Kenya’s counties are bleeding billions through weak revenue systems, ballooning pending bills, manual payrolls, and costly foreign trips, according to a new report by the Office of the Controller of Budget (OCB). The County Governments Budget Implementation Review Report (CBIRR) for the 2024/25 financial year paints a picture of “massive theft and wastage” that continues to derail fiscal responsibility across devolved units. As of June 30, 2025, counties had accumulated Sh124.95 billion in outstanding revenue arrears. This includes Sh112.47 billion in ordinary own-source revenue (OSR) and Sh7.46 billion from the Social Health Insurance Fund. Nairobi City County accounts for the bulk, with arrears of Sh63.52 billion—more than half of the national total. The OCB warns this persistent underperformance constrains liquidity, delays service delivery, and undermines fiscal sustainability.
Controller of Budget Margaret Nyakang’o. PHOTO | COURTESY | TRBN |
MOMBASA COUNTY ALSO PAID OUT
SH147.39M
TO 713 CASUALS AND 3,388
COMMUNITY HEALTH PROMOTERS
THROUGH MANUAL PAYROLLS
Revenue collection
The watchdog urges counties to automate revenue collection, strengthen enforcement, and set realistic targets to curb the arrears and prevent more budget deficits. On expenditure, pending bills remain the single biggest headache. Counties collectively owe Sh176.80 billion, with Nairobi again the worst offender at Sh86.77 billion. The OCB recommends amending the Public Finance Management Act, 2012 to classify pending bills as public debt. This would compel counties to prepare Debt Management Strategy Papers, enhancing accountability for what has become a chronic liability. Development spending also remains weak: 23 counties failed to meet the 30 percent development expenditure threshold, in violation of the law.
The report exposes worrying abuse of manual payroll systems. In Bomet County, salaries worth Sh50.1 million for 114 casual staff were processed outside the Integrated Payroll and Personnel Database (IPPD). Mombasa County also paid out Sh147.39 million to 713 casuals and 3,388 community health promoters through manual payrolls. The OCB warns this system is “prone to abuse and may result in loss of public funds.” While some counties kept foreign travel below one percent of recurrent spending, others splurged heavily, driving up overall wastage. The OCB further criticizes counties for over-relying on Facility Improvement Funds (FIF) to prop up OSR. In Bomet, Nyamira, and Homa Bay, FIF accounted for over 70 percent of local revenue. “These funds are intended for reinvestment in health facilities, not for general county spending,” the report stresses, warning that misuse threatens service delivery and fiscal stability. The watchdog also flags operational lapses, including lapsed public funds that continue to transact illegally. For example, Mombasa’s County Education Bursary Fund and Scholarship & Educational Benefits Fund had expired, making withdrawals unlawful.
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