NAIROBI, Kenya — Auditor General Nancy Gathungu has flagged a Sh10.85 billion cost overrun in the construction of Nairobi’s Talanta Sports City, raising concerns over procurement compliance and financial oversight.
In her audit of the Ministry of Defence accounts for the 2024/25 financial year, Gathungu revealed that the National Treasury had approved Sh35 billion for the project. The funding was to be drawn from the Sports and Arts Social Development Fund (SASDF) over six years.
However, the signed contract for the design, construction and equipping of the 60,000-seater stadium stands at Sh45.85 billion. The variance creates what the audit terms an unsupported price increase of Sh10.85 billion.
“This is against a contract amount of Sh45.85 billion, resulting in an unsupported price variation of Sh10.85 billion,” the report states.
The Ministry of Defence signed a two-year contract with a foreign contractor on May 26, 2024, at a cost of Sh45,848,051,675 (US$344,514,966). The facility is expected to host matches during the 2027 Africa Cup of Nations.
The audit found that clearance from the Attorney General was not provided before the award of the contract. At the time, the office was held by Justin Muturi.
Section 134 of the Public Procurement and Asset Disposal Act requires contracts exceeding Sh5 billion to receive prior clearance from the Attorney General. Cabinet Secretaries must also regularly inform Cabinet and the National Treasury of such agreements.
“Clearance from the Attorney General for the award of the contract was not provided for audit,” the report reads.
The audit further found that the contract was awarded through direct procurement. It concluded that the method did not meet the strict criteria allowed under the Public Procurement and Asset Disposal Act, which prioritises open tendering except in cases of urgency, war, exclusive rights or natural disaster.
The Ministry of Sports transferred Sh2.01 billion and procurement responsibility to the Ministry of Defence before the contract was signed.
As of June 1, 2025, implementation stood at 44.54pc complete, with 15 months remaining to contract expiry. Cumulative payments to the contractor amounted to Sh2 billion, about 4.5pc of the contract sum.
The audit also warned that delayed payments would attract interest at 3pc above the prevailing Central Bank of Kenya base lending rate under Article 3.5 of the agreement. Such penalties could inflate overall project costs.
Questions were also raised about the project’s financing structure. The Talanta project is backed by a Sh44.7 billion bond listed on the Nairobi Securities Exchange, serviced through SASDF revenues at an estimated Sh3.4 billion every six months.
A Deed of Assumption signed on July 22, 2025, transferred payment obligations to a Trustee on behalf of the Ministry of Defence, with contractor consent. However, the audit noted that full details of the revised funding model were not provided, recommending a special audit to assess value for money.
Kiharu MP Ndindi Nyoro has warned that the bond could cost taxpayers up to Sh100 billion over its maturity period.
“The maturity of this loan of Sh44.7 billion means we could pay up to Sh100 billion,” Nyoro said. “Every child born in the next 15 years will have a loan tag for money they have no idea how it was used.”
The Sh10.85 billion overrun alone could fund nearly 9.5 kilometres of the Rironi–Mau Summit dual carriageway or support millions of learners annually under current capitation rates.
The findings intensify scrutiny over mega infrastructure financing, procurement integrity and the state’s constitutional obligation under Article 201 to ensure prudent and responsible use of public funds.
