Sh4.1 billion CDF puzzle

The controversial National Government-Constituency Development Fund (NG-CDF) is on the spot yet again after Auditor General Nancy Gathungu released a report detailing how Sh4.1 billion meant for bursaries cannot be accounted for.

Gathungu, in her latest report for the 2023/2024 financial year, details how Sh4.1 billion under NG-CDF cannot be accounted for, amid a sustained onslaught by the broad-based government of President William Ruto, backed by former Prime Minister Raila Odinga, to have the kitty yanked from the control of MPs. Raila has consistently demanded that the NG-CDF be placed in the hands of governors.

The report will open a new battlefront between MPs and the Auditor General. Legislators are already on the warpath, accusing the independent office of churning out “compromised” reports. The actual amounts disbursed to NG-CDF in the 2023/2024 financial year is Sh57 billion.

The audit report details how 125 constituencies claimed to have supported thousands of students through NG-CDF bursaries but were unable to support the claims with documents.

The damning report also shows that 86 NG-CDF funds failed to provide supporting documents for bursary disbursements amounting to Sh2.12 billion, in the form of acknowledgement receipts from beneficiary institutions and details of students’ admission numbers.

Notable constituencies flagged under this category include Awendo, where documents in support of bursary disbursements worth Sh125.9 million were not provided for audit review.

Embakasi South was also flagged for disbursing Sh91.9 million but lacked acknowledgement notes or receipts from beneficiary institutions, while the bursary cheque dispatch register was not provided for audit.

In Embakasi Central, NG-CDF bursary disbursement supporting documents were not provided for audit review. In Isiolo South, bursary disbursements worth Sh73 million lacked acknowledgement letters from beneficiaries.

Baringo Central also failed to support bursary disbursements worth Sh61.9 million with acknowledgement receipts from beneficiary institutions, while in neighbouring Baringo North NG-CDF disbursements totalling Sh40.3 million were not supported with relevant documents.

Embakasi Central MP Benjamin Gathiru responded: “It is like the Auditor General is playing politics or doesn’t want to work… she has a chance of asking for bank statements to verify that the amounts in question were sent to the schools. Further, she can go to the schools and confirm whether the institutions got the money instead of just engaging in blanket condemnation.”

“In most of her audits, she speaks of mismanagement of funds due to lack of receipts, yet it is parents who sometimes delay in returning receipts after receiving their bursary cheques. What am I or the fund manager to do in such situations? This is the case across many constituencies. The only way she can do justice to us is by going to the banks and institutions where the monies were sent and confirm if the students got the funds,” he added.

Among the controversial constituencies was also Gilgil, where Sh56.4 million in disbursements were not supported with acknowledgement receipts from beneficiary institutions.

At the same time, another 39 constituencies were also cited for not supporting disbursements amounting to Sh1.97 billion.

“… the documentation on vetting of applications, including bursary vetting committee minutes/reports and policy and/or guidelines on bursary award, was not provided, leading to potential bias and exclusion of deserving students,” reads the report in part.

They include Kilome Constituency, where despite Sh87.9 million being disbursed, bursary policy and approval minutes were not provided for audit. Additionally, there was no evidence of periodic monitoring by the NG-CDF Committee and community involvement in identifying beneficiaries. Kitui East was also highlighted with disbursements totalling Sh86.6 million, among others.

In Tiaty, Sh65.2 million was disbursed but there were no supporting documents.

“The Ward Committee minutes (for Kitui East) provided for audit verification did not include a criterion used for bursary allocation and details justifying the applicants’ vulnerability to support amounts of Sh70,298,000 and Sh16,289,000 relating to bursaries to secondary schools and tertiary institutions respectively,” added the report.

Further, it emerged that four constituencies irregularly disbursed bursaries amounting to Sh265.05 million as they did not meet the statutory thresholds of bursary allocation. This, Gathungu noted, was contrary to the law.

They include Embakasi West, where disbursements totalled Sh93.6 million, Makadara with Sh82.5 million, Maragua with Sh47.5 million, and Kikuyu, where Sh41.4 million was disbursed below the statutory 25 per cent threshold.

The report also highlighted unauthorised bursary expenditure by constituencies: “Kitui Rural NG-CDF overspent Sh417,758 against the approved budget. Further, Kasarani NG-CDF approved a code list reflecting bursaries to secondary schools of Sh35,000,000, while actual bursaries disbursed amounted to Sh56,124,233, resulting in an over-expenditure of Sh21,124,233. In the circumstances, the bursary over-expenditure totalling Sh21,541,991 was not approved and therefore was irregular.”

The revelations by Gathungu come against the backdrop of a push by MPs to ring-fence the NG-CDF kitty. Last month, the National Assembly unanimously voted to pass the Constitutional (Amendment) Bill introduced by Rarieda MP Otiende Amollo and his Ainabkoi counterpart Samuel Chepkonga. A historic 298 MPs voted for it and subsequently transmitted it to the Senate for concurrence.

The Bill seeks to amend the 2010 Constitution to anchor NG-CDF in law and introduce a Senate Oversight Fund. It also seeks to embed the National Government Affirmative Action Fund into law.

To amend the Constitution through a parliamentary initiative, the Bill must be supported by at least two-thirds of all members of each House — both the National Assembly and the Senate — before it can be enacted. It currently awaits the Senate’s approval.

Speaker of the National Assembly Moses Wetang’ula has also defended the clamour to anchor NG-CDF in law.

Speaking during the launch of a newly constructed tuition block at St Veronica Ranje R.C. Comprehensive School in Kanduyi Constituency, Wetang’ula said the fund has transformed the education sector over the past two decades by improving infrastructure and the quality of learning.

“When the court ruled that CDF lacked a constitutional basis, this is the person we helped to introduce the Bill in Parliament to safeguard NG-CDF because he was the CDF chairperson. When you look around, you see buildings like this constructed with CDF funds. Prudent use of public resources can be explained through NG-CDF,” said Wetang’ula.

His sentiments were aimed at ODM leader and former Prime Minister Raila Odinga, who has been a vocal critic of retaining the kitty in the hands of MPs. He has repeatedly argued that the billions under the fund should be administered by county governments.

During the recent Devolution Conference in Homa Bay, Raila renewed his call for NG-CDF to be handed to the counties.

“In the interest of efficiency and better service delivery, all monies currently managed by the NG-CDF and NGAAF should be surrendered to counties.

“Everything Kenyans have done to re-establish good governance has made the CDF system obsolete; it is serving no role in the new constitutional architecture,” he said.

This echoed his earlier remarks that MPs had increasingly turned themselves into contractors, managing projects meant for governors, even as he warned that blurring the lines between the two levels of government could roll back devolution gains.

“MPs’ role is legislating, oversight and representation; they have no business building roads, hospitals and schools,” he said recently.

Raila’s lawyer, Paul Mwangi, has also moved to court to block entrenchment of the fund in the Constitution. In an interview with The Sunday Standard, Mwangi said he had not been instructed by Raila to file the petition, maintaining that he and Raila shared values on governance and constitutionalism.

But in their defence, MPs have absolved themselves from any wrongdoing in the administration of billions and called out the OAG over her “misleading” reports.

Parliament observed that MPs were not to blame for irregularities in the administration of the multi-billion kitty, which faces a grim future following a court order directing that it be wound up by next year. The ruling delivered in September last year declared NG-CDF unconstitutional. Justices Kanyi Kimondo, Mugure Thande and Roselyne Aburili noted that it had violated separation of powers and cited failure by the National Assembly to consult the Senate as grounds for its illegality.

The judges said the fund and all its projects, programmes and activities shall cease to operate on 30 June 2026.

During a sitting of the Decentralised Funds Committee, MPs rejected the report’s findings, maintaining that legislators are not involved in implementing the fund. Instead, they said accountability lies with Fund Account Managers appointed by the NG-CDF Board.

Led by committee chairperson and Mwingi Central MP Gideon Mulyungi, they termed the report “misleading and baseless”.

“This Committee has pronounced itself on these false allegations. We do not implement CDF; Fund Managers should be answerable in cases of irregularities,” Mulyungi stated.

Other members echoed this, emphasising that MPs are only responsible for oversight, not execution, of projects.

“As MPs, we audit the use of these monies by Fund Account Managers, who are employees of the NG-CDF Board,” said Nominated MP Dorothy Muthoni. “Any misappropriation squarely falls on their shoulders, not MPs.”

Earlier this week, another committee — the Public Investment Committee on Governance and Education — also criticised the Auditor General for what it termed skewed reports. They consequently summoned Gathungu to explain what they described as a worrying decline in the quality of audit reports.

“The quality of reports is wanting. Parliament will not be used to rubber-stamp illegalities in government,” said committee chairperson Jack Wamboka.

Gathungu’s report also exposed stalled and abandoned projects in 29 constituencies, valued at Sh495.6 million. For instance, Matayos NG-CDF had stalled projects worth Sh85.2 million, while Bomachoge Borabu NG-CDF had abandoned primary school projects valued at Sh73,079,495.

“Stalled projects are an indication that the public has been denied benefits that would have accrued from the completed projects, and that value for money invested in the projects has not been realised,” observed Gathungu.