A leaking roof at a public hospital, a stalled road project and dry taps in growing towns are becoming a familiar struggle for many residents, even as billions meant to support such services remain uncollected in county coffers.
A new report now lays bare how weak revenue systems have left devolved units short of cash, with Sh143 billion in unpaid dues piling up as counties strain to keep basic services running.
According to the report by Margaret Nyakang’o, the arrears had reached Sh143 billion by December 31, 2025. Of this, Sh101.54 billion is from own-source revenue, while the rest is linked to debts owed by the Social Health Insurance Fund, the defunct National Health Insurance Fund and other liabilities.
The report paints a picture of mounting pressure on county governments, where weak collection systems, delayed funds from the national government and rising expenses are affecting service delivery.
Much of the outstanding revenue is tied to land rates, house rents and other county charges that have gone unpaid for years, in some cases stretching between five and ten years. Audit records show that many counties have not taken firm steps to pursue the debts, exposing gaps in enforcement and follow-up.
The scale of the unpaid funds is vast. The report shows that several counties have not set up strong debt collection systems and instead depend on national government transfers, which are often delayed. In some cases, political choices have worsened the situation. Some counties have issued waivers on land rates and rent arrears, especially as the 2027 General Election approaches, locking out billions that could have been collected.
Nairobi holds the largest share of the arrears at Sh65.39 billion, about 45 per cent of the total. This includes Sh55.4 billion in land rates, Sh288.3 million from house rent and market stall fees and Sh368 million from outdoor advertising.
Kenya Power owes the county Sh5.6 billion in wayleave fees. The situation is made worse by poor asset management, with some county houses occupied by tenants who have never paid rent, highlighting weak enforcement and tracking systems.
Mombasa follows with Sh14.51 billion in arrears, largely from plot rates and health insurance debts, pointing to similar challenges in coastal counties where land-based revenue remains under-collected.
Nakuru is owed Sh13.84 billion, more than four times what it collects annually from its own sources. In the 2024/2025 financial year, the county raised Sh3.65 billion against a wage bill of about Sh7 billion, showing a clear gap between income and spending. The county also issued a Sh693 million rent waiver targeting long-term defaulters, further limiting revenue.
However, Nakuru has outlined plans to recover the arrears using laws such as the Housing Estates Tenancy and Management Bill, the Revenue Administration Act and the Rating Act.
It also plans to issue demand notices, set up a Debt Collection Unit and work with national agencies to recover debts from institutions like Kenya Railways, Kenya Wildlife Service and the Pyrethrum Processing Company of Kenya.
The county is also owed Sh443.99 million by the Social Health Insurance Fund and Sh479.52 million by the National Health Insurance Fund, further limiting its ability to fund development in Nakuru City, which gained city status in December 2021 but still depends heavily on national funding and development partners.
Kwale reported Sh1.08 billion in arrears but has not put in place clear recovery steps, while Kiambu is owed Sh5.61 billion, mainly from land rates and health-related debts. Narok has Sh641 million in outstanding revenue, largely from park fees and health insurance arrears.
Other counties facing notable arrears include Kakamega with Sh2.83 billion, Kisumu with Sh2.32 billion, Kitui with Sh1.76 billion, Kisii with Sh1.57 billion, Busia with Sh1.47 billion, Kajiado with Sh1.43 billion and Kilifi with Sh1.34 billion, showing that the challenge cuts across both urban and rural areas.
A few counties reported lower arrears. Homa Bay recorded Sh23.27 million and has already issued demand letters to defaulters, while Murang’a reported Sh40 million. Machakos posted Sh84.58 million, with much of the debt linked to the National Health Insurance Fund, suggesting that stronger enforcement and tracking can improve results.
The report shows arrears rose in most counties by December 2025, even as many pledged tighter measures in the 2026/2027 financial year. These include legal action against defaulters, hiring private debt collectors and denying business permits to those who fail to comply.
The findings come at a time when counties are still struggling to meet revenue targets. The Commission on Revenue Allocation says counties have the capacity to raise at least Sh260 billion annually. However, in the 2024/2025 financial year, they collected Sh67.3 billion against a target of Sh87.67 billion, up from Sh41.4 billion the previous year but still below expectations.
More than three-quarters of counties continue to miss their revenue targets years after devolution, raising concerns about the effectiveness of current systems and enforcement. Nyakang’o has recommended stronger enforcement, adoption of automated systems and fixing institutional gaps, especially in high-potential counties such as Nairobi and Nakuru. She also called for closer collaboration with agencies like the Social Health Insurance Fund to recover outstanding debts and stabilise county finances.
