Economy
One year wait for suppliers as Cabinet orders pending bills audit
Wednesday June 28 2023
President William Ruto Chairs Cabinet Meeting on June 27, 2023 at State House, Nairobi. The Cabinet has approved establishment of a special committee on Pending Bills. PHOTO | PCS
Contractors and suppliers of goods and services to the national government face a longer wait for more than Sh537.2 billion after the Cabinet approved the setting up of a special committee to audit the pending bills before payment can start.
A Cabinet meeting chaired by President William Ruto on Tuesday gave the committee up to one year to present its findings.
“The pending bills verification committee will be tasked with the auditing of liabilities for the period between 2005 and 2022,” said a statement from the Cabinet.
Read: Counties clear Sh23 billion pending bills in 6 months
“Crucially, the committee will propose a mechanism to stop future pending bills. It was agreed that the committee will present its final report within a year.”
The audit, which mirrors what retired President Uhuru Kenyatta ordered for counties in 2019, signals that suppliers and contractors of goods and services to the government are in for a longer wait for payment.
Treasury data show outstanding national government pending bills at the end of March stood at Sh537.2 billion, marking a 23.6 percent growth from Sh434.5 billion in a similar period last year. That of counties was at Sh159.7 billion in March.
The national government’s pending bills from June 2005 to June 2022 stood at Sh481 billion while that of counties was at Sh159.9 billion.
The delay in settling payments of pending bills has led to the deterioration of the financial positions of many individuals and businesses, especially those who tapped bank loans to do business with the government.
Many first-time governors from September last year also started forming taskforces to comb massive records and even physically inspect the projects done or goods supplied before payment can be done.
The verification process for national government pending bills may involve asking all the suppliers and contractors claiming to be owed money to submit claims to the committee if it follows the same procedure that is being used by counties.
“The move is aimed at establishing the integrity of all bills and cushioning small enterprises against liquidity inadequacies,” said the statement from the Cabinet.
Value for money
The county committees review the bills, record descriptions of works done, goods supplied or services given and the dates, including exact locations.
This is then followed by obtaining evidence of the delivery of goods or performance of the services and then quantifying and evaluating the value for money.
This means suppliers and contractors, many already battling loan defaults, could be in for back and forth with the committee in proving the validity of the latest stock of pending bills.
The Cabinet noted that pending bills remain “a sticky issue” for the government and wants the committee to examine and submit interim reports to Treasury Cabinet Secretary Njuguna Ndung’u upon verification.
The committee will consist of the Attorney-General and representatives of the State departments of roads, public works, housing and urban development and the Public Procurement Regulatory Authority.
Read: Treasury mulls mini-budget to clear Sh641bn pending bills
The Ethics and Anti-Corruption Commission, the Law Society of Kenya, the Institute of Engineers of Kenya and the Institute of Certified Public Accountants of Kenya will also be part of it.
Prof Ndung’u said during the presentation of the 2023/2024 Budget Statement that once the pending bills are cleared by the verification committee, the Treasury will direct all State entities to be clearing pending bills as a first charge on the Budget.
Section 74(4) of the Public Finance Management Act, 2012 states it is “improper conduct” when a public officer or accounting officer “fails, without reasonable excuse, to pay eligible and approved bills promptly in circumstances where funds are provided for.”
