NAIROBI, Kenya – An audit by Auditor General Nancy Gathungu has flagged the irregular handling of Sh2.1 billion earmarked for coffee farmers under the Coffee Cherry Advance Revolving Fund, raising concerns over financial mismanagement.
The funds, intended to support farmers, were instead deposited in a commercial bank, breaching a directive from the National Treasury, which stipulated that such funds should be invested in treasury bills or bonds via the Central Bank of Kenya (CBK).
The audit reveals that the Coffee Cherry Fund administrators deposited Sh2,181,054,794 into a call account, directly contravening a 2018 Treasury circular.
The circular mandated that surplus funds held by state corporations and semi-autonomous government agencies be invested through CBK, avoiding intermediaries like commercial banks.
Gathungu noted that this move deprived farmers of potential benefits, stating, “Farmers have not obtained value for money in the circumstances,” as quoted in her report.
She emphasized that the decision to keep the non-disbursed funds in a call account violated Treasury guidelines, highlighting management’s breach of the law.
Adding to the concerns, the audit also discovered that Sh181 million in interest earned from the deposits had not been applied.
This unapplied interest, Gathungu argued, further disadvantaged the fund by limiting potential returns.
The interest remained idle, as call deposits do not yield higher returns unless re-invested or rolled over into the principal balance.
The Coffee Cherry Advance Revolving Fund was established to provide affordable loans to coffee farmers to ease their financial burden, but this mismanagement raises questions about the fund’s oversight and the transparency of its operations.
The Auditor General’s findings underscore the need for tighter financial controls to ensure that such funds, which are critical to Kenya’s agricultural sector, are managed prudently and in compliance with established guidelines.
The report has been submitted to relevant authorities, and further actions are expected to address the lapses in the fund’s management.
The funds, intended to support farmers, were instead deposited in a commercial bank, breaching a directive from the National Treasury, which stipulated that such funds should be invested in treasury bills or bonds via the Central Bank of Kenya (CBK).
The audit reveals that the Coffee Cherry Fund administrators deposited Sh2,181,054,794 into a call account, directly contravening a 2018 Treasury circular.
The circular mandated that surplus funds held by state corporations and semi-autonomous government agencies be invested through CBK, avoiding intermediaries like commercial banks.
Gathungu noted that this move deprived farmers of potential benefits, stating, “Farmers have not obtained value for money in the circumstances,” as quoted in her report.
She emphasized that the decision to keep the non-disbursed funds in a call account violated Treasury guidelines, highlighting management’s breach of the law.
Adding to the concerns, the audit also discovered that Sh181 million in interest earned from the deposits had not been applied.
This unapplied interest, Gathungu argued, further disadvantaged the fund by limiting potential returns.
The interest remained idle, as call deposits do not yield higher returns unless re-invested or rolled over into the principal balance.
The Coffee Cherry Advance Revolving Fund was established to provide affordable loans to coffee farmers to ease their financial burden, but this mismanagement raises questions about the fund’s oversight and the transparency of its operations.
The Auditor General’s findings underscore the need for tighter financial controls to ensure that such funds, which are critical to Kenya’s agricultural sector, are managed prudently and in compliance with established guidelines.
The report has been submitted to relevant authorities, and further actions are expected to address the lapses in the fund’s management.
