NAIROBI, Kenya – Kenya’s county governments are staring at a deepening financial crisis that could cripple essential services and stall development projects for years, as unpaid bills balloon to alarming levels.
A new report by the Commission on Revenue Allocation (CRA) warns that at least 17 counties have accumulated pending bills exceeding 20 per cent of their annual revenue, a threshold that puts their financial sustainability at risk.
In some cases, counties could be forced to suspend most operations for more than two years if revenues were fully redirected toward debt repayment.
The mounting debts have hit critical areas such as staff salaries, service delivery, and ongoing development projects, while pushing suppliers and contractors into financial distress due to delayed payments.
“The accumulation of pending bills by county governments has a negative effect on suppliers of goods and services. County governments should therefore prioritise the payment of pending bills,” the CRA notes in its report tabled before Parliament.
Nairobi Leads with Sh86.8 Billion Debt
Nairobi County tops the list, with pending bills totalling Sh86.8 billion—more than double its annual revenue.
According to the CRA, even if the capital committed all its income to settling the arrears, it would take over two years to clear them.
The capital alone accounts for nearly half of all pending bills owed by county governments nationwide, underscoring the scale of the crisis.
Other counties facing severe debt pressure include Kilifi, which owes Sh9.3 billion (55.9 per cent of its revenue), and Machakos, with Sh6.7 billion (54.4 per cent).
Kiambu follows with Sh7.9 billion, representing 42.2 per cent of its annual income.
Counties such as Busia (38.3 per cent), Tana River (31.5 per cent) and Wajir (31.2 per cent) are also grappling with heavy arrears, while several others—including Taita Taveta, Bungoma, Kajiado, Laikipia, Garissa, Embu, Kericho, Mombasa, Siaya, Murang’a and Nyandarua—have pending bills exceeding one-fifth of their yearly revenue.
Sharp Contrast in Financial Discipline
In contrast, Narok, Elgeyo Marakwet and Lamu reported pending bills of less than one per cent of their annual revenue, highlighting stark differences in financial management across the 47 counties.
As of June 30, 2025, total pending bills across county governments stood at Sh176.9 billion.
County executives account for Sh171.7 billion (97.1 per cent) of the debt, while county assemblies owe Sh5.2 billion (2.9 per cent).
Recurrent Spending Dominates Arrears
The report shows that recurrent expenditure accounts for 71.7 per cent (Sh126.9 billion) of the unpaid bills, with development-related obligations making up Sh50 billion (28.3 per cent).
Nairobi again leads in recurrent arrears at Sh79.6 billion, followed by Kiambu (Sh4.5 billion), Machakos (Sh4.03 billion), Kilifi (Sh3.88 billion), Nakuru (Sh3 billion) and Mombasa (Sh2.55 billion).
Narok County reported no recurrent pending bills during the period under review.
Causes of the Crisis
CRA attributes the growing backlog to poor local revenue collection and a failure by counties to clear existing debts before committing to new expenditure—a practice that continues to strain county finances and undermine service delivery.
With suppliers struggling to stay afloat and development projects grinding to a halt, the commission warns that urgent fiscal discipline and prioritisation of debt settlement will be critical to preventing further deterioration in county operations.
