The Office of the Auditor General has raised concerns over millions of shillings lying idle at the Central Bank of Kenya (CBK) meant for catering to the widows and children of slain European officers in the East African Service.
According to Gathungu, the National Treasury had a balance of Ksh.179 million funds held at the CBK for the European Widows and Orphans Pension Fund by the end of the Financial Year 2023/24.
As disclosed in the statement of accounts, the Fund has only one surviving beneficiary who was paid Ksh.54,264 during the year.
This raised questions as to why the National Treasury would set aside millions for a Fund that only has one beneficiary.
Further, the AG questioned why the idle funds were not invested in interest-earning channels, hence losing an opportunity to earn a Ksh.21 million interest.
Interestingly, Gathungu noted that the government had sought guidance from the CBK on how to invest the funds.
“Although Management has indicated that the National Treasury had sought guidance from the Central Bank of Kenya on how to invest the funds, the matter had not been concluded as at the time of the audit in November 2024,” the report read in part.
“In the circumstances, the effective use of the Funds held in the bank could not be confirmed.”
Further, the AG also raised queries over the Asian Officers Family Pensions Fund, wondering why the Fund had been operating over the years without a Board of Trustees and hence breaching the law.
The government sets aside funds to provide pensions to the beneficiaries of Asian officers previously employed in the Kenyan government.
The AG also revealed that Ksh.1 billion was also lying idle at the CBK meant for provident funds as the scheme did not make any payment during the year, with the statement claiming that no member or beneficiary was surviving as of June 30, 2024.
A provident fund is dedicated to catering to employees following their retirement or to the dependents in the case of the employee’s death.
“It was unclear why the idle funds were not invested in interest-bearing instruments. This may have led to a potential loss of interest estimated at Ksh.122 million using the average CBK rate of 11.875 per cent,” the report read in part.
The revelation comes at a time when Kenya’s fiscal troubles are increasing, owing to debt-financed investments and infrastructure projects.
As a result, the country’s public debt ratio has risen from 41 per cent of gross domestic product (GDP) in 2014 to 69 per cent of GDP in 2024.