The recent comedian and businessman Sammy Kioko dispute with Machakos County has once again exposed a dangerous but deeply entrenched problem within Kenya’s devolved governance system: counties entering into contracts without the financial capacity to honour them.
While public attention often focuses on individual disputes between counties and suppliers, the broader issue is systemic. Counties continue to accumulate billions of shillings in pending bills owed to contractors, consultants, and small businesses that have delivered goods and services. This is no longer an accounting issue. It is becoming a governance, economic, and credibility crisis.
As of June 30, 2025, county governments collectively reported approximately Sh183 billion in pending bills. Of this amount, Sh130.8 billion relates to recurrent expenditure while Sh52.2 billion is tied to development projects.
Nairobi County alone accounts for more than Sh86.8 billion in outstanding obligations, with counties such as Kilifi, Machakos, and Kiambu also carrying significant debt burdens.
Behind these numbers are real businesses and livelihoods.
Thousands of small businesses, consultants, contractors, and service providers continue to suffer because counties delay or fail to honour payment obligations. Many of these businesses take loans, mobilise workers, purchase materials, and commit operational resources based on signed county contracts.
When payments delay for months or years, businesses experience cash flow crises, layoffs, loan defaults, and in many cases collapse entirely. Families suffer, jobs disappear, and investor confidence weakens.
The ripple effect extends beyond suppliers. Delayed county payments weaken local economies, affect banking sector exposure, discourage investment in public projects, and erode trust in government procurement systems. What is particularly worrying is that this problem has persisted since the onset of devolution in 2013.
Every election cycle introduces new county administrations, but the financial culture often remains unchanged. Incoming governments inherit pending bills from previous administrations while simultaneously launching new projects and issuing fresh tenders. As a result, liabilities continue to grow faster than counties can realistically settle them.
At the centre of this crisis is poor and, in some cases, careless financial planning.
Many counties issue tenders without having adequate cash reserves, secured financing, or realistic visibility on where the money will come from. Procurement commitments are often made ahead of actual revenue availability or lawful appropriation.
In simple terms, counties are spending money they do not yet have.
This undermines the principles of prudent public finance management under the Constitution and the Public Finance Management Act, which require public expenditure to be anchored on approved budgets and lawful appropriations.
Counties should, therefore, only enter into contracts that are fully supported by budget allocations and realistic revenue projections.
Yet political pressure to launch visible projects, satisfy competing interests, or demonstrate development progress often overrides fiscal discipline. Counties end up prioritising political optics over financial sustainability.
The result is predictable: ballooning pending bills, stalled projects, court battles, and financial distress for businesses.
The Senate Committee on County Public Accounts and Investments has already raised alarm over the growing backlog of pending bills and directed counties to prioritise debt settlement before initiating new expenditures. Some legislators have even proposed freezing new county projects in the 2026/2027 financial year until outstanding obligations are addressed.
These conversations are necessary, but Kenya now requires stronger and more enforceable reforms.
First, county procurement must be strictly tied to approved budgets and appropriation laws. Counties should be prohibited from issuing tenders or signing contracts unless funding has already been secured and legally appropriated.
Second, accounting officers who commit counties to unfunded expenditures should face personal accountability under public finance laws. There must be consequences for reckless financial commitments that expose taxpayers and businesses to avoidable losses.
Third, counties should adopt transparent procurement and payment tracking systems that allow suppliers and oversight institutions to monitor project commitments and payment status in real time.
Most importantly, Kenya must institutionalise a culture of fiscal discipline within devolved governance.
Devolution was created to accelerate development and bring services closer to wananchi. But without responsible financial management, it risks becoming a cycle of unsustainable debt, incomplete projects, and broken trust between government and the private sector.
The Kioko matter should therefore not be viewed as an isolated incident. It is a warning sign of a much larger structural problem that demands urgent attention.
If county governments are serious about supporting local businesses, protecting taxpayers, and restoring confidence in public procurement, then the principle must be clear:
Counties should only contract within approved budgets and available resources.
In public finance, as in business, there should be one guiding rule: No budget, no contract.