Auditor-General Nancy Gathungu has raised serious concerns over the accountability of Sh11.66 billion from an international loan provided to the Kenya Mortgage Refinance Company (KMRC) for the affordable housing initiative.
The funds, part of a €219 million (Sh29.99 billion) loan issued in 2019, were meant to support KMRC and provide technical assistance to the Treasury and Ministry of Lands in achieving Kenya’s affordable housing goals.
However, the Auditor-General’s report, tabled in the National Assembly, indicates major gaps in the documentation and use of these funds.
The audit revealed that by June 2024, KMRC had received Sh11.66 billion, but there was no clear evidence showing how the funds were distributed to the intended beneficiaries.
The onward allocation of the funds remains untraceable.
Additionally, the report highlighted that KMRC’s financial statements are not audited by the Auditor-General’s office or any other appointed auditor, as mandated by the Public Audit Act of 2015.
This lack of oversight has made it nearly impossible to verify the proper use of the funds. “In the circumstances, the accuracy and appropriate utilisation of (Sh11.66 billion) disbursed to KMRC for project implementation could not be confirmed,” the report states.
This raises questions about the transparency and management of funds meant to support one of Kenya’s most ambitious socio-economic initiatives.
KMRC, established in 2018 as a public-private partnership under the Central Bank of Kenya, was launched by former President Uhuru Kenyatta as a cornerstone of his Big Four Agenda on affordable housing.
The institution is tasked with providing long-term funding to mortgage lenders to make home loans more accessible to Kenyans.
Borrowers with monthly incomes of up to Sh150,000 are eligible for loans capped at Sh4 million in Nairobi, Kiambu, Machakos, and Kajiado, and Sh3 million for the rest of the country.
The initiative was intended to facilitate the construction of at least 500,000 low-cost houses across the nation.
KMRC, owned 80% by the private sector and 20% by the government, was to be regulated by the Central Bank of Kenya, with the Capital Markets Authority overseeing its bond issuance.
It aimed to provide large-scale, long-term finance to the housing market, ensuring professional and credible operations.Further scrutiny in the Auditor-General’s report uncovered irregularities beyond the Sh11.66 billion.
It questioned Sh1.67 million spent on return air tickets for officers attending a benchmarking visit in Kuala Lumpur, Malaysia.
The audit noted the absence of key supporting documentation, including a list of participants and proof of attendance, making it impossible to confirm the propriety and value of the expenditure.
The findings highlight troubling lapses in oversight and financial accountability in a project critical to addressing Kenya’s housing deficit.
These gaps threaten the credibility of KMRC and call into question the efficacy of the government’s affordable housing agenda.
Without stringent financial auditing and transparency measures, the promise of providing accessible housing to millions of Kenyans risks being undermined by poor governance and mismanagement.
