Gathungu warns Sh2.5 billion loaned to youth groups may not be repaid
By Maureen Kinyanjui |
The report raises serious concerns over Sh66 million in loan repayments from unidentified borrowers.
More than Sh2.5 billion in loans disbursed to youth groups across Kenya for start-up ventures may be unrecoverable, according to a new audit report by Auditor-General Nancy Gathungu.
The Youth Enterprise Development Fund (YEDF), which has provided loans to empower young entrepreneurs, faces challenges as debts remain unpaid, with some accounts in arrears for over three years.
In her recent report, Gathungu flagged the lack of repayments in six loan categories totalling Sh2.46 billion.
"A review of records revealed six loan categories with an amount of Sh2,463,644,828 had not been serviced for a period of more than three years," Gathungu stated.
The fund, which as of June 2022 had disbursed over Sh14.2 billion in loans to approximately two million youth, appears to be struggling with debt recovery and portfolio management.
The audit also highlighted concerns regarding the fund's allocation of Sh395 million for bad and doubtful debts, indicating that this provision may be insufficient given the scale of outstanding debts.
The Auditor-General noted that YEDF management has yet to explain what steps are being taken to recover these long-overdue loans, further raising questions about the fund's financial health and accountability.
Unidentified borrowers
The report raises serious concerns over Sh66 million in loan repayments from unidentified borrowers.
According to the Auditor-General, some borrowers have remained unidentified for more than three years despite similar concerns raised in prior audits.
"Management did not explain why reconciliations were not done in order to update and allocate borrowers' accounts, which could lead to misstatement of receivables from exchange transactions balance," Gathungu observed.
Further troubling findings include a Sh180 million payment made to a company for an ICT contract.
This payment, labelled irregular, was investigated by the Public Investments Committee of the 12th Parliament, which confirmed it benefited senior YEDF officials.
The company and its directors were later convicted of conspiracy to commit an economic crime, among other charges, including the unlawful acquisition of public property and document falsification.
Gathungu's review, which covers the period ending June 30, 2023, also casts doubt on the recoverability of this Sh180 million, noting no evidence that it would be repaid.
"Its recoverability is, therefore, doubtful. In addition, there was no provision made for bad and doubtful debts in respect of this amount," the report reads in part.
As a result, Gathungu concluded that the accuracy and completeness of the receivables from exchange transactions, specifically the Sh180,363,789 balance, could not be verified.
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