Kenya's national government is grappling with a colossal Ksh525.44 billion in unpaid bills, a figure that casts a long shadow over the nation's economic health. This mountain of debt, accrued by the end of September 2025, is not just a line item in a ledger; it represents a systemic failure in public financial management that is choking the life out of Kenyan businesses and straining essential services.

The heart of the problem lies within the country's state-owned enterprises. According to a sobering report by the Controller of Budget, Dr. Margaret Nyakang'o, these parastatals and semi-autonomous government agencies (SAGAs) are the principal drivers of this debt, accounting for a staggering Ksh406.49 billion, or roughly 77% of the total. This isn't just about delayed payments for mega-projects; it's about the fundamentals. The debt includes Ksh210.64 billion for recurrent costs like salaries and a shocking Ksh26.8 billion in unpaid wages and Ksh39 billion in unremitted health insurance contributions, leaving public servants in financial distress.

The Ripple Effect on Everyday Kenyans

This debt crisis is not an abstract problem for economists in Nairobi; it has tangible consequences for ordinary citizens. When the government fails to pay its suppliers, small and medium-sized enterprises—the backbone of Kenya's economy—are starved of cash flow, forcing them to lay off workers or shut down entirely. Dr. Nyakang'o warned that these delays are a direct threat to the broader economy. The ever-increasing public debt, which now stands at over Ksh11 trillion, consumes a vast portion of national revenue, with some reports indicating that as much as seven out of every ten shillings collected goes to debt repayment. This leaves precious little for critical sectors such as healthcare and education, ultimately compromising the quality of life for all Kenyans.

The list of debtors within the government itself is extensive and concerning. Key entities with significant pending bills include:

• The National Police Service: Ksh13.65 billion
• The Executive Office of the President (via the defunct Nairobi Metropolitan Service): Over Ksh13.6 billion
• The State Department for Correctional Services: Ksh6.22 billion

A Vicious Cycle of Mismanagement

The crisis is exacerbated by a history of poor governance and financial mismanagement within these state corporations. Entities like Kenya Railways and Kenyatta National Hospital have been flagged for significant debts and financial irregularities. For instance, Kenya Railways has faced scrutiny for defaulting on loans for the Standard Gauge Railway, accumulating billions in penalties. Similarly, major hospitals are choking on debt, which compromises their ability to provide essential health services.

In response to this escalating crisis, President William Ruto's administration has acknowledged the severity of the situation, with the President himself stating he is making difficult decisions to avert a national default. A significant legislative step has been the signing of the Government Owned Enterprises Act in November 2025, which aims to overhaul the governance of these state firms, enforce commercial discipline, and professionalize their boards. The success of this reform will be critical in stemming the tide of public debt.

While the government expresses confidence in steering the economy to safer ground, the sheer scale of the pending bills remains a formidable challenge. The path forward requires not just legislative reform but a fundamental shift towards fiscal discipline and accountability to ensure that public funds serve the Kenyan people, not a cycle of debt.