Why Controller of Budget rejected Sakaja’s Sh49bn ‘unrealistic’ plan

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Nairobi Governor Johnson Sakaja has suffered another setback after the Controller of Budget, Dr Margaret Nyakang’o, rejected the county budget for the 2026/27 financial year.

The budget, which was passed earlier this month following weeks of stalemate between the Members of the County Assembly and the Executive, has been returned to the county to address the grey areas.

The MCAs unanimously approved a budget of Sh49.27 billion, comprising Sh23.47 billion from the equitable share and grants, Sh20.86 billion from Own Source Revenue (OSR), Sh3.2 billion from the Health Facilities Improvement Fund and liquor licensing, and Sh1.7 billion in projected cash balances.

However, in a letter dated August 19 and addressed to the Nairobi County Chief Executive Committee Member for Finance and Economic Affairs, Ibrahim Auma Nyangoya, Dr Nyakang’o asked the county to address some of the issues that had been highlighted, including the unreasonable OSR projections and the lack of sufficient measures to tackle the mounting pending bills, which stand at Sh81.1 billion.

“Own Source Revenue forecasting tools were rolled out to counties to help them forecast realistically and in tandem with their potential. Unrealistic projections present a significant risk of unfunded expenditures and hidden fiscal deficits, which may, in turn, contribute to the accumulation of trade payables,” Dr Nyakang’o said.

She stated that a review of the approved budget estimates indicates that the county anticipates raising Sh24.10 billion as OSR, comprising both ordinary revenue sources and Facility Improvement Financing (FIF), yet the county has never met the target in previous years.

“Historical performance trends do not support the projected OSR of Sh24.10 billion and are therefore unrealistic. The County should revise the revenue projections using a credible and documented methodology in compliance with Section 128(3)(b) of the Public Finance Management Act, Cap. 412A.”

In the last financial year, the county had set a target of Sh21.57 billion as own source revenue but managed to collect Sh15.53 billion, leaving a deficit of Sh6 billion.

The CoB also raised questions about the allocation set aside for personnel emoluments, saying that the PFM (County Governments) Regulations, 2015, set a ceiling on county government expenditure on wages and benefits at 35 per cent of the county’s total revenue, which Nairobi County failed to adhere to.

“A review of the Approved Budget Estimates indicates that the allocation to personnel emoluments amounts to Sh17.33 billion, translating to 35.2 per cent of total revenue, which is above the ceiling provided in law.”

On the pending bills, Dr Nyakang’o said that the county ought to prioritise finalised and outstanding works or contracts by budgeting for them as a first charge before any new projects are considered.

While the county had set aside Sh1.3 billion for the Executive and Sh1.12 billion for the Assembly for the settlement of trade payables in FY 2026/27, the CoB said this was not enough and would likely escalate owing to the payables accumulated in FY 2025/26, which ended on June 30.

“The County should clearly budget for all verified trade payables ‘as a first charge’ and ensure that there is sufficient provision in the budget to pay and reduce them significantly in the subsequent financial year.”

The Controller of Budget also recommended that the county submit a universe of trade payables for the County Executive using the Intergovernmental Budget and Economic Council (IBEC)-approved template; a comprehensive Trade Payables Action Plan for the County Executive using the prescribed template approved by IBEC on a First In, First Out (FIFO) basis; a reconciliation of the universal trade payables for FY 2025/26 for the County Executive and Assembly showing the total payables settled in FY 2025/26; and payables that accumulated during FY 2025/26.

While Dr Nyakang’o said the budget estimates for eight other counties had also been rejected out of the budgets from 21 counties that had been reviewed, she said her office would not give room to unlawful spending.

Meanwhile, about 19,000 county government workers in Nairobi will have to wait longer for their July salaries, which have not yet been paid.

According to Calvince Okello, the Nairobi branch secretary-general of the Kenya County Government Workers Union (KCGWU), the delay has affected their lives as they cannot access medical insurance or pay their bills. With the reopening of schools, the situation would be difficult for parents.

He also said that the union was consulting with the aim of taking strike action if the delays persist and called on the county governor to take all possible measures to resolve the situation.

Reporting originally appeared via Nation Africa. Read the full source for additional context.