- Auditor General Nancy Gathungu's report said civil servants had ignored demand letters for repayment from their Housing Scheme Fund
- Gathungu cast doubt the fund would recover the outstanding Sh7.1 billion
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The government has dismissed assertions by auditors that civil servants owe Sh7 billion in repayments to their housing scheme.
The Housing Department said that the conclusion by the office of the Auditor General was misleading.
PS Charles Hinga's team said the arrears between April and June 30, 2023, was Sh8.6 million.
“The outstanding arrears for three months to June 30, 2023, was Sh8,637,738 only,” the department said in a press statement on Wednesday.
Auditor General Nancy Gathungu in her audit cast doubt the Civil Servants Housing Scheme Fund would recover the outstanding Sh7.1 billion.
In her report, covering the period to June 30, 2023, Gathungu said the affected civil servants ignored letters for repayment from the Fund.
“Although management provided demand letters issued to the defaulters, the amount remained outstanding as at June 2023,” the report tabled in Parliament read.
“In the circumstances, the full recovery of the long outstanding receivables couldn’t be confirmed.”
The housing department refuted the report and said the loan book reflects the total sums lent, which must be distinguished from the amounts in arrears.
“The mortgage loans are long term spanning within a period of 20 years, hence the loan books reflect the total outstanding repayments of the entire period,” the department’s statement reads.
The tenant purchase scheme was set up in 2004 to loan civil servants cash to buy or build homes, which they are free to sell or rent out.
About 3,000 civil servants took up the loans, most of whose accounts auditors said were in arrears.
The department clarified yesterday that Sh2.8 billion was in respect of mortgage recoverable from the tenant purchase scheme.
Another Sh3.1 billion was loans from a KCB package, Sh1.1 billion from Housing Finance and Sh71.8 million from insurance premiums.
They also dismissed the auditor's report that indicated Sh843 million investments might be grabbed for lack of titles.
Gathungu had said ownership papers for parcels on which select housing units are located were not provided.
Properties in Kileleshwa Gichugu I, Kileleshwa Gichugu II, Kilimani-Denis Pritt, Park Road-Nairobi, Jogoo Road Nairobi, Kibera High Rise, Mukenia South B, Kileleshwa Flats, Shauri Moyo-Kisumu, Kiambu, Bondeni-Nakuru, Machakos, Embu and Ruiru were cited.
But the department said the documentation and processing of titles was not dependent on them.
“The management has engaged the state department for Lands and NLC [National Land Commission] in processing the titles. Most of the titles have now been processed and collected,” the statement reads.
On concerns civil servants shunned mortgages, the department blamed the regime change.
“The low uptake of mortgages by state officers was due to the transition period following the August 2022 general election and when the term of most state officers end.”
The auditor general flagged Sh754 million of funds, for the mortgage, that were not taken up.
Gathungu said in the ensuing circumstances, the overall objectives of the fund may have not been achieved.
MPs will review the report and make recommendations.