The Kenyan government might have misused over KES 12.5 billion in public funds to acquire shares in three organizations without evidence of ownership, according to a special report by the auditor general.
In a special audit report presented to parliament, Auditor General Nancy Gathungu revealed that The National Treasury exercised emergency powers last fiscal year to withdraw the funds from the central bank under Article 223 of the constitution. This article permits such withdrawals when allocated budgets are depleted or new needs arise.
Out of the total, KES 6.2 billion was allocated to purchase a 40% stake in Telkom Kenya from private equity firm Helios. Another KES 5 billion was used to buy shares in pan-African Afreximbank, and KES 1.3 billion was spent on acquiring Eastern and Southern African Trade Development Bank stock.
However, Gathungu expressed concerns as the banks refused to confirm the share acquisitions, stating, “It was, therefore, not possible to confirm the ownership of the shares acquired and to determine whether there were any benefits that may have accrued,” in her report.
Covering the nine financial years between 2014 and 2023, the special audit exposed a significant increase in such withdrawals — from KES 1.1 billion in 2014/15 to over KES 147 billion in the last fiscal year.
The recommendations of the audit included the establishment of new guidelines for qualifying expenditures, conflict resolution concerning approval limits, ensuring public participation, and transparency in the supplementary budget process.
The 123-page report, currently undergoing parliamentary review, also raised concerns about KES 16 billion disbursed to struggling Kenya Airways under an unsigned loan agreement in the last fiscal year. Other substantial withdrawals were directed towards fuel and food subsidies, the impacts of which remained unclear.
