support our efforts towards enforcing compliance in payment of all verified pending bills by the county governments,” he said.
He noted that the delays in payment of pending bills to businesses that have offered services to both the national and county government has affected the liquidity of the entities.
“In a number of cases, this has led to the closure of businesses and affected the livelihoods of the suppliers,” he observed.
Before the end of the financial year, the treasury disbursed additional Sh.43.5 billion to County Governments to clear their pending bills.
However, Council of Governors (CoG) said the amount is not enough to clear all pending bills and still run the counties effectively.
In a statement by Finance, Planning and Economic Affairs Committee Chair Ndiritu Muriithi, said the amount disbursed comprises of Sh.39 billion as equitable share.
Out of this, Ndiritu said, Sh.3.5 billion is arrears owed to the Nairobi County government, Sh.8.692 billion is arrears owed to 16 county governments for the month of March, and Sh.27.052 billion is owed to 47 county governments for April.
“It is important to note that these amounts are the normal monthly allocation to County Governments to facilitate delivery of services to the citizen,” said Ndiritu.
The governors said the delay in disbursement by Treasury led to the county governments owing employees salaries from March to present, hence a big chunk of the funds will be used to settle these arrears as well as statutory deductions to KRA, NHIF and NSSF.
Government’s unpaid bills to suppliers and contractors sharply increased in 2020 to Sh.322.5 billion by the end of December 2020, compared to Sh.89.9 billion by the end of December 2019.
The Treasury owed suppliers and contractors Sh.274.3 billion equivalent to 85 per cent of the pending bills while government ministries and state departments owed Sh.48.2 billion equivalent to 15 per cent of the pending bills at the end of last year.
The government collected Sh.810.55 billion in revenue by the end of December 2020, below the Sh907.66 billion target, and Sh.119 billion less than the amount collected at the end of December 2019.
Revenue collection fell below the target mainly due to difficult economic environment created by the covid19 pandemic.
An audit conducted by the Auditor General on behalf of the National Treasury in 2018 indicated that both the central and county governments owe suppliers more than Sh.225 billion dating back several years.