NAIROBI, Kenya — At least 14 major government projects with a combined budget of Sh515.1 billion have failed to utilise over half of their allocations over the past five years, raising alarm over deep-rooted inefficiencies in public investment management.
In a report tabled before the National Assembly’s Budget and Appropriations Committee, Auditor-General Nancy Gathungu revealed that the projects left a staggering Sh304.4 billion—equivalent to 59.1 per cent of their funding—undrawn, citing implementation delays, poor planning, and financial mismanagement.
“Many of these projects now risk lapsing without achieving their intended goals,” Gathungu warned, adding that taxpayers have borne the brunt of the inefficiencies, including billions lost in commitment fees for unused foreign loans.
According to the Auditor-General, Kenya paid Sh6.57 billion in commitment fees between 2020 and 2024 for undrawn loans, with the annual cost ranging from Sh1.4 billion to Sh2 billion.
These fees are charged by lenders on unutilised funds meant to finance delayed or stalled projects.
High-Stakes Projects Stalling
Some of the underperforming projects are among the government’s flagship initiatives.
The East Africa Skills Transformation Project, running from 2018 to 2024, had used only 61 per cent of donor funds by June 2024.
Meanwhile, the Sh23.5 billion Kapchorwa-Suam-Kitale and Eldoret Bypass roads had a 35 per cent undrawn balance by September 2023.
Perhaps the most glaring case is the Mombasa Gate Bridge, a project allocated Sh49.05 billion since 2019.
After four years, only Sh938.2 million—or just 2 per cent—has been spent.
The remaining Sh48.1 billion remains idle, despite the project continuing to attract financial penalties.
“Clause II (2.03) of the financing agreement states that the loan will continue to attract a penalty on the undrawn balance,” Gathungu said, pointing to further losses if absorption does not improve.
Development Funding Below Legal Threshold
Beyond poor project execution, the Auditor-General raised concerns over the shrinking portion of the national budget allocated to development.
In the current 2023/24 fiscal year, only Sh708.85 billion—about 15 per cent of the Sh4.26 trillion budget—is allocated to development, far below the 30 per cent legal threshold outlined in the Public Finance Management Act.
In the proposed 2024/25 budget, development spending is projected to rise slightly to Sh643.9 billion, or 25.8 per cent of total expenditure.
However, this still falls short of the minimum target meant to ensure long-term economic growth.
“This trend reflects a worrying shift in budget priorities and undermines efforts to deliver infrastructure, social services, and development outcomes,” the Auditor-General noted.
Mounting Concerns Over Fiscal Discipline
The report adds to growing scrutiny of the government’s fiscal management, especially as the national debt approaches unsustainable levels.
Gathungu has repeatedly warned that delayed payments, stalled projects, and low budget absorption not only derail development but also increase the cost of borrowing and service delivery.
Recent audits have flagged over Sh38 billion in stalled projects across 24 government departments, a Sh46.5 billion shortfall in the Equalisation Fund, and interest penalties of Sh4.3 billion due to delayed payments to contractors.
The Auditor-General’s findings are expected to fuel debate in Parliament ahead of the 2024/25 budget reading and may pressure the Treasury and implementing agencies to explain the chronic underperformance.
