Ouko's pending bills committee casts doubt on Sh402b claims

Pending Bills Verification Committee chairman Edward Ouko.[File, Standard]

Nearly two-thirds of the money owed to contractors in government  pending bills may not be paid after an audit committee cleared only Sh235.6 billion out of the Sh637.6 billion claimed by various firms.

This means that some Sh402 billion or about 63 per cent of what suppliers and contractors have been claiming from different national government agencies might not be paid.

The large gap between claimed and verified amounts could point to inflated or fraudulent claims or to additional charges such as penalties and interest accrued due to delayed government payments.

National Treasury Cabinet Secretary John Mbadi on Thursday said the Pending Bills Verification Committee had completed its analysis of pending bills and recommended payment of the verified Sh235.6 billion. 

The CS explained that Treasury would pay the approved pending bills over the next two financial years and would prioritise micro, small and medium companies.

“The Committee has since concluded its work and analysed a total of 91,911 pending bill claims valued at Sh637.6 billion. Following this verification exercise, 29,885 claims amounting to Sh235.6 billion have been recommended for settlement,” said Mbadi, further explaining that the Sh175 billion borrowed through the securitisation of the Sh7 per litre of the Road Maintenance Levy has been used to pay pending bills owed to road contractors.

“Of this amount (Sh235.6 billion), Sh80.3 billion has already been settled through securitisation in the roads sector, leaving a verified outstanding balance of Sh155.3 billion for other sectors.”

Financing strategies

He further said the balance of the verified pending bills would be paid through a mix of financing strategies over the two financial years. In the coming financial year, Mbadi said the government would pay Sh68 billion, mostly SMEs that are owed up to Sh100 million.

“To settle the verified outstanding balance of Sh155.3 billion, the National Treasury has proposed a balanced and sustainable settlement strategy which includes a combination of direct budgetary allocations and securitization. The proposal is to settle the verified outstanding balance of Sh155.3 billion over two years starting with FY 2026/27. 

“In the FY 2026/27, the National Treasury proposes a budgetary provision of Sh68 billion to settle the verified bills to suppliers and contractors, owed by the Government for amounts of up to Sh100 million. This provision will also partly settle suppliers and contractors whose pending bills exceed Sh100 million, ensuring that no supplier is excluded.” “The remaining Sh88.0 billion worth of claims will be addressed through other budgetary provisions and instruments.

Mr. Speaker, the deliberate policy of settling pending bills of up to Sh100 million, while individually smaller in value, accounts for the majority of suppliers and have the highest multiplier effect on economic activity. This is to ensure that the Micro, Small and Medium- Enterprises (MSMEs) are not starved of the essential working capital which is critical to the sustainability of their businesses.” 

The Controller of Budget in a recent report said the national government owed contractors and suppliers Sh465.87 billion in pending bills as of March 31 this year, indicating a gradual reduction on account of payments made to settle claims by road contractors.

Counties focus

It also notes that county governments owed contractors Sh163.7 billion as of December 31, 2025, which was a reduction from Sh183.03 billion reported as of June 30, 2025.

The reduction was partly on account of a clean up of the Nairobi County’s clean up of its pending bills register through a rigorous claim verification, debt reconciliation and creditor negotiation as well as partial payments of verified claims.

Analysts noted that the move to pay pending bills would ease liquidity constraints among businesses.  

PwC, in a post budget analysis, noted that county governments too should also come up with plans to clear verified pending bills.

“Unlocking this liquidity is vital to prevent choking MSMEs of essential working capital. Consequently, counties must aggressively execute the IBEC-approved Pending Bills Action Plans, ensuring that clearing outstanding arrears is prioritised as a first charge on their respective budgets,” said PwC.

KPMG said while the move would improve liquidity, its effectiveness would also depend on government honouring hte commitment while also taming its domestic borrowing.

“This commitment is expected to improve liquidity within the private sector, support business cash flows and restore confidence among suppliers and contractors doing business with government,” said KPMG in a post-budget brief. 

“The combination of pending bill settlements, lower interest rates and a more measured tax approach may support business liquidity and investment. However, the extent of this benefit will depend on the Government’s ability to implement its commitments and manage domestic borrowing levels.”