Nakuru County collected more revenue than it had targeted in the 2025/26 financial year but spent less than half of its development budget, while billions of shillings remained outstanding in revenue arrears and unpaid bills, according to the Controller of Budget.
The county had an approved supplementary budget of Sh.25.65 billion, including Sh.8.83 billion for development and Sh.16.81 billion for recurrent programmes. The budget was 6.96 per cent higher than the previous financial year.
Despite the larger budget, Nakuru spent only Sh.4.33 billion on development programmes, achieving a 48.97 per cent absorption rate. Recurrent expenditure, meanwhile, reached Sh.14.96 billion, representing 88.95 per cent of the recurrent budget.
The Controller of Budget identified “Low development performance in the review period” as one of the challenges that “hampered effective budget implementation”, noting that “Some programmes did not incur any expenditure.”
The weak development spending came despite improved revenue collection.
Nakuru reported total receipts of Sh.25.38 billion during the year, up 16.74 per cent from Sh.21.74 billion in the comparable period of 2024/25.
Own-source revenue rose by 47.95 per cent to Sh.5.40 billion from Sh.3.65 billion the previous year. The collection represented 109.37 per cent of the annual target.
The report attributed the increase to “improved SHA reimbursements, automated revenue collection, and integration of payment systems with the County Integrated Financial Operations Management System.”
Health and hospital fees through Facilities Improvement Financing generated Sh.3.57 billion, accounting for 66.15 per cent of total own-source revenue.
Yet revenue collection remains a major concern because the county’s outstanding receivables increased sharply.
Revenue arrears rose from Sh.12.20 billion on July 1, 2025, to Sh.16.84 billion by June 30, 2026. Of this, Sh.12.57 billion was own-source revenue and Sh.4.27 billion was Facilities Improvement Financing.
The spending pattern also favoured recurrent commitments. The Controller of Budget approved Sh.17.70 billion in exchequer withdrawals, of which Sh.13.54 billion, or 76.50 per cent, went to recurrent programmes and Sh.4.16 billion to development.
Employee compensation accounted for Sh.8.51 billion, while operations and maintenance consumed Sh.5.02 billion. Domestic travel amounted to Sh.548.93 million, while foreign travel totalled Sh.106.73 million.
The county also ended the year with Sh.3.14 billion in trade payables. Neither the County Executive nor the County Assembly adhered to the payment plan.
The report recommends that “The County Leadership should ensure that genuine bills/trade payables are paid promptly in the ensuing financial year.”
Personnel emoluments worth Sh.1.86 billion were processed through a manual payroll, representing 21.80 per cent of total payroll costs. The report warns that “Manual payroll is prone to abuse and may result in the loss of public funds.”
The county is advised to process salaries through the Human Resource Information System and fast-track Unified Personnel Numbers for staff.
Financial controls also came under scrutiny after the county operated 280 commercial bank accounts without submitting copies of authorisation letters to the Controller of Budget.
The report says this was “contrary to Regulation 82(5) of the Public Finance Management (County Governments) Regulations, 2015.”
The Controller recommends submission of the letters “to enhance accountability and oversight.”
The review also found that the Emergency Fund’s lifespan had lapsed and that the County Treasury submitted financial reports late, affecting the timely preparation of the budget implementation report.
For the coming financial year, the Controller’s says, “The County should implement strategies to increase development expenditures in FY 2026/27.”
The recommendations also call for prompt payment of genuine bills, tighter payroll controls, regularisation of commercial bank accounts and timely financial reporting.
