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Gov’t Stares At A Loss Close To Ksh1 Trillion In Bad Loans

Treasury CS Henry Rotich. [PHOTO/ COURTESY]

The treasury could lose Ksh823.7 billion, an amount loaned to 72 state state corporations which have been cash strapped.

According to reports by the Nation, Ksh47.52 billion of these loans are non-performing or simply dormant, which have reached maturity.

The loans were advanced by the National Treasury without fundamental documents, and questions the loaning criteria, according to a report by the auditor general Edward Ouko.

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“Failure to redeem the loans precipitate a high likelihood of defaulting and eventual loss of public funds because of continued write-offs of bad debts,” Mr Ouko says in the report.

Ouko further reveals that there were no documentation for determining the beneficiaries, terms of the loans and the authorisation of the disbursements.

“This determination appears to be outside the department’s control, thus the department implements decisions that are made elsewhere. This is exhibited by the continued growth of the outstanding loans,” adds Ouko.

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The defaulting institutions continue to receive funding. Ouko also said that the loanees lacked budgets, annual plans, assessment or evaluation and performance reports.

Rural Electrification Authority has Ksh13.65, the Coast Water Service Board (Ksh7), Northern Water Services Board (Ksh5.39) and Tanathi Water Services Board (Ksh4.4).

Lake Victoria South Water Services Board owes the government Ksh3, Lake Victoria North Water Services Board (Ksh2.8) Mumias Sugar Company (Ksh2.5) the National Water Conservation and Pipeline Corporation (Ksh2.46).

Read: Amaco Insurance Loses Office Furniture Over Ksh15 Million Debt


Several discrepancies were noted on some companies’ books as compared to treasury books.

On South Nyanza Sugar Company, its books show that it owes the government Ksh770.28 million while Treasury books show that the loan is Ksh199.02 million. Mumias Sugar Company has Ksh3 billion as per its records but Treasury records have Ksh2.5 billion.

Agro Chemicals has defaulted Ksh9.07 billion but only Ksh1.11 billion is captured at the Treasury records, Tanathi Water Services Board Ksh5.20 billion but Treasury records have Ksh15.05 billion.

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Moi University has Ksh257.77 million but Treasury books show the loan as KshSh31.25 million, Kenya Meat Commission Ksh300 million but Treasury has Ksh940.24 million in its records.

Kenya Utalii College has Ksh140.13 million but Treasury lists zero balance, Faulu Kenya Ksh176.68 million but Treasury has Ksh141.31 million, IDB Capital limited claims to have zero balance but Treasury claims IDB is yet to pay Ksh1.56 billion.

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Written by Francis Muli

Senior reporter at Kahawa Tungu, Muli has a passion for human interest stories. Believes in unearthing societal rots that have been hidden from the public eye.
Follow me on Twitter @FmuliKE. Email

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