Kenyan SMEs Turn to Trade Finance Amid Rising Unpaid Government Bills

Outstanding public pending bills in Kenya rose to Sh465.87 billion in March 2026, a 10.5% increase over the same period in 2025. The backlog forces suppliers and contractors to wait 30 to 90 days, or longer, for payments from ministries, state corporations and county governments, straining cash flow.

Because of the delayed payments, many small and medium‑sized enterprises are turning to structured trade‑finance solutions. Faulu Microfinance Bank, backed by Old Mutual, has expanded its product suite to include local purchase‑order financing and invoice financing, aiming to bridge the gap for firms that lack traditional collateral. The bank’s CEO, Julius Ouma, said the National Treasury’s recent approval of a Sh255 billion disbursement to reduce arrears will not be enough unless settlement processes become faster and more transparent. The Treasury estimates clearing the historical backlog could take at least two financial years, prompting financial institutions to offer alternative financing to keep businesses operating.