County governments sharply increased their use of bank credit in the first three months of the 2025 financial year, with total commercial borrowing rising to Sh3.2 billion by the end of September.
This was a notable jump from Sh1.8 billion recorded during the same period last year, pointing to mounting financial pressure on devolved units as they struggled to meet routine expenses amid delayed releases from the National Treasury.
Figures released by the Controller of Budget show that Nairobi County accounted for more than half of the outstanding debt, with total borrowings of Sh1.9 billion. The County Executive owed Sh1.5 billion, while the County Assembly had pending obligations amounting to Sh316.7 million by the close of the quarter.
“The County Executive has a bank overdraft facility with the Co-operative Bank of Kenya Limited to cover its personnel emoluments, which average Sh1.6 billion per month,” wrote Controller of Budget Margaret Nyakang’o. “As of September 30, 2025, it had an overdraft balance of Sh1.54 billion and had paid Sh68.38 million in the form of bank charges, commissions, and penalties during the period under review for use of the facility.”
Machakos County emerged as the second-largest borrower, with the county executive recording outstanding loans of Sh544.3 million. Homa Bay followed with Sh471.5 million, while Kisumu County Executive had unpaid bank facilities totalling Sh289.1 million at the end of the review period.
Laikipia County Assembly posted the lowest exposure among the indebted counties, with outstanding commercial debt of Sh24 million.
The CoB noted that most of the borrowing reported during the quarter involved bank overdrafts, which counties used mainly to settle salary bills and meet urgent operational costs.
The increased use of overdrafts points to cash flow strain at the start of the financial year, forcing counties to seek temporary support from banks. The report did not show any long-term commercial loans, indicating that short-term facilities remain the main driver of rising county debt.
