The management of Kenya’s Contingencies Fund has come under sharp scrutiny after the Auditor General flagged irregular withdrawals and weak accountability in the handling of billions of shillings meant for emergency use.
In her latest audit report covering the period ending June 30, 2024, Auditor General Nancy Gathungu issued a qualified opinion on the fund’s accounts, citing unsupported expenditures and misuse of resources by several government ministries and departments.
The report shows that the Ministries of Defence, Internal Security and National Administration, and Irrigation failed to provide expenditure returns for amounts they received from the fund. At the centre of the concerns are unverified refunds totalling Sh1.07 billion.
“In the circumstances, the validity of the amount disbursed from the fund of Sh1,070,000,000 could not be confirmed,” the report states, pointing to major gaps in financial oversight. Expenditure returns are a critical control tool used to confirm how public money is utilised.
Gathungu also raised concerns over Sh130 million issued to the State Departments for Public Works, Crop Development and Livestock.
The money was drawn for “urgent and unforeseen” needs as provided under the Public Finance Management Act, 2012. However, the Auditor General said the spending did not satisfy the legal requirements for use of the fund.
“A review of the respective expenditure returns revealed that the expenditure was in respect of goods and services that could not meet the legal threshold,” she said.
Another issue highlighted is the Sh3.83 billion advanced to the State Department for Arid and Semi-Arid Lands and Regional Development between December 2023 and June 2024. The Auditor General said the department had already factored the same activities into its approved supplementary budget, questioning why the fund was tapped for these expenses.
“No explanation was provided to justify the funding of the expenditure from the fund, yet the department had included the activities in the approved supplementary budget,” the report notes.
The Contingencies Fund, established under Article 208 of the Constitution, is intended to finance urgent needs that lack budgetary allocations. It is administered by the National Treasury and has a permanent capital ceiling of Sh10 billion, though the actual balance varies depending on available fiscal space.
During the 2023–24 financial year, a total of Sh6.53 billion was drawn from the fund — more than double the Sh3.11 billion issued in the previous year. Much of the money went towards drought and flood interventions, including El Niño response measures.
The findings have emerged at a time when the Treasury is grappling with declining revenues and a mounting pile of pending bills, which stood at Sh526 billion by June 2025.
Even though the Treasury reported a budget absorption rate of 79.76 per cent, an improvement from the previous year, the audit indicates that accountability in emergency spending remains weak.