NAIROBI, Kenya — The Local Authorities Provident Fund (LAPFUND) has come under renewed scrutiny after the Auditor-General questioned a Sh1.3 billion advance paid to a contractor for a major housing project in Nairobi before work was formally certified.
In her latest audit report, Auditor-General Nancy Gathungu revealed that LAPFUND disbursed nearly Sh2.9 billion for the Bellevue Park Residences project in South C by June 2025, despite verified construction work amounting to just Sh1.59 billion.
The discrepancy has raised red flags over the fund’s procurement controls and financial oversight, particularly in the management of large-scale real estate investments.
“It was observed that an advance payment of Sh2,898,604,851 was made, whereas the value of works certified as at 30 June, 2025, stood at Sh1,585,691,063, raising concerns on efficient utilisation of funds,” Gathungu noted.
The excess payment of about Sh1.31 billion is significant, given the overall Sh16.1 billion cost of the mixed-use development, which was launched in January 2023.
Bellevue Park Residences comprises studio and three-bedroom apartments alongside commercial spaces, a kindergarten and a health centre.
The project was initially scheduled for completion by October 2025, but audit findings show it has fallen substantially behind schedule.
According to the report, 25 of the project’s 31 contractual months — equivalent to 81 per cent of the construction period — had elapsed by July 2025, yet the development was still incomplete, leaving it 16 months behind schedule.
A site inspection conducted on July 10, 2025 confirmed that construction was ongoing but far from finished.
The Auditor-General further observed that LAPFUND had not formally sought an extension of time, despite missing key milestones.
Beyond the stalled project, the audit also flagged concerns over how LAPFUND reports its property investments.
Assets under construction valued at Sh19.57 billion were classified as investment property within the fund’s Sh36.7 billion portfolio, even though they are not yet ready for sale or occupation.
“However, the investment includes assets under construction of Sh19,570,612,000, which were classified as investment property even though they were not complete for sale or occupation,” the report states.
The fund’s revenue collection challenges were also highlighted. As of June 2025, LAPFUND was owed Sh17.7 billion in long-term receivables and Sh1.89 billion in short-term debts, while potential losses from unremitted contributions stood at Sh42.27 billion.
The Auditor-General attributed the rising debt burden to penalties charged on outstanding contributions, with gross non-current receivables increasing by Sh6.2 billion to Sh65.8 billion in the year under review.
The findings underscore growing concerns about LAPFUND’s stewardship of public funds, with delayed projects, questionable advance payments and mounting uncollected contributions posing potential risks to the retirement savings of county government workers.
