The Office of the Auditor General has uncovered a troubling financial oversight involving millions of shillings in idle funds at the Central Bank of Kenya (CBK) meant for pension benefits. The funds, designated for widows, orphans, and retirees, remain unutilized despite Kenya’s worsening fiscal situation.
According to Auditor General Nancy Gathungu’s report, the National Treasury had a balance of Ksh.179 million at the CBK under the European Widows and Orphans Pension Fund at the close of the 2023/24 Financial Year. However, the Fund currently has only one surviving beneficiary, who received a mere Ksh.54,264 in payments during the year. This revelation raises concerns over why such a substantial amount remains allocated to a nearly obsolete fund.
Adding to the financial mismanagement, the Auditor General noted that the idle funds were not invested in interest-bearing instruments. As a result, the government lost a potential Ksh.21 million in interest earnings. The Treasury had sought guidance from the CBK on investment options, but no resolution had been reached by the time of the audit in November 2024.
Similarly, concerns were raised regarding the Asian Officers Family Pensions Fund, which has been operating for years without a legally mandated Board of Trustees. The government has been setting aside funds for the dependents of Asian officers who previously served in Kenya, but the lack of proper oversight has led to inefficiencies.
An even more significant revelation is that Ksh.1 billion in provident funds is also lying idle at the CBK, with no payments made during the financial year. The report states that there were no surviving members or beneficiaries as of June 30, 2024, questioning why the funds were not repurposed or invested. The estimated loss from failing to invest these funds is pegged at Ksh.122 million, based on the CBK’s average interest rate of 11.875%.
These findings come at a time when Kenya is grappling with severe fiscal challenges, exacerbated by debt-financed infrastructure projects. The country’s public debt has surged from 41% of GDP in 2014 to 69% in 2024, further straining government resources.
The Auditor General’s report highlights inefficiencies in fund management and underscores the urgent need for proper investment strategies to maximize returns. As the government navigates economic challenges, ensuring that public funds are effectively utilized remains crucial to maintaining financial stability and public trust.
