CoB: Kenya wasting billions on idle loans and unprepared projects
Speaking to the National Assembly committee on public debt and privatization, she said taxpayers are losing money through commitment fees paid on loans that are not being used because project implementers are unprepared.
Controller of Budget Margaret Nyakang’o has warned that Kenya could default on its debt if the government does not stop wasteful practices, especially in the way it handles loans and travel expenses.
Speaking to the National Assembly committee on public debt and privatization, she said taxpayers are losing money through commitment fees paid on loans that are not being used because project implementers are unprepared.
In just the first nine months of the current financial year, the government paid Sh770.5 million in commitment fees for loans that remain idle.
"We found out that we sign loans before the project implementors are ready so they are surprised to be told there is money here for you so can you start, they say woow we didn't know there was money, so we have this problem where the sinking of the funds is not aligned to project readiness," Nyakang’o said.
She warned that these inefficiencies, combined with high levels of non-essential spending, are increasing Kenya’s debt servicing burden. If this trend continues, she said, the country could soon be unable to meet its financial obligations.
"If we continue doing the wrong things then we are headed in the route of defaulting, but if we amend our ways and start doing the right thing, and I have just said if we go to the TSA, we will make massive savings and we will not need to borrow as much," she stated.
In addition to the problem of commitment fees, Nyakang’o also flagged high expenditure on travel, which has cost the government more than Sh9.5 billion this year.
She questioned the necessity of foreign trips that could be replaced by local meetings, describing one instance where Kenyans flew to Turkey for a conference that could have taken place in Mombasa.
She further raised the issue of rising public wage bills and miscellaneous spending, which have grown despite the government's reduced disbursement of pension and gratuity funds.
Only Sh115 billion of the allocated Sh223 billion for pensions has been disbursed in the same period.
Nyakang’o called for immediate reforms, including proper debt audits and alignment between loan approvals and project readiness.
She said this would ensure the country borrows only when needed and uses the money efficiently.
