To cut debts, State should convert pending each bill into a government security

The government enters the market with the confidence of any serious buyer. It tenders, negotiates hard, demands delivery on time, penalises suppliers who fall short.

Then the invoice matures, and it pays on its own terms, or not at all, and the supplier who financed that delivery has almost no way to enforce the matter. That imbalance isn't bureaucratic drift. It's written into law.

The Government Proceedings Act, Cap 40, is a 1956 statute that survived into a constitutional order it was never built for. Its most damaging provision is Section 21.

A supplier who wins a money judgment against the State cannot execute or attach government property the way any other decree holder can.

The only path is a certificate of order against the government, served on the accounting officer, followed, if payment still doesn't come, by a fresh judicial review case seeking mandamus to compel that officer to pay.

 You win, you queue, then you sue again to collect what a court already awarded you. The mandamus carries no real teeth, because you still can't touch a single government asset.

The courts have wobbled on this. In March 2024, the High Court declared Sections 13A and 21 unconstitutional for granting the State preferential treatment.

Weeks later, the Court of Appeal restated the old position, and as recently as October 2025, the High Court confirmed that Section 21 still governs.

The shield holds. Business can't build liquidity on a case that might turn one day.

The damage isn't theoretical. Kenya's outstanding government pending bills sit at roughly Sh622.7 billion as of mid-2026 - Sh465.9 billion by the national government and Sh156.84 billion by counties.

Most of it is owed to small and medium enterprises on claims below Sh10 million each. These are traders who delivered on bank loans priced above 20 per cent and have waited years on paper they can't spend, pledge, or enforce.

Most Kenyan businesses don't fail from a lack of opportunity. They fail because their capital is trapped, and much of that trapped capital sits inside government.

The fix isn't to repeal Cap 40 and turn auctioneers loose on hospitals. It's to change the instrument. Convert each verified pending bill, with the supplier's consent, into a government security: a Treasury bill, a bond, or a tax-exempt infrastructure bond.

That single move solves what mandamus never could. Once arrears become a listed security, Section 21 stops mattering, because the State will not casually default on a coupon.

The cost is a downgrade, spooked pension funds, and a locked door the next time it borrows. You swap a toothless court order for the one discipline government to actually respect its own borrowing reputation.

The consent matters. Offer paper, don't force it, and you avoid a takings fight.

A trader who needs rent money takes a short bill or sells the paper on the exchange the same day. One who can wait takes yield.

The bond becomes bankable, discountable, alive. This is honest accounting, not new borrowing. Kenya's debt already sits near Sh13 trillion, so the headline objection writes itself.

 But these arrears are already a liability, merely hidden and unfunded. The IMF is itself pushing Kenya to recognise obligations it currently keeps off the books. Bonding verified bills raises the number because the truth rises, not the debt.

Nigeria is already settling over four trillion Naira in contractor arrears through structured, verified, smallest-first payments. The mechanism works. It needs a hard verification gate, given that Sh268 billion in claims were already rejected for missing documentation, and a firm rule against fresh accumulation.

If the State wants the appetite of a private client, it must carry the duty of one. The government's debt is real. Its obligation to pay should be too.