Billions in county empowerment loans remains unpaid as senators call for EACC Probe

Several county leaders are facing scrutiny after it was revealed that billions of shillings allocated as loans under various empowerment initiatives have largely gone unpaid.

Senators say the funds may have been used to gain political favour during election periods, prompting calls for the Ethics and Anti-Corruption Commission (EACC) to launch investigations.

During ongoing Senate hearings, the County Public Investments Committee has been examining governors over rising non-performing loans.

“EACC should just take up the matter. Even if we allowed you to recover the money, you would come back here and report that nothing has been recovered,” the committee said.

The committee has further instructed the Controller of Budget to provide a detailed report on all empowerment funds across counties, showing the amounts disbursed, loans issued, and sums still outstanding.

Committee chair Godfrey Osotsi expressed concern over the timing of the loans, noting that most were released close to elections.

While addressing Kitui Governor Julius Malombe, Osotsi said some of the county funds could have been used in campaigns against his candidacy in 2022.

“What is becoming clear is that this money was being disbursed during election periods, and in some cases, it was probably used to campaign against you,” he said.

Four governors, Paul Otuoma (Busia), Benjamin Cheboi (Baringo), Malombe (Kitui), and Jeremiah Lomorukai (Turkana), have appeared before the committee to explain why loans issued under previous administrations remain largely unrecovered.

In Busia, Sh130 million in loans under the Agricultural Development Fund, the County Cooperative and Enterprise Development Fund, and the Public Officers Revolving Fund is at risk of being lost.

The Auditor General, Nancy Gathungu, noted that the loans were unsecured, as the law creating them did not require collateral.

“These were inherited loans, and we had put a line that we are not disbursing loans until we correct the anomaly that is in the act as we pursue the cooperatives that were given,” Governor Otuoma said.

Turkana County has also struggled to recover over Sh500 million lent to women, youth, and county employees years ago.

Governor Lomorukai highlighted efforts to improve oversight through a Loan Management System.

“The Loan Management System will enhance accountability and transparency, improve repayment monitoring and consistency, financial inclusion and capacity building, data-driven decision-making and sustainability of the revolving fund,” he said.

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Kitui faces Sh157.31 million in unpaid loans under its Empowerment Fund.

Senator Raphael Mwinzagu accused the county of intentionally ignoring its own law on loan recovery.

“It is apparent that the county government of Kitui was intentional in not recovering this fund. The sections of this law are very clear on how they intend to recover these loans. We don’t understand why you don’t want to follow what you have put through as your own legislation,” he said.

Governor Malombe admitted that political actors in the previous administration had instructed residents not to repay the loans.

“You appreciate the circumstances we operate in. We are not giving out any more loans,” he told senators.

Other counties are also facing recovery challenges. Bungoma has Sh4.81 million and Sh23.38 million pending under its Persons with Disabilities Empowerment Fund and Youth and Women Enterprise Fund.

Laikipia is yet to recover Sh47.22 million from long-overdue loans. In Mombasa, Sh53.88 million remains unpaid under the Consolidated Revolving Fund, with no evidence that agreements or collateral were in place.

Meru has Sh28.20 million still outstanding under its County Investment and Development Corporation Fund.

Senators warned that the continued failure to recover these loans not only wastes public resources but also undermines the very purpose of empowerment funds, which were designed to support residents’ economic growth but have been compromised by political interference and weak enforcement.