Auditor General flags financial irregularities at Taita Taveta Education Fund

Auditor General Nancy Gathungu has raised concerns over the operations of the Taita Taveta County Education Fund, citing serious issues including high loan default rates, cash flow challenges, and mismanagement.

In her report for the financial year ending June 30, 2022, Gathungu pointed out that the public initiative, established to provide bursaries, scholarships and loans to students from low-income families, is struggling despite significant financial allocations.

The fund, initially enacted in 2013 and amended under the Taita Taveta County Education Fund Act, 2024, received Sh200 million for the current financial year—double the Sh100 million allocated the previous year.

However, despite the increase, the fund is grappling with financial difficulties.

The County Public Investments and Accounts Committee (PAIC), after reviewing the Auditor General’s report, flagged critical problems with the fund’s performance.

One of the main issues noted was the failure to recover loans from beneficiaries, leading the fund to partner with the Higher Education Loans Board (HELB).

While HELB has managed to recover over Sh36 million, unresolved challenges remain.

Inconsistent funding

According to the PAIC report, presented by Chairperson Amos Makalo and adopted by the county assembly, inconsistent funding has been a major issue.

Financial statements reflect over Sh88 million in long-term receivables from non-exchange transactions, transferred to HELB for disbursement to needy students.

Further records from HELB show that while Sh52 million was transferred, Sh52.8 million was disbursed to students.

A discrepancy of Sh856,000, part of the Sh5.6 million recovered by HELB, was noted. However, the report did not clarify whether students who received loans totalling over Sh36.7 million signed the necessary agreements, nor did it outline who is responsible for recovering these loans.

Additionally, the fund only received Sh58 million out of its Sh145 million budget, severely impacting its operations.

The report attributed this shortfall to cash flow challenges experienced by the county treasury during the period under review.

The Auditor General’s report comes at a time when Taita Taveta County is already facing multiple financial difficulties, including low revenue collection, significant pending bills, an unsustainable wage bill, and a bloated workforce.

The county executive has also been criticised for failing to implement key recommendations from both the PAIC and the Senate by June 30, 2022.

In response, the PAIC has recommended that the fund administrator provide a detailed list of loan beneficiaries and their balances as of June 2024, along with a recovery plan for loans already disbursed and an action plan for defaulters.

"We want to see an account of what has so far been recovered out of the already disbursed loans and the balance to be recovered within 14 days after adoption of this report,” Makalo said.

He also urged the county treasury to better support the fund’s board, saying, “The county treasury should facilitate the fund board to enable it to discharge its mandate effectively and efficiently. At the same time, the fund administrator should also prepare a realizable budget.”