By Paul Njenga
Every financial year, county governments across Kenya inherit billions of shillings in pending bills. Despite repeated commitments to clear these obligations, new arrears continue to accumulate, often exceeding those that have been settled. Pending bills have gradually become accepted as an inevitable feature of public finance. They should not be.
Pending bills are far more than accounting balances awaiting payment. They represent broken promises to contractors who have completed projects, suppliers who have delivered goods, employees awaiting their lawful dues, and citizens denied timely public services. They weaken businesses, increase the cost of government, fuel litigation, discourage investment, and erode public confidence in government institutions.
The debate, however, has focused almost exclusively on how to pay pending bills rather than why they continue to accumulate. The answer lies not in cash flow alone but in governance.
The accumulation of pending bills is largely a consequence of unrealistic budgeting, weak commitment controls, inaccurate revenue projections, delayed budget adjustments, poor project planning, and the absence of accountability across the public expenditure cycle. Governments frequently prepare budgets based on optimistic Own Source Revenue projections and overstated opening balances that create the illusion of financial capacity. Consequently, procurement proceeds against approved budget provisions that appear legitimate on paper but are not supported by actual funding.
This distinction is critical. A budget appropriation does not necessarily mean that cash is available. When projected revenues fail to materialise or opening balances are overstated, governments find themselves with legally approved budgets but insufficient liquidity to honour the obligations created through those budgets. The inevitable outcome is the accumulation of pending bills.
The first reform, therefore, must be restoring credibility to the budgeting process. Governments should prepare budgets using realistic revenue forecasts and verified opening balances. Budget appropriations must be supported by credible financing plans and realistic cash flow projections. Public finance begins with honesty, not optimism.
Equally important is fiscal discipline. No procurement should commence unless there is reasonable assurance that the resulting contractual obligation can be financed. The purpose of budgeting is not merely to authorise expenditure but to ensure that commitments can be honoured when they fall due. Every unfunded commitment simply postpones today’s planning failures into tomorrow’s pending bills.
Governments must also rethink the way pending bills are managed. Existing contractual obligations should be treated as the first charge on available resources before embarking on new projects. There is little justification for commissioning new projects while contractors who completed earlier assignments remain unpaid. Sound financial management requires governments to honour existing commitments before creating new ones.
Every pending bill should undergo a rigorous verification and authentication process before payment. Only bills supported by valid contracts, inspection reports, completion certificates, invoices, and all statutory documentation should qualify for settlement. A verified pending bills register should be maintained and regularly published to promote transparency and public confidence.
Authentication should not merely identify bills that deserve payment; it should also establish accountability. Bills found to be unsupported, duplicated, fraudulent, irregular, or otherwise ineligible should immediately trigger administrative action against the officers responsible for initiating, approving, certifying, or processing those obligations. Where criminal conduct is suspected, the matters should be referred to the relevant investigative and prosecutorial agencies. Public officers must understand that creating irregular financial obligations carries personal consequences.
As a former Chief Officer for Finance, I have experienced firsthand the immense pressure associated with managing pending bills. Public criticism, political pressure, and reputational damage are often directed at the County Treasury because it is the office responsible for making payments. Yet, in many cases, the Treasury is merely dealing with the consequences of policy and management decisions made much earlier in the expenditure cycle. Unrealistic budgets, unfunded procurement, poor project planning, delayed implementation, and weak commitment controls originate elsewhere, but the blame invariably falls on the finance office when payments cannot be made. It is therefore unfair to judge the performance of finance officers solely by the stock of pending bills while ignoring the governance failures that created them.
There is another uncomfortable truth that Kenya must confront. The accumulation of unfunded pending bills is not merely a fiscal risk; it is a fertile breeding ground for corruption.
The first corruption risk arises at the point of contract award. In many instances, contracts are awarded against budgetary provisions that exist on paper but are not backed by actual funding. This disconnect often results from unrealistic revenue projections, overstated opening balances, or expenditure plans that exceed the government’s actual financing capacity. Although the procurement process appears compliant because the budget contains an allocation, there is no realistic cash flow to settle the contract once the work is completed. Such an environment creates fertile ground for corruption. Some public officers may be tempted to award contracts primarily to secure illicit kickbacks or other personal benefits, knowing that the immediate financial consequences will only emerge much later as pending bills. The beneficiaries walk away with private gains while taxpayers inherit unfunded obligations, stalled projects, escalating interest, and costly litigation. Budget credibility is therefore just as important as budget approval.
The second corruption risk emerges during the payment process itself. When the value of verified invoices significantly exceeds available cash, payment becomes uncertain and vulnerable to manipulation. Contractors and suppliers, unsure of when—or even whether—they will be paid, may resort to informal influence to accelerate settlement. Likewise, officers responsible for prioritising payments may face pressure or inducements to favour particular invoices. Where there is uncertainty, discretion flourishes; where discretion flourishes, opportunities for corruption inevitably arise.
The antidote to both forms of corruption is transparency, predictability, and accountability.
Governments should establish a transparent, predictable, and rules-based payment cycle. Every supplier and contractor should know where their invoice sits in the payment queue, the criteria used for prioritisation, and the expected payment timeline. The County Treasury should maintain and regularly publish a verified pending bills register together with an approved payment schedule while strictly applying the First-In-First-Out (FIFO) principle, except where the law or overriding public interest dictates otherwise.
Such a system removes unnecessary discretion, reduces opportunities for corruption, minimises lobbying by suppliers, and restores confidence in public procurement. More importantly, it allows contractors to plan their cash flows, access financing, price their bids competitively, and participate in government procurement without factoring in the cost of payment uncertainty.
Institutional reforms are equally necessary. Responsibility for managing pending bills should be decentralised to spending departments, with Accounting Officers assuming full responsibility for commitments made under their votes while the County Treasury provides policy direction, oversight, monitoring, and coordination. Governments should also strengthen commitment controls, improve cash flow forecasting, enhance Own Source Revenue performance, negotiate structured settlement plans with major creditors, and simplify payment procedures for verified pending bills.
Ultimately, the conversation must move beyond paying pending bills to preventing them. Accountability must extend across the entire public expenditure cycle—from policy formulation and budgeting to procurement, contract management, project implementation, and payment. Every Accounting Officer, Chief Officer, procurement professional, project manager, and approving authority must bear responsibility for decisions made within their respective mandates.
Good public financial management is not measured by how effectively governments clear accumulated arrears. It is measured by their ability to prevent those arrears from arising in the first place. Counties that commit only what they can finance, pay legitimate obligations promptly, hold public officers accountable for irregular commitments, and institutionalise transparent and predictable payment systems will restore supplier confidence, improve audit outcomes, reduce corruption opportunities, and strengthen public trust.
The true legacy of public finance leadership is not the number of pending bills inherited but the number that future generations will never have to inherit.
