NAIROBI, Kenya – The Office of the Auditor General has raised concerns over millions of shillings lying idle at the Central Bank of Kenya (CBK), meant for pension funds but largely unutilized due to bureaucratic delays.
The audit report questions why the National Treasury has continued to retain these funds without investing them in interest-earning instruments, leading to potential financial losses.
According to Auditor General Nancy Gathungu, the European Widows and Orphans Pension Fund—meant for dependents of slain European officers in the East African Service—held a balance of Ksh.179 million at CBK by the close of the 2023/24 financial year.
However, the fund has only one surviving beneficiary, who was paid a mere Ksh.54,264 over the year, raising questions about the necessity of maintaining such a large balance.
The audit further reveals that Treasury sought CBK’s guidance on how to invest the idle money but had yet to reach a resolution by November 2024.
Had the funds been placed in interest-bearing accounts, they could have generated an estimated Ksh.21 million in interest, the report notes.
Asian Officers Pension Fund Also Under Scrutiny
In addition to the European Widows and Orphans Fund, Gathungu flagged irregularities in the Asian Officers Family Pensions Fund, which has reportedly been operating without a Board of Trustees, in violation of governance laws.
The fund provides pensions for former Asian officers employed under the Kenyan government.
Further raising alarm, the audit uncovered that an additional Ksh.1 billion earmarked for provident funds has also remained idle at CBK, with no payments made during the financial year.
The report states that as of June 30, 2024, there were no known surviving members or beneficiaries of the provident scheme.
“It was unclear why the idle funds were not invested in interest-bearing instruments. This may have led to a potential loss of interest estimated at Ksh.122 million using the average CBK rate of 11.875%,” the report states.
Concerns Amid Kenya’s Debt Burden
These revelations come at a time when Kenya is grappling with fiscal pressures driven by high debt obligations.
Over the past decade, the country’s public debt has surged from 41% of GDP in 2014 to 69% in 2024, fueled by debt-financed infrastructure projects and other government expenditures.
With the government struggling to meet its financial obligations, the Auditor General’s findings highlight inefficiencies in fund management and raise critical questions about why billions remain unutilized instead of being redirected to pressing national priorities.
