Audit Finds Kenya Has Been Servicing Ksh17.87 Billion Loan That Was Never Used

In Summary:

• Kenya is paying Ksh89.4 million annually in commitment fees for undrawn pandemic loan funds, with Ksh17.87 billion remaining unused. The government also owes Ksh8.34 billion for undelivered Covid-19 vaccines.
  
  
• 82% of private hospitals have cut services due to financial strain, delayed reimbursements, and high regulatory costs, with some considering closure. Level 2 and 3 hospitals are most at risk.
  
  
• Kenya signed a Ksh1.8 billion grant agreement with China to upgrade six regional hospitals, addressing infrastructure gaps such as ambulance shortages and lack of electronic health systems.
  
  
• The Betting Control and Licensing Board (BC&LB) has banned standalone crash and aviator gaming apps, requiring them to operate within licensed betting platforms for better regulation.
  
  
• The Unclaimed Financial Assets Authority (UFAA) is developing an agent system to help recover over Ksh75.6 billion in unclaimed assets, of which only 3% has been reclaimed so far.
  
  
• Kenya launched its National AI Strategy (2025-2030), prioritizing ethical AI adoption and workforce upskilling, with a Ksh152 billion budget. An AI Bill will be introduced in Parliament within four months.
  
  
• The Postal Corporation of Kenya (PCK) plans to lay off 600 employees as part of a restructuring effort amid financial struggles, Ksh6.23 billion in losses, and unpaid salaries.
  
  
• Local fund managers are competing for control of the Public Service Superannuation Scheme Fund (PSSF), which has grown to nearly Ksh200 billion. Over 40 firms and 35 banks are bidding for fund management and custodianship roles.
  
  
• Acorn Investment Management’s REITs posted a net profit of Ksh1.4 billion in 2024, with student housing assets growing to Ksh26.4 billion.
  
  
• Equity Group’s net profit rose 10.8% to Ksh46.5 billion in 2024, increasing its dividend payout to Ksh4.25 per share.
  
  
• County allocations will rise by Ksh17.6 billion in the 2025/26 financial year to Ksh405.06 billion, but Treasury warns of inefficiencies and misuse of funds in county governments.
  
  
• Moody’s revised Rwanda’s economic outlook from stable to negative due to risks from the eastern DRC conflict, which could impact Kenya’s regional trade.
  
  
• Kenyan courts have dismissed 139 cases filed by unregulated lenders for non-compliance with CBK regulations.
  
  
• The Treasury secured Ksh60 billion from banks to settle road contractor debts and plans to issue a medium-term bond. Kenya risks losing Ksh297 billion in World Bank and UAE funding amid IMF program delays.
  
  

In a report by the Business Daily, An audit by the Auditor General has revealed that Kenya is losing Ksh89.4 million annually in commitment fees on undrawn donor funds for Covid-19 vaccines. Of the Ksh18.67 billion allocated for Supplementary Financing II, only Ksh800 million has been used, leaving an undrawn balance of Ksh17.87 billion, which attracts a 0.5% annual commitment fee. The report also found that Kenya had ordered 13.33 million vaccine doses worth Ksh7.5 billion but had received only 1.8 million, with 2.72 million doses manufactured but never delivered, now marked for destruction. The government owes Ksh8.34 billion, including accrued interest, for the undelivered vaccines, and efforts to have the interest waived have been unsuccessful. 

A new survey by the Rural and Urban Private Hospitals Association of Kenya (Rupha) reveals that 82% of private hospitals have downsized due to financial pressures, staff shortages, and rising regulatory costs. The cutbacks have affected outpatient, inpatient, dialysis, and surgical services, leading to longer wait times and reduced access to specialized care. According to the Business Daily, delayed reimbursements and high operational costs are forcing 25% of private hospitals to consider shutting down or selling. Level 2 and 3 hospitals, critical for primary healthcare, are most at risk. Rupha warns that without urgent funding and regulatory reforms, essential frontline healthcare services could collapse.

In a report by the Star, Kenya has signed a Ksh1.8 billion grant agreement with China to modernize six regional hospitals, including Londiani Referral, Baringo County Referral, and Kilifi Hospital. Treasury CS John Mbadi and Chinese Ambassador Guo Haiyan formalized the deal. The upgrades are to address infrastructure gaps identified in the 2023 Health Facility Census. The report found that 51% of facilities lack ambulances, 69% do not use electronic health systems, and only 47% have disability-friendly infrastructure.

Kenya’s Betting Control and Licensing Board (BC&LB) has banned standalone crash and aviator gaming apps, requiring all such games to operate within licensed betting platforms. The move aims to curb unregulated gambling and enhance player protection by mandating independent certification of game algorithms and audits. Gaming firms must disclose all payment channels and comply with stricter backend system reviews or face penalties, including suspensions and legal action as reported by the People Daily. 

In a report by Nation, the Unclaimed Financial Assets Authority (UFAA) is developing a framework to engage agents in reuniting owners with over Ksh75.6 billion in unclaimed assets. These include Ksh36.09 billion in cash, 3,737 safe deposit boxes, and over 9.87 million unit trust units. So far, only Ksh2.3 billion has been reclaimed by 33,929 claimants, representing just 3% of total unclaimed assets.

In a report by Citizen,  Kenya has launched its National AI Strategy (2025-2030).  The strategy, unveiled by ICT Cabinet Secretary William Kabogo, emphasizes ethical AI adoption, workforce upskilling, and digital infrastructure development, which will take up 50% of the Ksh152 billion budget. Kabogo also announced plans to introduce an AI Bill in Parliament within four months to regulate and fund the sector. The initiative includes setting up 1,450 digital innovation hubs and integrating AI-trained university graduates into public service roles.

The Postal Corporation of Kenya (PCK) plans to lay off 600 employees—about 25% of its workforce—as part of a restructuring effort to cut costs and seek a strategic partner for its courier and financial services division. According to the Business Daily, the state-owned firm is struggling with financial challenges, including Ksh6.23 billion in accumulated losses, three months of unpaid salaries, and unremitted statutory deductions such as Ksh1 billion owed to KRA and Ksh1.97 billion in pension arrears. PCK’s revenue has been hit by declining mail volumes, competition from private courier firms, and the rise of mobile money services, with letter deliveries dropping from 11.8 million in 2019 to 1.2 million in 2023. Despite a Ksh3 billion bailout from Parliament last year, the corporation continues to face liquidity constraints and is seeking new business models to stay afloat.

Local fund managers are vying for a share of the Public Service Superannuation Scheme Fund (PSSF), which manages retirement savings for new civil service employees. The fund, which launched in January 2021, has grown from Ksh140.2 billion in June 2024 to nearly Ksh200 billion by February 2025. Currently managed by GenAfrica Asset Managers, PSSF is seeking new fund managers for the next three years, with over 40 firms expected to compete as reported by the Business Daily. Additionally, 35 commercial banks will bid to become custodians of the fund’s assets, a role currently held by NCBA, Stanbic, and Cooperative Bank. The scheme invests primarily in Treasury bonds (Ksh100.3 billion), Treasury bills (Ksh24.8 billion), fixed deposits, equities, and Eurobonds. 

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In a report by the People Daily, Acorn Investment Management’s real estate investment trusts (REITs) posted a net profit of Ksh1.4 billion in 2024, up from Ksh467 million the previous year. Acorn now manages 21,000 student beds, with total assets increasing to Ksh26.4 billion. The I-REIT hit Ksh1 billion in annual rental revenue and declared a Ksh224 million payout as reported by the CapitalBusiness. 

Equity Group reported a 10.8% rise in net profit to Ksh46.5 billion in 2024, increasing its dividend payout to Ksh4.25 per share. The total dividend distribution will rise to Ksh16 billion, payable to shareholders by May 23 as reported by the Capital Business. 

The government will increase county allocations by Ksh17.6 billion in the 2025/26 financial year, raising the total equitable revenue share to Ksh405.06 billion.  According to the People Daily, Treasury CS John Mbadi has raised concerns about inefficiencies, ghost workers, and misuse of funds in counties, arguing that devolution needs restructuring for better service delivery. While counties now receive 25% of shareable revenue—above the 15% constitutional minimum—Treasury highlights the national government's burden in covering budget deficits.

Moody’s has revised Rwanda’s economic outlook from stable to negative, citing risks from ongoing conflict in eastern DRC. While Rwanda’s B2 credit rating remains unchanged, concerns over potential donor funding withdrawals and external financing pressures could weaken the country’s fiscal resilience. According to the People Daily, the downgrade also has broader implications for Kenya, as disruptions in trade and investor confidence could impact regional business flows. 

In a report by the People Daily, Kenyan courts have thrown out over 139 cases filed by unregulated lenders, citing abuse of judicial process and non-compliance with CBK regulations. 

The National Treasury has secured Ksh60 billion from a bank consortium to settle outstanding debts owed to road contractors, with repayment tied to a securitized road levy. According to The Kenya Times, Treasury CS John Mbadi confirmed plans to issue a medium-term bond by June to raise additional funds, as contractors and landowners remain owed Ksh175 billion. The government is also negotiating with contractors to waive up to 50% of accrued interest. Amid delays in Ksh109 billion IMF disbursements, Kenya risks losing Ksh297 billion in funding from the World Bank and UAE. Mbadi also announced Kenya’s withdrawal from the 9th IMF program review, citing time constraints.