The Nairobi City County Government is facing mounting questions over its financial management after the Controller of Budget (Cob) flagged delayed financial reporting, an escalating backlog of unpaid bills, weak revenue collection, and poor implementation of development projects.
In her report on the implementation of county budgets for the first nine months of the 2025/26 financial year, Controller of Budget Margaret Nyakang’o revealed that Nairobi County submitted its financial statements on April 30, well beyond the deadline prescribed under Section 166 of the Public Finance Management (PFM) Act, 2012.
The delayed submission, she noted, hampered the timely preparation of the national budget implementation report, raising concerns over the county’s compliance with statutory financial reporting requirements.
The report further paints a picture of a county struggling to finance its own budget.
Despite setting an ambitious own-source revenue target of Sh21.58 billion for the financial year, Nairobi had collected only Sh11 billion by the end of March, achieving just 48 per cent of its annual target. The shortfall leaves the county increasingly reliant on external funding while constraining its ability to finance planned programmes.
Development spending also remained below expectations as during the review period, the county spent Sh5.34 billion on development projects, translating to an absorption rate of only 40 per cent.
The Controller of Budget also flagged irregularities after noting that unspent funds from the 2024/25 financial year were not returned to the County Revenue Fund (CRF) as required, resulting in actual expenditure exceeding the approved exchequer issues in several departments.
Even more alarming is the county’s ballooning stock of pending bills.
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As of March 31, 2026, Nairobi County’s outstanding trade payables stood at Sh81.79 billion. The County Executive accounted for Sh81.14 billion, while the County Assembly owed Sh650.6 million.
Although both arms of the county government submitted payment plans to clear the pending bills during the financial year, implementation fell significantly short.
The County Executive had committed to settling Sh8.84 billion but managed to clear only Sh4.98 billion, slightly over half of its target. The County Assembly, despite committing to pay Sh650.6 million, did not settle a single shilling during the review period.
“During the reporting period, the County Executive settled trade payables amounting to Sh4.98 billion, comprising Sh4.43 billion (89 per cent) for recurrent programmes and Sh550.26 million (11 per cent) for development programmes. On the other hand, the County Assembly did not settle any trade payables,” Nyakang’o states in the report.
The Controller of Budget further revealed that salary arrears and statutory deductions account for the largest share of the pending bills.
According to the report, the County Executive and County Assembly owed Sh41.37 billion and Sh27.58 million, respectively, in salary arrears and statutory deductions, representing 51 per cent of the county’s total outstanding obligations.
The report also raises concerns over the age of the unpaid bills. About 76 per cent of the County Executive’s pending bills have remained unsettled for more than three years, while 65 per cent of the County Assembly’s outstanding obligations are less than one-year-old.
Nyakang’o noted that the County Treasury failed to provide a detailed breakdown of the statutory deductions, making it difficult to fully assess the nature of some of the outstanding liabilities.
“The County Executive and County Assembly did not adhere to their payment plan,” the report concludes.
To address the shortcomings, the Controller of Budget urged Nairobi County to comply with statutory reporting timelines and improve its own-source revenue collection to ensure the approved budget is adequately financed.
She also called for stricter expenditure controls, warning that spending commitments must be aligned with available revenue to avoid further accumulation of pending bills.
Additionally, Nyakang’o urged the county to accelerate implementation of development projects, ensure fund administrators submit statutory reports within the timelines provided under the PFM Act, and enforce full compliance with the Trade Payables Action Plan.
“The County Leadership should address the situation of trade payables to ensure that genuine bills are paid promptly in the remaining financial year. Further, compliance with the Trade Payables Action Plan should be enforced,” she recommended.
