New reports by Auditor General Nancy Gathungu reveal that many beneficiaries of the programmes are not repaying the loans, threatening to sink millions of taxpayers’ money.
Worse, most beneficiaries have nothing to show for the funds despite the huge expenditures as some counties have not put in place measures to assess, monitor and evaluate the use of the money.
The development comes as the auditor revealed that many youths, women and PWDs have been locked out of the programmes as the counties fail or underfund the kitties.
The audit reports for youth, women, PWDs and enterprise funds run by the devolved units have been tabled in the Senate.
In Nyeri, the report shows that the county is at risk of losing Sh2.48 million after some eight groups that benefited from the fund defaulted.
The loans were advanced under the Nyeri County Development Enterprise Fund.
“No provision for bad and doubtful debts was made in the financial statements,” Gathungu said as she criticised the county for failing to apply penalties on defaulted loans.
In addition, the county risks losing Sh7.45 million that was advanced to groups that provided title deeds as security.
Valuation reports to confirm the value of the land were not provided, triggering doubts about the recoverability of the funds in the event of a default.
In Baringo, the county risks losing Sh5.86 million disbursed under the Baringo County Micro and Small Enterprises Fund for the year ended June 30, 2023.
“A review of loan repayment schedules revealed that loans amounting to Sh5.86 million was in arrears. However, the loan management committee has not taken any legal action to recover the loans,” the report reads.
The situation is similar in Kilifi, where the government has failed to recover loans amounting to Sh143.77 million out of Sh238.38 million advanced to some 315 groups under Kilifi County Microfinance (Wezesha) Fund.
The groups had not repaid the loans for over 90 days and were therefore in default.
In addition, the fund carried forward non-performing loans from previous year amounting to Sh18.87 million, contrary to its regulations.
“In the circumstances, the recoverability of the loan receivables of Sh238.38 million could not be confirmed. In addition, the management was in breach of the law,” the report reads.
In Kakamega, the government failed to disburse funds amounting to Sh45.97 million to the Kakamega County Microfinance Corporation during the year under review.
The report shows the county had a budget of Sh298.98 million but released Sh253.01 million, resulting to underfunding of Sh45.97 million or 15 per cent of the budget.
In addition, out of Sh253.01 million released to the fund only Sh176.78 million was disbursed to groups.
“The underfunding and underperformance affected planned activities and may have impacted negatively on service delivery to the public,” the report shows.
In Wajir, the government disbursed loans amounting to Sh73.80 million to various groups without an approved budget.
Out of the amount, Sh1.80 million was disbursed without adhering to eligibility criteria as set out in the Regulation 4(3) and 12(1) of the Wajir County Revolving Fund Regulations, 2016.
“In the circumstances, management was in breach of the law and the recoverability of loans amounting Sh1.80 million could not be confirmed,” the report says.
In Lamu, Gathungu reveals that the county could have locked out several PWDs from the Disability Fund during the financial year ending June 2023.
The county, according to the report, released a paltry 17 per cent of the total budget for the fund during the year.
The county only utilised Sh1.77 million from the fund from a budget of Sh8.73 million.
“The under-absorption may have affected the planned activities impacting negatively on service delivery to the public,” the report states.
The county has also been indicted for failing to appoint three persons to the Disability Fund Committee contrary to the county law that requires three PWDs to sit in the committee.
Still in Lamu, the county failed to utilise Sh7 million set aside for empowerment of the youth through the Lamu County Youth Development Fund for the year ended June 30, 2023.
“The funds appropriated were therefore not utilised during the year under review. In the circumstances, the residents of Lamu did not get the intended benefit from the funds appropriated,” Gathungu says.
The auditor further criticises the county for failing to monitor, asses and evaluate the funds loaned to the groups to ensure they were used for the intended purposes.
“Further, no follow ups or monitoring and evaluations were done or planned to ensure that the monies were spent as intended and that the objectives of the fund were being met contrary to Section 14 Part VI of the Lamu County Youth Development Act,” the report says.
In Meru, some youths, women and other special groups were locked out of the funds after the county government failed to release Sh20.69 million to the Meru County Youth Service Board for the year ended June 30, 2023.
“Review of the records revealed that the county government budgeted to transfer Sh75 million to the board. However, only Sh54.30 million had been transferred at the closure of the financial year resulting to underfunding of Sh20.69 million,” Gathungu notes in the report.
The auditor reveals that PWDs who benefited from Kajiado County Disability Mainstreaming Fund were yet to repay Sh8.59 million.
During the financial year ending June 30, 2023, the county recovered a paltry Sh95,000.
The report adds that the outstanding loans were not supported with ageing analyses as required.
“The management has not demonstrated efforts being made towards recovery of the outstanding loans,” the report shows.
In Tharaka Nithi, the county disbursed Sh23.55 million to youth groups in the last two financial years.
However, no monitoring and evaluation was carried out on the beneficiaries to ensure that the money was used for the intended purposes.
“It was therefore not confirmed whether the money disbursed was utilised for the intended purpose,” the report reads.
Further, the report reveals an assessment programme to determine the needs, concerns and priorities of the youths was not carried out.
This is contrary to Section 25 of the Tharaka Nithi County Youth Empowerment Act, which states that the department in charge of youth affairs in the implementation of programmes shall identify youth concerns, needs, priorities, constraints and opportunities in the county.
