NAIROBI, Kenya – Thousands of government suppliers across Kenya are staring at a financial crisis after the National Treasury invalidated nearly half of the Sh665 billion in pending bills, deeming them ineligible for payment.
A special audit committee chaired by former Auditor General Edward Ouko has only cleared Sh230 billion as legitimate.
The rest—roughly Sh270 billion—remains under a cloud, flagged for lacking documentation, procedural irregularities, or signs of potential fraud.
Treasury Principal Secretary Chris Kiptoo told the National Assembly Finance Committee that only verifiable claims would be paid.
“If the audit team declares a bill unpayable, the burden of proof shifts to the claimant,” Kiptoo said, adding that the move is part of a broader crackdown on fraudulent claims that have plagued government procurement.
The decision is a major blow to businesses—many of them small and medium enterprises—that have waited years for payment after supplying goods and services to government departments and agencies.
A Trail of Disputed Claims
The review process has sparked widespread frustration among suppliers, with some accusing government offices of misplacing or dismissing critical documents.
Others are preparing legal action, insisting their claims are genuine but unfairly rejected.
Ouko’s team has reviewed 75 per cent of all national pending bills, covering payments owed by the national executive, Parliament, Judiciary, constitutional commissions, state corporations, and county governments.
Among the Sh230 billion cleared so far, Sh80 billion is tied to infrastructure projects, while the remainder covers routine government supplies.
Treasury says some of the approved payments have already been made, with the rest scheduled after the current budget process.
The final list of verified and rejected claims will be made public upon completion of the review.
A Systemic Problem
The issue of unpaid bills is not new. A November 2024 report by Auditor General Nancy Gathungu flagged Sh194 billion in unsettled claims, warning that the mounting debt was crippling the economy.
“Failure to settle the bills has an effect of withholding circulation of cash in the economy and affects the smooth operations of suppliers and MSMEs,” Gathungu noted, adding that delays also affect revenue collection from taxes like VAT and Withholding Tax.
Gathungu’s audit highlighted the Office of the President as holding Sh14 billion in legacy bills, mostly inherited from the defunct Nairobi Metropolitan Services.
The Ministry of Defence topped the list for 2024, with Sh22.9 billion in unpaid bills—a sharp rise from the previous year.
Other major defaulters include:
- Ministry of Agriculture: Sh13.6 billion
- National Police Service: Sh9.9 billion
- Correctional Services: Sh5.2 billion
- Teachers Service Commission: Sh3.3 billion
In contrast, the Medical Services department saw a dramatic drop in pending bills—from Sh41 billion to Sh4.9 billion—following what officials said were aggressive clean-up efforts.
Suppliers Left Behind
Despite the Treasury’s assurances that Sh230 billion will be paid, possibly starting by June, many businesses say they’ve already hit breaking point.
Some warn of imminent closures, while others say trust in government contracts has eroded.
The audit team’s mandate—to weed out fake or inflated claims—has laid bare the chaos and lack of financial discipline in public procurement.
As the government attempts to clean up the system, thousands of legitimate suppliers may be left holding the bag.
