Several county governments are under scrutiny after it emerged that billions of shillings have been issued as loans under empowerment funds but remain largely unrecovered.
Senators now want the Ethics and Anti-Corruption Commission to step in, citing concerns that the funds may have been used as political tools to woo voters during election periods.
The County Public Investments Committee, which has been interrogating governors over the ballooning non-performing loans, ruled that EACC should take over the matter, warning that continued recovery efforts by counties would be futile.
“EACC should just take up the matter. Even if we allowed you to recover the money, you would come back here and report that nothing has been recovered,” the committee declared.
The senators also instructed the Controller of Budget to provide a full record of empowerment funds in all counties, including the amounts disbursed, loans issued, and recoveries made.
Committee chairperson Godfrey Osotsi expressed alarm at the timing of the disbursements, noting that many of the loans were released close to elections.
“What is becoming clear is that this money was being disbursed during election periods — and in some cases it was probably used to campaign against you,” Osotsi told Kitui Governor Julius Malombe.
Since Monday, the committee has questioned four governors — Paul Otuoma (Busia), Benjamin Cheboi (Baringo), Julius Malombe (Kitui), and Jeremiah Lomorukai (Turkana) — over massive loan defaults dating back to previous administrations.
In Busia, the county risks losing Sh130 million issued to employees and cooperatives through the Busia Agricultural Development Fund, the Busia County Cooperative and Enterprise Development Fund, and the Public Officers Revolving Fund.
Auditor General Nancy Gathungu flagged the loans as unsecured, noting that the law creating the funds did not require collateral.
Governor Otuoma told senators, “These were inherited loans, and we had put a line that we are not disbursing loans until we correct the anomaly that is in the act as we pursue the cooperatives that were given.”
In Turkana, over Sh500 million disbursed to women, youth, and county employees has not been recovered years after maturity. The Auditor General reported that no clear measures had been taken to recover the loans.
Governor Lomorukai said the county had procured a Loan Management System to improve accountability and ensure recovery.
“The Loan Management System will enhance accountability and transparency, improve repayment monitoring and consistency, financial inclusion and capacity building, data-driven decision-making and sustainability of the revolving fund,” he explained.
Kitui is struggling to recover Sh157.31 million under its Empowerment Fund, which has been flagged for high default rates. Senator Raphael Chimera accused the county of deliberately ignoring its own legislation.
“It is apparent that the county government of Kitui was intentional in not recovering this fund. The sections of this law are very clear on how they intend to recover these loans. We don’t understand why you don’t want to follow what you have put through as your own legislation,” he said.
Malombe admitted that political figures in the past administration told residents not to repay the loans. “You appreciate the circumstances we operate in. We are not giving any more loans,” he told the senators.
Bungoma has failed to recover Sh4.81 million disbursed under the Persons with Disabilities Empowerment Fund, while Sh23.38 million under the Youth and Women Enterprise Fund has remained outstanding for four years.
In Laikipia, Sh18.45 million disbursed under the County Enterprise Fund and Sh20.88 million under the Cooperative Development Fund remain unpaid, casting doubt on the recoverability of Sh47.22 million in total.
In Mombasa, Sh53.88 million advanced under the Consolidated Revolving Fund remains unpaid, with auditors noting that loan agreements and collateral were missing.
Similarly, in Meru, Sh28.20 million disbursed under the County Investment and Development Corporation Fund is still outstanding.
Senators warned that the persistent defaults not only put public resources at risk but also defeat the purpose of empowerment funds, which were created to support economic development but are now being undermined by political manipulation and weak enforcement.
