Taxpayers stand to lose Sh5.7 billion in donor-funded projects due to poor financial management by government institutions, according to a new report by Auditor General Nancy Gathungu.
The report, which covers the financial year ending June 30, 2024, highlights serious concerns about how ministries, departments, and agencies (MDAs) have handled donor funds.
It cites procurement breaches, inefficiencies, unauthorized spending, and payment delays, which have resulted in unnecessary costs and risks to project completion.
A staggering Sh4.4 billion was paid as interest on delayed payments—costs that Auditor General Gathungu described as “unnecessary” and avoidable if agencies adhered to project timelines.
The audit also uncovered Sh1.3 billion in ineligible expenditure across 10 projects, pointing to possible misuse of public funds. Moreover, pending bills related to the reviewed projects amount to Sh64 billion, raising fears the situation may worsen.
Among the worst cases cited are the Ministry of Health, the Kenya Urban Roads Authority, and the State Department for Infrastructure.
At the Ministry of Health, delays in settling debts related to Covid-19 vaccines resulted in Sh930 million in interest payments, alongside an unpaid Sh100 million for Covid-19 response efforts.
The Kenya National Highways Authority (KeNHA) faces Sh856 million in interest for delayed tax payments on the Mombasa-Mariakani highway project, Sh657 million owed to contractors on the Isebania-Kisii-Ahero junction project, and Sh615 million in interest linked to the World Bank-funded Kenya Transport Sector Support Project.
Other delayed payments include Sh614 million for the Kibwezi-Mutomo-Kitui-Migwani road project and Sh318 million for the Kapchorwa-Suam-Kitale and Eldoret Bypass projects.
The Kenya Rural Roads Authority (KERRA) has accumulated Sh38 million in interest on the Gilgil project and Sh4.8 million on the Roads 2000 projects in Central Kenya. The agency also failed to provide Sh167 million for Gilgil roads, while the Agriculture department did not release Sh99 million.
Ineligible expenditures include Sh475 million spent by the National Treasury on the Africa Climate Summit, which was financed after the event took place, making the costs ineligible.
The Water Department also failed to recover Sh124 million wrongly paid to the Thwake Dam contractor.
Additionally, the audit revealed that 44 projects did not use their allocated funds before closure, raising concerns that planned activities may not be completed. The mixing of donor funds with agency funds in 16 projects violated financial rules, complicating tracking and accountability.
Auditor General Gathungu warned that commingling of funds and poor financial discipline threaten the success of vital development projects, underscoring the urgent need for improved financial management to safeguard public resources.
