NAIROBI, Kenya — Bishop Gatimu Ngandu Girls High School has been ordered to explain a Sh1 million investment in Nairobi Securities Exchange (NSE) shares after MPs questioned the low dividend income generated and the availability of supporting documents.
The matter came before the National Assembly Public Investments Committee on Governance and Education (PIC-G&E) on Tuesday, September 15, after the Auditor-General raised questions about Sh1.58 million recorded as short-term investments in the school’s financial statements for the year ended June 2021.
Auditors initially said the school had not provided investment certificates and other supporting records needed to verify the existence and completeness of the reported amount.
School Reveals Sh1 Million NSE Investment
Appearing before the committee, Chief Principal Jane Njuguna said the Sh1.58 million balance comprised several amounts, including Sh1 million invested in shares at the NSE.
The remaining funds were held in various accounts, according to the school.
Njuguna told MPs that the NSE investment generated finance income for the institution.
However, she disclosed that the school had received only Sh5,381 in dividends during the year, prompting MPs to question whether the investment was generating sufficient returns.
“Can you imagine we have Sh1 million and this year you got Sh5,000?” committee chairman Dick Maungu, the Luanda MP, asked.
Maungu said the committee needed to establish whether the investment represented value for money.
MPs Question Value of Investment
The committee sought details of the investment’s performance and the companies whose shares the school had purchased.
Kilome MP Thaddeus Nzambia also questioned how an investment of Sh1 million could generate only about Sh5,000 in dividends over the year.
The committee’s concerns centred not only on the dividend income but also on whether the school had appropriate documentation and approvals for investing public funds.
The reported dividend of Sh5,381 represents about 0.54 per cent of the Sh1 million investment for that year, although dividend income alone does not establish the overall return on a share investment because it does not account for changes in the market value of the shares.
Treasury Approval Under Scrutiny
MPs also wanted to know whether the school obtained the necessary National Treasury approval before investing public funds.
Auditor-General’s representative Patricia Esipeya told the committee that Section 119(2) of the Public Finance Management Act requires accounting officers to manage public funds responsibly and keep cash balances at a minimum while seeking appropriate returns.
She further told MPs that investments by public institutions require approval from the National Treasury through the relevant parent ministry.
When Njuguna was asked whether the school had obtained the required approval, she requested additional time to establish the details.
The committee subsequently deferred the matter and directed the school to return with the relevant documentation.
School Unable to Immediately Identify Shares
The committee also questioned school bursar Racheal Wambui about the companies in which the Sh1 million had been invested.
Wambui said the investment remained active and that dividend payments were received through Absa and Centum.
However, she could not immediately identify the specific companies whose shares were held by the school.
She told MPs that the investment had been made before 2010, while she joined the institution in 2022.
Wambui acknowledged that the returns raised questions about the investment’s financial performance.
“Economically, I would say that it could not maybe give the value for money,” she told the committee.
Investment Dates Back to Before 2010
The committee also sought to establish how the school accumulated the funds used for the investment.
Njuguna said the school had previously operated income-generating projects, including coffee farming, which contributed to its savings.
She said the school no longer had sufficient land for coffee farming because of development and other activities.
The investment itself predates the current school administration, making it necessary for the committee to examine records from previous management.
MPs Seek Parents’ Approval Records
MPs also questioned whether parents had been involved in the decision to invest the school funds.
Sotik MP Francis Sigei asked the school to provide minutes of parents’ meetings or the Annual General Meeting showing whether the investment had been discussed.
The request formed part of wider questions about how the investment was authorised and whether the school had followed the applicable governance procedures.
The committee also questioned how the investment had initially been cleared in the audit process despite concerns over missing documentation.
Esipeya explained that auditors later obtained bank statements and evidence of Board of Management approval confirming that the funds had been invested through the NSE. The money had subsequently been transferred back to the school’s operational account during the audit review.
Committee Orders Fresh Documentation
Maungu directed the school to provide further records to allow the committee to establish how the investment was made and whether it complied with the applicable requirements.
The documents sought include details of the equities held, investment certificates, evidence of Treasury approval, relevant Board of Management and parents’ meeting minutes, and records showing the income and performance of the investment.
The committee is expected to revisit the matter after the school submits the requested documentation.
