Pending bills pile over delayed release of counties funds

Deputy President Rigathi Gachagua at 20th Ordinary Session of the Intergovernmental budget and economic council (IBEC) at his official Karen residence on June 05, 2023. [DPSC]

In the wake of the government's recent disbursement of nearly Sh110 billion to counties, a long-standing issue of pending bills continues to plague suppliers, jeopardising their financial stability.

Months of delayed payments and unreliable disbursements have hampered operations in most county governments, prompting threats of operational shutdowns by several assemblies.

County Assembly Forum Secretary General Chege Mwaura (Ngara MCA) said the disbursement, aimed at addressing the mounting financial challenges, may not provide the intended relief as counties grapple with the absorption of funds before the end of the financial year on June 30.

Mwaura revealed that the delay in the disbursement of funds forced counties to take overdrafts from local commercial banks, which attract high interest and unnecessarily burdens the taxpayer.

"The money that should have been allocated for development and recurrent expenditure ends up being utilized for costly overdraft facilities to ensure salaries are paid and essential services are provided," he said.

The Controller of Budget Margaret Nyakang'o told the Senate Committee on Devolution and Intergovernmental Relations, that counties owe suppliers a cumulative total of Sh157 billion, while county assemblies owe Sh1.63 billion.

Nairobi County leads with the highest pending bill amounting to Sh100.36 billion, followed by Wajir at Sh5.59 billion, Kiambu at Sh4.98 billion, Mombasa (Sh4.97 billion), Machakos (Sh2.88 billion) and Murang'a (Sh2.75 billion).

Request for extension

Despite the Council of Governors (COG) request for a 15-day extension beyond June 30, Mwaura emphasizes that even if the extension is granted, the implementation of the Integrated Financial Management Information System (IFMIS) often faces substantial technical hurdles that hinder procurement processes and overall county financial operations.

He sheds light on the complexities surrounding the issue, citing the prioritization of current projects and the need for elected officials to showcase their achievements to constituents.

"Anyone who has worked and is awaiting payment will not receive their dues. They are gradually pushed into the pending bills category, losing their priority status. This creates a difficult situation for them financially." Mwaura said.

Furthermore, the IFMIS (IFMIS e-Procurement system), which is utilized by both national agencies and county governments, presents its own set of challenges.

"The system experiences congestion as all these entities push their own procurement activities through it. Consequently, as the financial year ends, unpaid contractors are added to the pending bills category," Mwaura said.

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