Questions raised over Sh10b maize subsidy and Telkom shareholding

Auditor-General Nancy Gathungu has raised concerns regarding a total of Sh10.19 billion spent on the maize flour subsidy program and the purchase of Telkom shares, highlighting that these expenditures lacked the necessary constitutional approval.

Of the Sh10 billion, Sh4 billion was allocated to the maize flour subsidy, while Sh6.1 billion was spent on acquiring Telkom (K) shares by the State Department for Crop Development and the National Treasury, respectively.

The Auditor-General also flagged 15 ministries, departments, and agencies (MDAs) that received extra funding under Article 223 of the Constitution.

In her report for the 2023/2024 financial year, Gathungu noted the absence of clear guidelines on handling unapproved withdrawals from the Consolidated Fund, despite the funds being spent.

MDAs can access additional funds during the budget period if there is a shortfall in the approved amount for a specific purpose, or if the expenditure relates to an unclaimed purpose or requires money from the Contingencies Fund.

The report indicates that some of the largest recipients of additional funding include the Arid and Semi-Arid Lands (ASAL) and the Regional Development Humanitarian department, which received Sh4.3 billion for emergency flood and drought relief efforts.

The Crop Development department was also allocated Sh3.065 billion for emergency measures related to El Niño and the fertilizer subsidy program.

Out of this amount, Sh3 billion was for the fertilizer subsidy, and Sh65 million was designated for emergency interventions.

The total additional funding approved under Article 223 during the audited year amounted to Sh23.67 billion.

The National Treasury received a total of Sh5 billion, with Sh4 billion allocated to the Kenya Revenue Authority (KRA) and Sh1 billion earmarked for a donor-funded project.

The National Police Service (NPS) was granted Sh2 billion for medical and GPA insurance coverage.

The Ministry of Defence received Sh500 million for emergency interventions related to El Niño, while the State Department for Roads was allocated Sh1 billion for similar emergency response efforts due to the El Niño phenomenon.

Additional funding for El Niño-related interventions was provided to other MDAs, including Public Works, which received Sh30 million; Irrigation, which got Sh70 million; and Livestock, which was allocated Sh35 million.

Cooperatives also received Sh1.1 billion to manage excess milk production.

The Forestry unit was granted Sh2 billion, while the Ministry of Environment and Climate Change was allocated Sh60 million to host the 6th United Nations Environment Assembly (UNEA 6).

The report also raised concerns over the expenditure by 15 MDAs for confidential security operations.

Auditor-General Nancy Gathungu emphasized the need for stronger accountability and clearer regulations regarding such expenditures, recommending that the entities eligible for confidential security-related spending be explicitly defined, along with a clear understanding of what constitutes security operations.

Gathungu urged the establishment of internal oversight mechanisms, including detailed budget projections and post-operation financial summaries, to address potential risks and ensure the responsible and accountable use of funds, beyond just the certificates.

"These measures will improve governance, build trust, and ensure that funds are used responsibly without compromising state security," she said.

The report listed 15 MDAs that incurred expenditures for confidential security operations.

Despite this, each of these MDAs received certificates of confidential expenditure, supported by declarations from their respective Accounting Officers affirming compliance with Regulation 101(5) of the Public Finance Management (National Government) Regulations, 2015.

The MDAs include the Department for Correctional Services, National Police Service (NPS), Ministry of Defence, State Department for Foreign Affairs, State Department for Diaspora Affairs, State Department for Lands and Physical Planning, State Department for Mining, the Judiciary, National Intelligence Service (NIS), Office of the Director of Public Prosecutions (ODPP), and the Judicial Service Commission (JSC).