Auditor General Nancy Gathungu has sounded a fierce alarm, accusing government entities of blatantly ignoring audit and parliamentary recommendations—and she’s demanding action.
Appearing before the National Assembly’s Budget and Appropriations Committee, Gathungu dropped a bombshell: billions in taxpayer funds are slipping through the cracks due to weak laws and a culture of impunity. She urged Parliament to urgently revise the Public Finance Management Act (PFM), 2012, introducing tough penalties for agencies that dodge accountability.
“We are watching audit reports gather dust while inefficiency, waste, and blatant disregard of fiscal discipline continue unchecked,” Gathungu warned, visibly frustrated.
The Auditor General didn’t mince words—she’s pushing for swift legal reforms that would force institutions to implement both parliamentary and audit recommendations or face harsh consequences.
Gathungu also demanded that all government entities submit their financial statements within a month after each fiscal year, emphasizing that delays only worsen Kenya’s transparency crisis. “Timely reporting is not optional—it’s the bedrock of accountability,” she said.
She went further, calling on Parliament to enforce a previous law requiring the National Treasury to support the Office of the Auditor General through a single-line budget. She argued that this would empower her office to respond to emerging audit challenges with greater agility.
In a hard-hitting call for national dialogue, Gathungu also demanded a unified, cost-effective method for valuing government assets, calling the current system inefficient and opaque.
But perhaps her most shocking revelation came when she disclosed the depth of Kenya’s tax revenue crisis.
According to her latest findings, revenue projections continue to miss the mark, with the nation still falling below the World Bank’s recommended tax-to-GDP ratio of 15%. Kenya’s current ratio stands at 14.3%, a worrying sign for an economy with growing obligations.
As of June 30, 2024, the Kenya Revenue Authority (KRA) reported tax arrears totaling a jaw-dropping Sh2.334 trillion—a 133% spike from the previous year. Gathungu blamed the ballooning figure on widespread non-compliance, tax evasion, and systemic planning failures.
“This level of arrears is unsustainable. It’s a ticking fiscal time bomb,” she said, warning that the government may struggle to meet its 2025/2026 spending targets without sinking deeper into debt.
She called for a radical overhaul of revenue forecasting practices, pushing for a model grounded in evidence and historical trends rather than guesswork.
As if that wasn’t enough, Gathungu exposed yet another flaw—donor-funded projects are massively underperforming. Of the Sh515.1 billion allocated in FY 2023/2024 to 14 key initiatives, a staggering Sh304.4 billion went unspent.
She warned that failure to execute these projects in time could render them completely useless. Even worse, taxpayers are on the hook for Sh6.569 billion in commitment fees paid on undrawn loans—money spent on funds that were never even used.
“We’re literally paying to waste opportunities,” Gathungu concluded, delivering a stark verdict on the nation’s financial mismanagement.
Bottom Line: Kenya is hemorrhaging billions due to weak oversight, unimplemented recommendations, and poor planning. Unless Parliament acts now, the consequences for public services and development could be dire.
