NAIROBI, Kenya Jun 2 – At least 14 flagship government projects have failed to absorb more than half of their allocated budgets, resulting in the underutilisation of Sh304.4 billion over the past five years.
This represents 59.1 per cent of the total Sh515.1 billion earmarked for development, according to Auditor-General Nancy Gathungu.
Appearing before the National Assembly’s Budget and Appropriations Committee, Gathungu highlighted stalled development and chronic underperformance, warning that continued inefficiencies in budget absorption are jeopardising critical national infrastructure and social initiatives.
“Many of these projects now risk lapsing without achieving their intended goals,” Gathungu cautioned.
Her report further revealed that taxpayers have incurred a staggering Sh6.569 billion in commitment fees charges levied on undrawn loan balances paid to foreign lenders between the 2020/21 and 2023/24 financial years.
These loans were tied to underperforming projects whose funds remained idle.
“Indeed, between the FY 2020/2021 and FY 2023/2024, the Government paid commitment fees totalling Sh6.569 billion on undrawn amounts in respect of loans signed between the Government of Kenya and foreign lenders,” she said.
A breakdown shows that Sh2 billion was paid in 2020/21, Sh1.48 billion in 2021/22, Sh1.43 billion in 2022/23, and Sh1.58 billion in 2023/24.
Legal Breach in Development Allocations
Gathungu also raised alarm over the low priority given to development spending in the national budget. In the 2023/24 financial year, only Sh708.85 billion or 15 per cent of the total Sh4.26 trillion expenditure was allocated to development.
In the proposed 2024/25 budget, development spending stands at Sh643.9 billion, or 25.8 per cent of projected expenditure, still falling short of the legally required threshold.
“This is contrary to the provisions of Section 15(2)(a) of the Public Finance Management Act, 2012, which requires that, over the medium term, a minimum of thirty per cent (30 per cent) of the National and County Governments budgets shall be allocated to development expenditure,” reads the Auditor-General’s report.
Flagship Projects Stalling
Among the projects cited for significant delays is the East Africa Skills Transformation Project, budgeted at Sh1.1 billion over six years to 2024, but which had absorbed only 61 per cent of donor funding by June this year.
The Kapchorwa-Suam-Kitale and Eldoret Bypass road projects, valued at Sh23.5 billion, had an undrawn balance of 35 per cent by September 2023.
Most concerning, however, is the Mombasa Gate Bridge,a major infrastructure venture launched in December 2019 with a Sh49.05 billion budget over seven years. Four years in, only Sh938.2 million (2 per cent) has been spent, leaving a staggering Sh48.11 billion untouched.
“In accordance with Clause II (2.03) of the financing agreement, the loan will continue to attract a penalty on the undrawn balance in the form of commitment fees,” Gathungu warned.
