Civil servants shun Government car loan scheme-Report

In a new audit report, civil servants have been found to be largely uninterested in a government loan scheme intended to help them acquire vehicles.

Despite being launched in 2015, the uptake of the State Officers and Public Officers Motor Car Loan Scheme Fund has been dismal, with only Sh315 million disbursed to civil servants, representing a mere 7.8% of the fund's total assets, which stand at Sh4 billion.

The Audit General, Nancy Gathungu, expressed concern that the low participation rate may jeopardize the purpose of the fund, stating that the fund’s objective may not be realized.

The report shows a slight increase in uptake by just 1.2% for the year ending June 2024, following a 6.6 % uptake in the previous financial year.

The year before, the performance stood at 3.8%, a slight improvement from the 1.2% recorded in 2021.

Despite management's efforts to address the low uptake through sensitization drives, the results have not been significant.

The lack of interest in the loan scheme has led the fund’s managers to invest the idle funds in Treasury Bills to avoid having them sit unused.

“The fund experienced low response from state officers and public officers, compelling the management to invest in T-bills so that the allocated funds do not lie idle,” the report said.

Established in September 2015, the scheme was intended to assist civil servants in acquiring vehicles at flexible loan terms, which the government believed would improve productivity and motivate state officers.

The intention was also to alleviate the public embarrassment civil servants often faced due to their transport challenges.

However, the fund’s failure mirrors broader issues facing government benefit programs, including housing initiatives.

According to the Salaries and Remuneration Commission (SRC), civil servants are eligible for loans ranging from Sh600,000 to Sh10 million, depending on their rank.

Cabinet Secretaries, the Attorney General, and the Auditor General are eligible for the highest loan amounts of Sh10 million, while other senior civil servants, such as Principal Secretaries and the Controller of Budget, can access up to Sh8 million.

Junior employees in grades N, S, T, and U can borrow varying amounts, from Sh1.5 million to Sh4 million.

For those who take out the loans, the fund holds the vehicle logbooks until the loan is fully repaid.

However, earlier audits revealed that some intended beneficiaries were unaware of the scheme's existence.

As a result, management has promised to organize sessions to raise awareness about the fund and its benefits.

In a separate review, Auditor General Gathungu questioned an irregular expenditure of more than Sh48 million spent on foreign training for members of the fund's advisory board and staff.

The report noted that the management had failed to provide proper justification for these expenses.

“The management had not justified incurring expenditure on foreign training,” Gathungu stated in her findings.

The poor performance of the car loan scheme raises questions about the effectiveness of government benefit programs and their ability to meet the needs of civil servants.

With continued stagnation in participation and mismanagement of funds, it remains to be seen if the scheme will ever achieve its intended goals.