Kenya fined Ksh.6 billion for underutilized foreign loans - Auditor General

An audit of donor-funded projects has indicated that the projects continue to experience low absorption of the funds, leading to payment of commitment fees that, according to the Auditor General, amounted to wastage of public funds.

According to presentations from the Auditor General Nancy Gathungu on Tuesday, Ksh.6.6 billion has in the last four years been wasted through payments of commitments over unutilised funds.

“For instance, in the financial year 2023/2024, 14 projects which had total project allocations of Ksh.515.1 billion had not utilized Ksh.304.4 billion or 59.1% of the total allocation,” said Gathungu.

In the 2023/2024 FY, Kenyans lost Ksh.1.6 billion to commitment fees, while in the 2022/2023 FY, Ksh.1.4 billion was also lost to what the Auditor General terms as unmeaningful payments.

“Some of the projects have clauses where they attract commitment fees for any undrawn amounts, leading to wastage of funds and lack of value for money,” Gathungu noted.

Some of the projects listed to have attracted billions of shillings worth of commitment fees include the East Africa Skills Transformation Project, where World Bank donated Ksh.1 billion and Treasury ended up paying Ksh.526 million as commitment fees.

The Kapchorwa-Suam-Kitale and Eldoret Bypass Roads Project is also on the list, with undrawn balance of Ksh.16 billion also attracting penalties.

The Multinational Horn of Africa Isiolo–Mandera Corridor, the famous El Wak–Rhamu Road where Deputy President Kithure Kindiki visited on Tuesday to inspect the ongoing works, also attracted penalties after only Ksh.16 million was spent out of the billions of shillings allocated.

The session generated into a heated one, as Committee Chair Sam Atandi and his predecessor Ndindi Nyoro clashed over questions posed to the Auditor General.

The questions regarding the Hustler Fund also came to the fore, with MPs questioning why the committee should continue allocating money to the fund.

“Even arriving at Ksh.6 billion as a missing figure is difficult... The Hustler Fund is a problem, including its systems... You borrow Ksh.500 here, Ksh.1,000 there—surely how can you trace,” stated Gathungu.