State Corporations Now Owe Suppliers Ksh 385.6 Billion

State corporations, including public universities in Kenya, now owe suppliers 385.6 billion shillings as the country heads to a general election in August. Data from the National Treasury show that state corporations had 122.7 billion in additional arrears to contractors, suppliers, and regulators in 12 months through March.

President Uhuru Kenyatta had issued a directive ordering all state corporations to pay pending bills to all the suppliers. Since 2019, the National Treasury has been issuing circulars calling on the corporations to pay suppliers but nothing seems to have happened.

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At the same time, supplier debts accumulated by State corporations made up 88.7 percent of the 434.5 billion shillings pending bills at the national level by end of March, up from 307.8 billion shillings. 48.9 billion shillings were owed by ministries, departments, and agencies (MDAs).

About 227.89 billion shillings of the parastatals’ arrears are owed to contractors of public projects and suppliers of goods and services, a 38.91 percent jump over 164.05 billion shillings the year before. 157.71 billion shillings debts are in form of unremitted statutory and other deductions, which jumped 59.54 percent from 98.85 billion shillings a year earlier.

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The sad reality is that the majority of those owed by the state are small and medium enterprises (SMEs) that are supposed to be the engine of Kenya’s economy. Most of the SMEs who took loans to supply to the government have had to shut down their businesses.

Given that more than 450,000 SMEs are shutting down in Kenya annually, the accumulated debts by the government and state corporations is an irony for a government that claims to have the interests of the businesses at heart. As the country moves to an election, suppliers might have to wait for longer.

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