KSh100 Billion Sits Idle as Kenyan Counties Leave Development Projects Unfinished

County governments are struggling to turn approved development budgets into completed projects, leaving billions unused and contractors waiting for payment.

The Office of the Controller of Budget (COB) says county governments left KSh100.2 billion of available funds unspent in the financial year ended June 2026, while 189 projects worth KSh10.51 billion stalled.

The figures expose a gap between money approved for development and projects actually delivered. Counties had KSh596.78 billion available during the year and spent KSh496.58 billion, giving an overall absorption rate of 83.2 per cent.

The shortfall was much larger in development spending. Counties spent KSh126.69 billion of KSh233.69 billion allocated for development, absorbing 54.21 per cent of the budget. That left nearly KSh107 billion of development funds unused.

The money was meant for projects people can see

Development budgets pay for capital projects such as roads, markets, water infrastructure and health facilities. When counties fail to spend the money allocated for those projects, the effect is not limited to government accounts.

The COB report shows that 22 counties reported 189 stalled projects valued at KSh10.51 billion. KSh4.21 billion had already been paid towards those projects.

Nairobi had the largest value of stalled projects, at KSh2.24 billion across 57 projects. Isiolo followed with projects valued at KSh1.77 billion, while Kakamega reported 26 stalled projects worth KSh848.95 million.

The development budget absorption rate also varied sharply across counties. Kilifi recorded the highest rate at 84.52 per cent, followed by Wajir at 83.03 per cent and Mandera at 80 per cent. Kisumu recorded the lowest rate at 25.92 per cent.

Contractors are carrying another bill

County governments also owed KSh172.53 billion in trade payables as at June 30.

That matters to construction companies, suppliers and other businesses that depend on county contracts. Delayed payments can restrict their cash flow, slow construction and make firms less willing to take on new work before older bills are settled.

The spending figures therefore tell two connected stories. Counties have money that was available but unused, while businesses are still carrying unpaid obligations.

The COB has urged counties to prepare verified schedules of stalled projects, prioritise projects that can be completed and allocate enough money to finish them. It also called for outstanding contractual obligations to be addressed.

The wider cost for local businesses

County governments are major buyers of goods and services. Their spending affects contractors, suppliers, workers and businesses in towns across the country.

A county that fails to execute its development budget can therefore weaken local economic activity even when money has been approved. For residents, the cost can appear as delayed roads, incomplete markets, unfinished water projects or health facilities that are not ready for use.

The latest figures also add context to Kenya's wider growth picture. Mwenendo's growth analysis shows why headline economic growth does not necessarily translate into stronger activity in every part of the economy.

The next test for county spending

The next test is whether counties convert the recommendations in the COB report into higher development spending and fewer stalled projects.

The watchdog has specifically called for counties to prioritise projects that can be completed and operationalised, allocate adequate resources for completion and address outstanding contractual obligations.

For contractors and suppliers, the size of county trade payables will remain an important indicator of whether county spending is reaching businesses on the ground.