NAIROBI, Kenya – Kenyan taxpayers may have lost over Sh5.7 billion in donor-backed development projects due to widespread financial mismanagement across government institutions, a new report by Auditor General Nancy Gathungu reveals.
Covering the financial year ending June 30, 2024, the audit points to procurement violations, delayed payments, unauthorised spending, and underutilised funds in dozens of ministries, departments, and agencies (MDAs), raising alarm over Kenya’s stewardship of foreign aid.
According to the report, government entities paid a staggering Sh4.4 billion in avoidable interest due to delays in settling project-related bills.
Another Sh1.3 billion was flagged as ineligible expenditure, suggesting possible misuse of donor funds.
“These are unnecessary costs that could have been avoided if agencies adhered to project timelines and financing agreements,” Gathungu said in the report tabled in Parliament.
Projects Under Fire
Among the worst-hit was the Ministry of Health, which incurred Sh930 million in interest over unpaid debts related to Covid-19 vaccine procurement.
The ministry also failed to pay Sh100 million meant for pandemic response activities.
The Kenya National Highways Authority (KeNHA) was cited for multiple delays.
The agency now faces a Sh856 million interest bill for unpaid taxes linked to the Mombasa–Mariakani highway project.
It also owes contractors Sh657 million for delayed works on the Isebania–Kisii–Ahero junction and Sh615 million under the World Bank-funded Kenya Transport Sector Support Project.
Other state bodies, including the Kenya Rural Roads Authority (KeRRA), the Ministry of Water, and the Agriculture Department, were also faulted for non-payments, interest charges, and fund misallocation.
KeRRA owes Sh38 million in interest for the Gilgil project and an additional Sh4.8 million tied to the Roads 2000 programme.
The Water Department failed to recover Sh124 million wrongly paid to a Thwake Dam contractor, while the Agriculture Ministry did not release Sh99 million for planned projects.
Questionable Spending
One of the most glaring violations was a Sh475 million expenditure by the National Treasury to fund the Africa Climate Summit—money auditors say was spent before the financing agreement was signed, rendering it ineligible.
In total, 44 projects failed to absorb their allocated funds by the closure date, raising fears that key objectives may never be met.
Meanwhile, 18 projects were either stalled or at risk due to failure by national and county governments to provide agreed counterpart funding—amounting to Sh3.5 billion in unremitted local contributions.
Notably, Kenya Power withheld Sh1.1 billion meant for the Last Mile Connectivity Project, and KeNHA failed to provide Sh663 million for a trade facilitation programme.
Murky Financial Practices
The Auditor General further raised concern over 16 projects that mixed donor money with agency operational funds, violating strict donor accounting protocols and making financial tracking difficult.
“Commingling of funds compromises transparency and accountability, and risks breaching donor terms,” the report warns.
In addition, 28 projects had officially lapsed but had not been properly closed, leaving gaps in oversight and creating opportunities for misuse.
The findings come as Kenya continues to rely heavily on donor financing for key infrastructure and social development initiatives.
Analysts warn that such reports could affect future funding and damage the country’s reputation among development partners.
