Mystery of Sh37 billion debts choking counties

Health workers in Nyeri County took on the street to protest delayed better working conditions and promotions as the strikes enter second week on August 25, 2015. [PHOTO:KIBATA KIHU/STANDARD].

County governments were holding Sh37.46 billion in pending bills owed to its employees, contractors and suppliers by the close of the 2014/15 financial year.

In a statement that further raises questions on financial prudence employed by county governments, Controller of Budget Agnes Odhiambo paints a picture of devolved units that are on a spree to award tenders even in situations where there is no guarantee of budgetary allocations.

In the statement to the Senate tabled on Wednesday, Mrs Odhiambo told the House that financial reports by 45 counties, excluding Tana River and Busia which did not submit their reports, indicate that the devolved units were indebted to the tune of Sh37,457,709,447 by June 30, 2015.

Senators told The Standard on Saturday that the figures could be higher by now, even as they demanded that each of the governors be called to give details of the pending bills, how they were incurred and when they intend to clear them, as they were portraying the county governments in bad financial status.

Special committee

“This amount does not reflect the actual bills. I support the idea proposed by Kisumu Senator Anyang’ Nyong’o that we set up a special committee to look into this matter. We would like to know the exact bills as of now and how they were incurred,” said Busia Senator Amos Wako.

On Wednesday, Nyong’o suggested the formation of a Senate ad-hoc committee to interrogate the governors on how the bills were incurred and probe if the same was done in accordance with the laws.

“In the Narc government, I was the chairman of the pending bills committee. I would like to propose that we establish a similar one to look into this issue. Governors are going around dishing money left, right and centre above what they earn every month. We would like to know how these bills have come about,” he said moments after the statement was tabled.

Yesterday, Nyong’o maintained the need to form the committee, roping in financial experts from the Criminal Investigations Department (CID) and the Ethics and Anti-Corruption Commission (EACC) to scrutinise the bills.

He expressed fears that if the statement by the Controller of Budget was as by June last year, the bills could hit Sh100 billion mark by end of the current financial year. But he indicated that some of the bills could be fictitious.

“When we evaluated the bills during the Narc government, we realised that only 40 per cent were genuine, the others were either fictitious or fraudulent. We asked the government then to only pay the genuine ones and asked the others who were allegedly owed to move to court. This is what the committee formed should do,” Nyong’o said yesterday.

He defended the call to incorporate CID and EACC officers, saying the senators may not have the time and expertise to scrutinise the bills.

Of the colossal figure, Sh28,205,875,215 are pending bills in relations to development expenditure while all the counties were holding bills amounting to Sh9,251,834,232 in recurrent expenditure.

The figures, communicated to the House through a statement made by the House Finance, Commerce and Budget Committee Chairman Billow Kerrow shocked the senators who demanded to know when the individual governors were planning to clear the bills.

The legislators said the sad financial situation in counties was slowing development in the devolved units with contractors and other suppliers now not willing to do business with the county governments.

In his statement to the House, Odhiambo told senators that only the governors could explain how their governments incurred the pending bills and when they intend to settle them.

The senators demanded the summoning of the county bosses to explain how they plunged their counties into such debts and when they were planning to repay them. “Instead of asking for a statement from the Controller (of Budget) the Committee should have individually called these governors and demand explanations into these bills and how and when they intend to offset them,” said Kakamega Senator Boni Khalwale.

According to the statement prepared on March 6, Bungoma County has the highest amount in pending bills, having accumulated Sh2,537,140,803, with much of it, Sh2,018,455,160, being development expenditure pending bills. The rest, 18.7 million, are in recurrent expenditure.

Budgetary provisions

Other counties with high bills include Kisumu (Sh2.499 billion), Nakuru (Sh2.5 billion), Turkana (Sh2.4 billion) and Vihiga (Sh2.02 billion).

Others are Kwale (Sh1.9 billion), Meru (Sh1.6 billion), Mandera (Sh1.57 billion), Mombasa (Sh1.46 billion) and Nairobi, which has Sh1,228,390,523, all in recurrent expenditure bills.

Lamu county has the least amount in bills at Sh49.3 million, while Taita Taveta, Wajir, Baringo and Makueni counties have Sh108.9 million, Sh112 million, Sh173.4 million and Sh184.9 million debts respectively.

Homa Bay Senator Moses Kajwang’ yesterday said the pending Bills could be hurting youth, persons with disabilities and women, who are supposed to be enjoying an affirmative action by getting 30 per cent of tenders.

“I would like to know how much the youth, women or persons with disabilities are owed by the governor. They have been given 30 per cent tenders and I am sure they are owed billions of money,” he said.

Wycliffe Oparanya, the Chairman of the Council of Governors Finance Committee,  said the bills could be as a result of accumulation of debts not factored during the subsequent financial years budgeting, a challenge he attributed to lack of capacity in budgeting processes in counties.

Oparanya said delays in disbursement of funds by the National Treasury to counties was also occasioning delays in payments to contractors and staff, who at times have to go without their dues for up to three months.

“It is not that we are committing to undertake projects and awarding them without budgetary provisions. That is criminal and against the Public Finance Management Act, these delays in sending money to counties and challenges in budgeting could be the reason for such bills,” said Oparanya. He however said each county government can independently explain their situations as they faced different challenges.