Sh208 billion unutilised as Kenya's development spending hits five-year low

Auditor General Nancy Gathungu. (Photo: Auditor General Kenya)

By Lucy Mumbi
Monday, August 25, 2025

In the 2023/24 financial year, the government spent Sh500.2 billion on development projects against an allocation of Sh708.8 billion, leaving Sh208.6 billion or 29 per cent unutilised.

Kenya’s development budget utilisation has slumped to its lowest point in five years, raising concerns over poor project planning and wastage of public resources.

Auditor General Nancy Gathungu revealed that in the 2023/24 financial year, the government spent Sh500.2 billion on development projects against an allocation of Sh708.8 billion, leaving Sh208.6 billion or 29 per cent unutilised.

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“This marks the lowest absorption rate in five years, pointing to flawed expenditure and project planning,” Gathungu said in her latest report.

She added that donor-funded projects were also suffering from low absorption.

“In addition, the audits of donor-funded projects indicate that the projects continue to experience low absorption of funds. For instance, in the financial year 2023/2024, fourteen (14) projects which had total project allocations of Sh515.1 billion had not utilised Sh304.4 billion or 59.1 per cent of the total allocation,” she said.

A review of previous years shows the trend has worsened. In 2019/20, under-absorption stood at Sh71.2 billion (10 per cent), while in 2020/21 it was Sh61.5 billion (nine per cent). In 2021/22, Sh171 billion went unused (25 per cent), and in 2022/23, Sh127.8 billion was not absorbed (22 per cent).

The Auditor General warned that some projects continue to attract commitment fees on undrawn amounts, resulting in further losses.

“Indeed, between the fiscal year 2020/2021 and 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 commitment fee is a charge imposed by lenders to compensate for keeping a credit line open and guaranteeing access to funds on agreed terms, regardless of market conditions.

Among the projects flagged for low absorption was the East Africa Skills Transformation and Regional Integration Project, a five-year programme (2018–2024) funded by the World Bank with an approved budget of Sh1.08 billion. By June 30, 2024, it had drawn 5,328,282 Euros, equivalent to Sh526.3 million, representing 61 per cent of the donor commitment, leaving Sh137.3 million unutilised with only one year left.

The Kapchorwa-Suam-Kitale and Eldoret Bypass roads project also recorded a significant undrawn balance of Sh8.2 billion, or 35 per cent of its expected funding, as of September 30, 2023.

Data from the Treasury shows that the country’s budgets were Sh2.89 trillion in 2020/21 (recurrent Sh1.82 trillion), Sh3.03 trillion in 2021/22 (recurrent Sh2 trillion), Sh3.3 trillion in 2022/23 (recurrent Sh2.2 trillion), and Sh3.7 trillion in 2023/24 (recurrent Sh2.53 trillion). The 2024/25 budget had been projected at Sh3.99 trillion, with recurrent spending set at Sh2.84 trillion.

However, the government’s push to increase revenue through the controversial Finance Bill 2024 triggered protests, prompting the Treasury to revisit the plan after the President ordered reductions.

Over the past five years, development spending—including foreign-financed projects, allocations to the Contingencies Fund, and conditional transfers to county governments- has ranged between Sh633 billion and Sh707 billion annually.

Allocations to counties under the equitable share have also been rising, reaching Sh370 billion in 2022/23 and Sh385 billion in 2023/24. The proposed 2024/25 budget had earmarked Sh444.5 billion for county allocations.