This archive report was first published on 19 November 2019.
The government's failure to pay suppliers has resulted in a significant burden on the economy, with pending bills totaling Ksh.201.2 billion as of October 31, 2019.
According to the National Treasury, Ministries and their respective State Departments (MDAs) are the worst payers to government suppliers, with an accumulated Ksh.137.94 billion in historical pending bills as of October 31, 2019.
The State Department of Infrastructure carries the bulk of blame, with a net 40 percent of all pending bills, equivalent to Ksh.71.2 billion, as of the end of June.
When questioned about the outstanding sum, the Ministry of Transport cited the early closure of systems before the processing of payments.
The Ministry of Health is the second culprit, having failed to clear a net sum of Ksh.41.7 billion in supplier monies, blaming insufficient funding from Treasury to meet recurrent bills.
Counties account for a lesser pending bills subtotal of Ksh.64.2 billion, with 15 out of 47 counties failing to make any efforts towards payment, including Nairobi, Narok, Machakos, and others.
The lock-down in payments to government suppliers has weighed heavily on the economy, with Kenyans suffering from the acute lack of money in their pockets due to the stiff liquidity crunch.
The non-payment of bills, equivalent to a near three percent of Gross Domestic Product (GDP), has resulted in reduced consumer demand and a depressed outlook in company productivity.
Stanbic Purchasing Managers Index has mirrored the tough going elements for local businesses, with optimism for output hitting a New Year low at the end of October.
“Private sector activity was softer in October as firms again lament what they term as ‘cash-flow’ issues,” said Stanbic Bank Regional Economist Jibran Qureishi.
The Presidency has instigated last-minute enforcement reforms to stem further damage to the economy, including the immediate clearance of outstanding bills to suppliers by the end of the month.
The National Treasury has announced an expected freeze to equitable transfers beginning with the 15 most named unaccountable counties, which have failed to show effort in the clearance of the bills from December 1.
Implicated MDAs will suffer the same consequences, with the National Treasury opting for an end to exchequer issues at the end of the month.
“We are going to really enforce this as these monies are owed to the private sector and the Kenyan people, and if they are not paid, we will be extending their suffering,” Treasury Acting Cabinet Secretary Ukur Yatani told the Budget and Appropriations Committee.
