Kenya’s National Treasury, in a move that has shocked the public sector and sparked heated discussion about taxpayer money, has declared that public officers and civil servants who are dismissed from their posts, even for disciplinary reasons, will still be able to benefit from low-interest car loans which were previously available only to serving employees.
The change in loan conditions which has been in place for many years has surprised accountability advocates and has once again put government financial management under scrutiny.
The State Officers and Public Officers Motor Car Loan Scheme Fund regulations currently in place allow civil servants to access loans at much lower interest rates than commercial ones.
Formerly, the employees’ loans were automatically raised to commercial rates if the employees left the government service, especially those dismissed for misconduct. This protection is now likely to be eliminated as the authorities think that the program will be revived in a bigger scale.
The Treasury’s projections indicate that such changes might give a large scale of people access to the scheme, so that not just one hundred would be granted loans by June 2024 but more than a thousand by June 2028. Meanwhile, the total of Sh324 million which is now the amount disbursed will expand to Sh2.267 billion in that time — this is going to be a huge increase, and the public finances will be directly affected.
The decision comes when the public service is witnessing a swift rise in disciplinary dismissals, with a 67.5 per cent increase in the number of officers fired for misconduct in the twelve months concluding June 2024 being among the reports.
The opponents of the new policy have raised their voices already, warning that the move to allow the fired officers to keep their privileged loan conditions could lead to the already bad conduct being rewarded and to the fund being burdened with a higher risk of default loss.
The government defends the radical change as being inevitable for the long-standing problem of the non-use of funds that have been allocated to them, which the Auditor-General has constantly pointed out as wasted and at risk of being transferred to other national priorities. The supporters of the car loan scheme, by making it more attractive and accessible, argue that more eligible civil servants would be attracted to it.
On the other hand, the policy experts and taxpayer organizations consider this exceptional clemency as a possible factor for the weakening of the discipline mechanisms and the spreading of the public suspicion about the fair use of the governmental funds.
They want the authorities to ensure very soon the transparency regarding the fiscal impacts that are expected, and the measures that will be taken to prevent any misuse of the new conditions.
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