Kenya's taxpayers lose millions on vacant government offices, new report reveals

Kenya’s taxpayers are losing millions of shillings on rent for government offices that remain vacant, according to a damning new audit.

The report, which highlights the ongoing misuse of public funds, paints a troubling picture of a system where state agencies continue to pay for office spaces that no one is using.

The audit revealed that five key government departments owe a combined Sh125 million in rent for offices they have not occupied.

These departments include the Ministry of Sports, the State Law Office, the Office of the Director of Public Prosecutions (DPP), the Commission on Revenue Allocation (CRA), and the Ministry of Micro, Small, and Medium Enterprises (MSMEs).

In one of the most high-profile cases, the Sports department spent Sh98 million to renovate three floors in the Maktaba Kuu Building in Nairobi, with plans to house its offices there.

However, despite the hefty expenditure, the department has never used the space. Instead, the Cabinet Secretary and Principal Secretary have opted to work from Talanta Plaza, with no intention of moving into the newly renovated office.

Auditors visited the Maktaba Kuu Building in September 2024 and confirmed that the space was still vacant.

“No satisfactory explanation was provided for the failure to occupy the space,” Auditor General Nancy Gathungu said, questioning the value of the Sh98 million spent on the renovations.

The report also noted that Talanta Plaza, owned by the Sports Fund, also has several vacant floors, calling into question the rationale behind the department’s decision to renovate and pay for the Maktaba Kuu office space.

“The regularity and value for money of the expenditure of Sh98 million couldn’t be confirmed,” Gathungu concluded, highlighting the failure to use the renovated office despite the significant financial outlay.

Similar issues were found in other state agencies. The State Law Office, for instance, spent Sh20 million on an unoccupied office space at the Central Bank Pension Towers. This expenditure has been flagged as a violation of the Public Finance Management Act, which requires public funds to be used prudently.

“The payment of rent for unoccupied office space is against the principles of prudent financial management and is contrary to the Public Finance Management Act, 2012,” Gathungu remarked.

Scrutiny

The MSMEs department also came under scrutiny after paying Sh22 million for an office space it never used. The department signed a lease for a six-year term in June 2023 but failed to occupy the office 15 months later, despite having a three-month rent-free period for fitting and partitioning the space.

By the time the audit closed in November 2024, the MSMEs office remained vacant. Gathungu raised concerns about the department’s decision to lease space elsewhere rather than occupy the available space at the 60 percent-occupied Kenya Institute of Business Training (KIBT) building.

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“No explanation was given as to why the department chose to lease office space elsewhere when the KIBT building had unoccupied space,” the auditor said, underlining the lack of financial accountability within the department.

The Commission on Revenue Allocation also attracted criticism for paying Sh21 million upfront for office space at Prism Towers. Despite signing the lease in July 2023, the commission delayed procurement and only awarded the contract in December of the same year. This five-month delay has led auditors to question the legitimacy of the rent payment.

“In the circumstances, the value for money paid on rent of Sh21 million couldn’t be confirmed,” Gathungu said, noting that the delay resulted in wasted public funds.

The Office of the Director of Public Prosecutions (DPP) faced similar scrutiny. In Kabarnet Town, three-quarters of the space rented for the DPP’s office remained unused, wasting Sh12 million. Additionally, the DPP’s Mombasa office was largely empty, costing taxpayers Sh11 million annually.

Gathungu highlighted that accounting officers are responsible for ensuring that public resources are used efficiently and lawfully. “The law requires accounting officers to ensure public resources are used in a lawful, economical and authorised manner to prevent losses from wasteful expenditure,” she stated.

The audit’s findings have sparked public outrage, with many questioning why the government continues to spend taxpayer money on unused office spaces. There have been repeated calls for improved management and stricter controls over public spending, especially as the country struggles with a tough economic climate.

In response to the audit’s revelations, the National Treasury has issued new guidelines for state agencies when acquiring office spaces. The Treasury now requires all agencies to obtain approval from their accounting officers before signing lease agreements. These spaces must also be valued by government valuers, and the Cabinet Secretary for Housing, currently Alice Wahome, must clear the leases.

The new rules, which were outlined in a circular issued on January 23, also state that all lease agreements must be reviewed by the Attorney General, and a copy of the lease must be filed with the National Treasury. These measures are intended to curb wasteful spending and ensure that taxpayers are getting value for their money.

While the government has promised to tighten oversight, critics remain skeptical about whether the new rules will be effective in preventing further waste.