Auditor-General flags mismanagement of Sh11.6bn loan for affordable housing scheme
By Lucy Mumbi |
The audit revealed that by June 2024, KMRC had received Sh11.66 billion, but there was no clear evidence of how these funds were disbursed to the intended beneficiaries.
Auditor-General Nancy Gathungu has revealed that part of the Sh11.66 billion from an international loan to the Kenya Mortgage Refinance Company (KMRC) for affordable housing, issued in 2019, could not be accounted for.
The loan, part of a larger €219 million (Sh29.99 billion), was signed on December 5, 2019, with a repayment period extending to June 30, 2025.
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It was intended to support both KMRC and the technical assistance provided by the Treasury and Ministry of Lands in the affordable housing initiative.
However, in a report presented to the National Assembly, Gathungu expressed concerns about the use of funds disbursed by the International Bank for Reconstruction and Development (IBRD) to KMRC, the financial institution responsible for managing the project.
The audit revealed that by June 2024, KMRC had received Sh11.66 billion, but there was no clear evidence of how these funds were disbursed to the intended beneficiaries.
The report states that the onward allocation of the funds could not be established.
"In the circumstances, the accuracy and appropriate utilisation of (Sh11.66 billion) disbursed to KMRC for project implementation could not be confirmed," reads the audit report.
Financial statements not audited
Additionally, Gathungu noted that KMRC’s financial statements are not audited by her office, nor by any other appointed auditor as required by the Public Audit Act, 2015, complicating efforts to verify the funds' usage.
KMRC, established in 2018 as a public-private partnership under the Central Bank of Kenya, provides long-term funding to mortgage lenders to make home loans more accessible to Kenyans.
Former President Uhuru Kenyatta launched the Kenya Mortgage Refinance Company (KMRC) as part of efforts to achieve affordable housing, one of his Big Four Agenda initiatives.
Borrowers with a monthly income of not more than Sh150,000 are eligible for loans, which were capped at Sh4 million in Nairobi, Kiambu, Machakos, and Kajiado, and Sh3 million for the rest of the country.
The launch of KMRC, which is owned 80 per cent by the private sector and 20 per cent by the government, marked the roll-out of construction for at least 500,000 low-cost houses across the country.
The company was set to be regulated and supervised by the Central Bank of Kenya, with the Capital Markets Authority (CMA) overseeing its bond issuance operations.
It aimed to offer the housing finance market a credible, professional, and high-quality source of large-scale medium- to long-term finance.
The report by Gathungu also questioned Sh1.67 million spent on return air tickets for officers travelling to Kuala Lumpur, Malaysia, for a benchmarking visit. The audit found no supporting documentation for the trip made by the travelling firm, including a list of participants or proof of attendance.
"In the circumstances, the propriety and value of air travel expenditure of Sh1,672,770 could not be confirmed," reads the report.
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