Nairobi hogs 62pc of counties’ Sh96bn debt

Controller of Budget Agnes Odhiambo. file PHOTO | NMG 

By LYNET IGADWAH

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Summary

• Controller of Budget Agnes Odhiambo on Wednesday told Parliament that pending bills have grown further in the current financial year to reach Sh99.2 billion.
• Ms Odhiambo refuted claims that the Treasury’s delay in releasing funds to counties was to blame for the ballooning debts.
• She said the problem could be linked to counties overstating their revenues and going ahead to commit to suppliers.

Nairobi County accounted for 62 per cent of the Sh96.4 billion worth of debts that the 47 counties accumulated in the 2016/2017 financial year, official data shows.

Controller of Budget Agnes Odhiambo on Wednesday told Parliament that pending bills have grown further in the current financial year to reach Sh99.2 billion.

She called for an audit of the swelling pending bills by county governments. The debts have been blamed for crippling enterprises that are doing business with the devolved units.

Counties, on the other hand, have blamed the Treasury’s late disbursement of funds their rising debts which stood at Sh96.4 billion in the year ended June 2017.

“It is my recommendation that these pending bills are audited to ascertain their authenticity before payment is provided,” Ms Odhiambo told the Senate Joint committee comprising the Finance and Budget Committee and the County Accounts and Investment Committee.

Ms Odhiambo, who was accompanied by Auditor-General Edward Ouko, refuted claims that the Treasury’s delay in releasing funds to counties was to blame for the ballooning debts.

“The last tranche that came on June 30, 2017, should have seen the counties pay suppliers. They should not use this delay as an excuse for the growing debt,” she said.

Parliament is questioning the swelling pending bills by county governments which have been flagged as a major factor in the weakening of activity in the small and medium enterprise (SME) sector.

Ms Odhiambo said the problem could be linked to counties overstating their revenues and going ahead to commit to suppliers.

“Counties need to align their procurement plans, revenues and cash flows in order to save themselves from going bloke,” she said. None of the 47 counties has met its revenue target, making them dependent on Treasury funding.

The counties endured a four-month cash crunch following contradictions between the County Allocation of Revenue Act (Cara), 2017, and the disbursement schedule approved by the Senate.

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The anomaly, which has since been rectified, meant that the Treasury could not release funds to counties.

At the close of the first quarter that ended in September, none of the devolved units had received funds, compelling the Treasury to loan them Sh20.3 billion to pay workers’ salaries.

In the 2014/2015 financial year, pending bills by counties stood at Sh37.8 billion.

This translates to a 155 per cent increase to the Sh96.4 billion recorded in the year ended June 2017.