NAIROBI — Controller of Budget Margaret Nyakang’o has put county governments on the spot for failing to recover nearly Sh125 billion in unpaid revenues, warning that political waivers and lax enforcement are starving devolved units of resources needed for essential services.
In her latest County Governments Implementation Review Report for the 2024/2025 financial year, Nyakang’o said the arrears — drawn from land rates, house rent, and health fund contributions — paint a picture of weak fiscal discipline that threatens to cripple devolution.
“As of June 30, 2025, county governments reported a total of Sh124.95 billion in outstanding revenue arrears. These arrears reflect persistent challenges in revenue mobilisation, constraining liquidity, delaying service delivery and undermining fiscal sustainability in counties,” the report reads.
Nairobi tops list of defaulters
Nairobi County, under Governor Johnson Sakaja, accounts for more than half of the arrears, at Sh63.52 billion.
Most of this comes from Sh54 billion in unpaid land rates, alongside arrears from house and stall rent, outdoor advertising fees and wayleave charges owed by Kenya Power.
Nakuru under scrutiny
Nakuru follows with Sh12.59 billion, despite Governor Susan Kihika issuing a Sh693 million waiver on rent arrears for tenants of county-owned estates in Kivumbini, Bondeni and Flamingo.
Nyakang’o warned that such political decisions weaken counties’ revenue bases and derail recovery efforts.
Nakuru, which became a city in 2021, generates only about Sh3.6 billion annually against a wage bill of more than Sh6 billion.
“Nakuru cannot sustain itself,” Senate Public Accounts Committee chair Moses Kajwang’ recently observed, underscoring the county’s precarious finances.
Other major defaulters
Mombasa reported Sh13.75 billion in arrears, mostly from unpaid plot rates. Kajiado owes Sh12.09 billion, the bulk tied to Magadi Soda and other large debtors.
Kakamega, Kiambu, Kitui, Laikipia and Siaya are also grappling with billions in outstanding revenues.
Smaller counties such as Kwale and Marsabit, while owing less, have shown little commitment to recovery.
Call for urgent reforms
Nyakang’o urged counties to automate revenue collection, enforce existing laws and work closely with the Social Health Authority to clear arrears inherited from the defunct NHIF.
She pointed to Nairobi and Nakuru as high-potential revenue areas that must strengthen enforcement to wean themselves off national transfers.
The CoB warned that without urgent measures, counties will remain trapped in fiscal stress, reliant on Treasury disbursements that are often delayed, undermining delivery of health, education, and infrastructure services.
