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New reports from Auditor General Nancy Gathungu have raised alarms over the mismanagement of loan programs aimed at supporting youth, women, persons with disabilities (PWDs), and other special interest groups across county governments. The reports reveal that millions of taxpayer shillings could be lost due to non-repayment of loans, inadequate oversight, and poor funding allocation by several devolved units.
Key findings from the Auditor General’s report show that many beneficiaries of the loan programs have defaulted, with little to no action being taken by the counties to recover the funds. Some counties have also failed to monitor or evaluate the usage of the funds, rendering taxpayers’ money vulnerable to wastage.
Major Counties at Risk:
- Nyeri County: Risks losing Sh2.48 million due to defaults by eight groups under the Nyeri County Development Enterprise Fund. The county failed to set aside provisions for doubtful debts and did not apply penalties for defaults. Additionally, loans secured with land title deeds worth Sh7.45 million face doubts over recovery due to missing valuation reports.
- Baringo County: Faces a potential loss of Sh5.86 million disbursed under the Baringo County Micro and Small Enterprises Fund. Despite the loans being in arrears, no legal action has been taken to recover the debts.
- Kilifi County: Struggles with a massive Sh143.77 million in outstanding loans from 315 groups under the Kilifi County Microfinance (Wezesha) Fund, with many loans in default for over 90 days. A further Sh18.87 million in non-performing loans were carried over, breaching regulations.
- Kakamega County: Failed to disburse Sh45.97 million to the Kakamega County Microfinance Corporation, causing a shortfall of 15% in the budget. Only Sh176.78 million of the Sh253.01 million released to the fund was disbursed, affecting service delivery.
- Wajir County: Disbursed Sh73.80 million to various groups without an approved budget, and a portion of Sh1.80 million was disbursed without adhering to the set eligibility criteria.
- Lamu County: Lamu’s Disability Fund underutilized only 17% of its budget, amounting to just Sh1.77 million out of an allocated Sh8.73 million. Additionally, Sh7 million allocated for youth empowerment was not utilized, and the county failed to appoint the necessary committee members for proper oversight of the Disability Fund.
- Meru County: Failed to release Sh20.69 million to the Meru County Youth Service Board, undermining the county’s budget allocation and leaving youth programs underfunded.
- Kajiado County: Struggles with Sh8.59 million in outstanding loans under the Kajiado County Disability Mainstreaming Fund, with very little recovery made.
- Tharaka Nithi County: Disbursed Sh23.55 million to youth groups but failed to conduct monitoring or evaluation to ensure that the funds were used for their intended purposes.
Audit Findings and Concerns:
Auditor General Nancy Gathungu’s reports strongly criticize counties for their failure to set up effective monitoring and evaluation systems, leaving loan funds vulnerable to misuse. Many of the loans disbursed lacked proper documentation or assessments to ensure they were spent as intended. Several counties were found to be in breach of laws, and non-performing loans have yet to be addressed.
“Without proper oversight, these funds, which are meant to empower the most vulnerable groups in society, are at risk of being wasted. Many youths, women, and persons with disabilities are being locked out of these programs due to poor management and underfunding,” said Gathungu.
This alarming trend threatens not only the integrity of county development funds but also the intended benefits for disadvantaged groups who rely on such programs to uplift their livelihoods.
Recommendations:
The Auditor General has called for immediate corrective actions, including:
- Strengthening monitoring and evaluation mechanisms to track the impact of these funds.
- Enforcing penalties for loan defaults and ensuring legal actions are taken.
- Allocating sufficient funds and ensuring that beneficiaries are selected according to established criteria.
- Implementing effective debt recovery procedures.
As counties face significant financial challenges, these findings underscore the need for accountability and improved management to ensure that funds meant to support marginalized groups are not wasted.
The Auditor General’s reports have been tabled in the Senate, and further scrutiny and recommendations are expected.
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