Gathungu, Nyakang’o flag Sh7.7bn charges for unused loans
Kenya's Auditor-General and Controller of Budget have flagged Sh7.7 billion in commitment fees paid for unused loans over a five-year period. The report criticizes the Treasury for poor debt management and borrowing funds before projects were ready for implementation.
Why it matters
The findings highlight systemic inefficiencies in public finance management and the opportunity cost of wasted funds that could have supported education.
Auditor-General Nancy Gathungu and Controller of Budget (CoB) Margaret Nyakang’o have flagged Sh7.7 billion in commitment charges for loans tapped but not used over five years, warning of violations of prudent use of public funds.
The Auditor-General said the commitment fees relate to unused loans tapped between the 2020/21 and 2024/25 financial years for financial capital projects.
A commitment fee is a payment that is charged by a lender to a borrower to compensate the lender for keeping a credit line open. The fee also secures a lender's promise to provide the credit line on the agreed terms at specific dates, regardless of the conditions of the financial markets.
The commitment fees were paid to international lenders to reserve funds that ministries failed to utilise, sparking fresh concerns over the Treasury’s poor debt management strategies.
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