A massive 77 per cent of county pending bills as of March this year were found to be ineligible for payment due to a lack of supporting documents for some supply contracts.
A report by the Controller of Budget (CoB) Office shows that both executives and assemblies had Sh107.12 billion in ineligible bills out of the total Sh139.5 billion.
Between June 2020 and March 2022, counties only settled Sh15.9 billion pending bills, out of Sh155.5 billion, leaving Sh139.5 billion unsettled.
“County governments are advised to settle the eligible pending bills as a first charge on the budget in line with Regulation 41 (2) of the Public Finance Management (County Governments) 2015, which states that ‘debt service payments shall be a first charge on the County Revenue Fund and the Accounting Officer shall ensure this is done to the extent possible that the county government does not default on debt obligations,” the CoB stated.
The huge stockpile of ineligible pending bills raises questions about the procurement messes rocking many devolved units.
The Treasury in January last year ordered a repeat special audit of county pending bills following complaints about the authenticity of some supply contracts.
The Office of the Auditor-General (OAG) had in 2020 conducted a special audit that revealed that as at June 30, 2018, only Sh51.2 billion pending bills by counties were payable, while the rest totalling Sh37.7 billion were found to be ineligible due to lack of supporting documents.
Several county governments, however, wrote to the OAG disputing the eligibility of some of the pending bills. This prompted the repeat audit ordered by the Treasury.
Small businesses suffer
A pile-up of pending bills among counties and state corporations has dealt small businesses a major blow. Some contractors and suppliers have linked the non-payments to the collapse of their businesses and the auction by banks over loan defaults.
State firms and agencies still owe suppliers billions of shillings in pending bills, adding to the woes of the traders already hit by the effects of Covid-19 pandemic.
The heavy burden of pending bills will now be passed over to the next term of county leaderships after the August 9 elections, most of whom may not prioritise their settlement, as seen in the past.