Cash crunch at state ads agency as MDAs fail to pay Sh1bn debt

A parliamentary watchdog has raised concerns over a severe cash crunch at the Government Advertising Agency, warning that persistent non-payment by state agencies is crippling its operations and threatening essential public service communications.

The Public Accounts Committee (PAC), chaired by Butere MP Tindi Mwale, heard that government entities routinely place advertisements with the GAA but then fail to settle their bills, often blaming delays in funding releases from the National Treasury.

Officials from the ICT ministry, led by Broadcasting PS Stephen Isaboke, and GAA director Michael Okidi confirmed the systemic issue, revealing that the agency is owed Sh991 million in cumulative arrears.

The list of major debtors includes the Kenya Broadcasting Corporation (KBC) at Sh170 million, the Kenya Forest Service (KFS) at Sh36 million, and the Kenya Film Classification Board (KFCB), also at Sh36 million.

Other significant defaulters are the Kenya Yearbook Editorial Board (Sh34 million), the Media Council of Kenya (Sh10 million) and Development Initiatives (Sh3 million).

Okidi said while MDAs commit to adverts based on their budgets, the Treasury’s delayed release of funds frequently stalls payments.

“MDAs, when planning their adverts, charge the expenditure to their own budgets. Once the ads are placed, payment requires funds to be released by the National Treasury through the exchequer. At times, there are delays… which affect timely payment. However, the payments are eventually made.”

Committee members, however, expressed deep frustration with this explanation, accusing government officials of defending the very entities withholding payments.

Chairman Mwale chastised the culture of deflection, urging civil servants to speak candidly.

“Sometimes officers come here and end up defending those who are supposed to pay them,” he said.

“Don’t defend them, speak the truth… say, ‘We advertised, we did the work, but when it comes to payment, they have refused to pay'.”

Lawmakers pushed for systemic reforms at the centralised advertising pool to end the cycle of blame and perpetual arrears.

Rarieda MP Otiende Amollo challenged the fundamental process, suggesting that adverts should only be commissioned upon confirmation of funds from the exchequer, not merely on a budget commitment that may later be cut.

“The blame game circles back to the Treasury, but it doesn’t solve the problem,” Amollo argued.

“Why not insist that instructions are issued only when money is confirmed?” 

Samburu West MP Naisula Lesuuda proposed that the GAA secretariat should formally track these arrears and question defaulting MDAs during their audit hearings to force accountability.

In response, officials outlined measures being implemented to curb the debt.

These include mandating Local Purchase Orders (LPOs) before publishing adverts and barring any agency with arrears exceeding Sh2 million from placing new orders.

Furthermore, they revealed a new regime from the Office of the Head of Public Service that holds accounting officers personally liable for unfulfilled financial commitments, treating broken LPOs as infractions.

The crisis has sparked a debate on the GAA’s very existence. Established in 2015 to centralise advertising and curb inflated costs from private media, its effectiveness is now in question.

Amollo asked pointedly, “Those who owe you money cannot place adverts, yet the law compels them to advertise. So is GAA still necessary?”

ICT ministry officials vigorously defended the agency’s role, insisting it remains crucial for cost efficiency and compliance.

The PS argued that the need is for better alignment between budgets and payments, not abolition, stating, “GAA was created to eliminate inflated rates... It is a basic service. What we need is alignment between budget commitments and payments, not abolition.”

INSTANT ANALYSIS

This standoff reveals a critical breakdown in the country’s public financial management. While officials blame Treasury delays, lawmakers correctly identify the core issue as emanating from agencies committing to expenditures without guaranteed funds. The debate over GAA’s usefulness is a red herring; the real problem is a system that allows obligations to be incurred without immediate financial backing, leading to mounting debt that paralyses essential services and undermines fiscal discipline.