Parastatals hold Sh404bn of Kenya’s pending bills

State corporations and semi-autonomous government agencies (Sagas) are responsible for the majority of Kenya’s unpaid government bills, raising concerns about the strain on the economy and suppliers.

Controller of Budget Margaret Nyakang’o told the National Assembly’s Budget and Appropriations Committee in Mombasa that pending bills reached Sh524.84 billion in the 2024/25 financial year, up from Sh516.27 billion the previous year.

Of this total, State corporations and Sagas owe Sh404.33 billion, making up 77 per cent, while ministries, departments, and agencies (MDAs) hold Sh120.51 billion, or 23 per cent of the debt.

“Pending bills brought forward and settled during the year were reflected as deductions from current expenditure, while pending bills incurred in financial year 2024/25 were recorded as payables carried forward,” the report read.

Dr Nyakang’o said the introduction of the accrual accounting system has made it easier to monitor government debts.

The Cabinet approved the transition from cash-based accounting to the accrual system in March 2024, with a three-year phased rollout.

She noted that State corporations saw their pending bills rise by Sh24.51 billion compared to the previous year. The increase was driven by unpaid contractor fees, outstanding supplier payments, statutory obligations, and pension arrears.

“The National Treasury should fast-track the verification and settlement of eligible pending bills to ease pressure on the private sector and restore confidence in government payment systems,” Dr Nyakang’o said.