Nakuru grapples with Sh2.7bn debt as elections approach
Nakuru Governor Lee Kinyanjui. His administration is grappling with a Sh2.7billion debt
Nakuru County is grappling with a Sh2.66 billion debt as the August elections draw closer.
A medium-term debt management strategy paper shows that the debt has been growing since the advent of devolution but includes pending bills inherited from defunct local authorities.
The debt has grown from Sh483 million to Sh2.6 billion since 2013.
“It comprises Sh865,973,305 in inherited debts from the four defunct local authorities and pending bills on a commitment basis from the county departments amounting to Sh1.75 billion," the document reads.
The county government had pending bills of Sh2.6 billion as of December 31, 2020.
It paid Sh1.3 billion, leaving a balance of Sh1.2 billion.
The inherited debts were from the defunct Nakuru county council, the municipal councils of Nakuru and Naivasha, and the Molo town council.
The debts arose mainly from salary arrears and payroll deductions, legal fees, loans and unpaid suppliers and contractors.
The data alarmed members of the Nakuru County Assembly (MCAs) when it was tabled in the House, prompting them to ask the county government to adopt better debt management and spending practices.
"Given the current net debt of Sh2.66 billion, it is essential the county government exercises prudent debt management practice and efficiency in expenditure management to avoid unnecessary debt accumulation,” MCAs recommended in the document.
To avoid unmanageable debts, MCAs want the county to submit annual reports on public debts not later than three months after the end of each financial year.
They ordered a forensic audit of the Sh2.66 billion debt, after it emerged that some of the pending bills were fictitious and unexplained.
They issued the directive as they adopted the recommendations of the budget committee, clearing the way for tabling the 2021/2022 estimates.
"The budget committee hereby directs that the Kenya National Audit Office (KENAO) undertakes a forensic audit of the county debts and pending bills immediately, upon the adoption of this report to ascertain the accuracy and credibility of the amount before any money is committed or payment is made,” stated budget and appropriations committee chair Joel Karuri.
“Any allocation for settlement of debts and pending bills will be subject to the forensic audit.”
The MCAs also demanded details on any payments made to settle debts and any increases or reductions in debt if any.
The assembly also promised to form an ad hoc committee to scrutinise the bills and debt.
The committee allocated Sh55 million, which was included in the 2021/2022 budget, to settle the 2020/2021 KRA tax arrears.
The Nation established that a special audit of 2018 spending carried out by KENAO indicated that the pending bill to the Nakuru Water Sewerage Company had been fully paid though it resurfaced in the debt paper of 2021, raising doubts about the credibility of the alleged debt of Sh247 million.
The county government also could not properly account for the Sh1.477 billion appropriated for debt settlement from 2014/2015 to 2020/2021.
Although the county paid some pending bills classified as ineligible without justification and balances were tagged as dubious by the Auditor-General, they were still forwarded as pending bills.
Amounts for contracts that had been terminated were also forwarded as pending bills.
