NAIROBI, Kenya – State-owned agencies, including the Kenya National Highways Authority (KeNHA) and the Kenya Rural Roads Authority (KeRRA), have accumulated an additional Sh4.1 billion in penalties and interest on unpaid bills in just three months, pushing the government’s total liability to Sh14.72 billion, new data shows.
The Controller of Budget (CoB), Margaret Nyakang’o, attributed the spike—recorded between January and March 2025—to persistent delays in settling pending bills, largely due to chronic cash flow shortages and budget cuts from the National Treasury.
KeRRA, KeNHA Lead in Penalty Surge
According to the CoB’s quarterly report, KeRRA recorded the sharpest increase, adding Sh2.6 billion in penalties, while KeNHA followed with a Sh1.09 billion rise, bringing its total to Sh8.09 billion.
Overall penalties had stood at Sh12.07 billion in December 2024.
“These high pending bills increase the government’s cost of doing business due to growing interest charges and penalties on overdue invoices,” Nyakang’o noted.
Other Agencies Also Affected
Several other state agencies also reported significant jumps in accrued penalties:
- Water Resources Authority – Sh84.68 million increase
- National Oil Corporation – Sh50.14 million increase, bringing its total to Sh1.01 billion
- Kenya Urban Roads Authority (KURA) – Sh30.13 million increase, now owing Sh478.3 million in penalties
The growing backlog, Nyakang’o warned, is hurting the private sector—particularly small and medium-sized enterprises (SMEs)—that rely on timely payments from government contracts.
“Liquidity constraints are forcing businesses to scale down operations, lay off workers, or take costly loans,” she said.
Funding Crunch and Government Debt Burden
Nyakang’o highlighted that the National Treasury’s limited revenue collection and mounting debt repayments are to blame for delayed disbursements to state agencies, which has worsened the pending bills crisis.
Despite efforts to address the issue, many state entities and county governments continue to default on payments, hurting contractors, suppliers, and lenders, and eroding private sector trust in government institutions.
New Loan Facility to Clear Pending Bills
To ease pressure on infrastructure agencies, the government has secured a Sh73 billion loan to clear pending bills owed to road contractors.
The facility will be repaid through a planned Sh175 billion government bond expected later this year.
While the move is expected to offer temporary relief, the CoB has raised concerns that without structural reforms, the cycle of delayed payments and penalties will persist.
