Taxpayers pay Sh2.6 billion fine for unused donor funds

Currently, the country has Sh1.1 trillion of unutilised donor funding and foreign grants which attract an annual committee fee whether used or not.

In Summary

•Total donor commitment stands at Sh2.3 trillion with the country paying an average 0.25 per cent of these funds as commitment.

•Treasury CS Ukur Yatani has warned accounting officers against  misuse of public funds, even as he called for implementation of donor funded projects to save the country from extra costs.

Acting Treasury CS Ukur Yattani speaks to KRA boss James Mburu after his maiden meeting with the tax body on Tuesday

Kenyans fork out Sh2.6 billion annually as commitment fee for donor funds and grants which remain unused, the National Treasury has revealed.

This, is despite the pressure to borrow more to bridge budget deficit.

According to the Treasury, the country has Sh1.1 trillion of unused donor funding, including grants from foreign governments and international organisations, which Ministries, Departments and Agencies(MDAs) are shy of drawing.

To date, total donor commitment stands at Sh2.3 trillion with the country paying an average 0.25 per cent as commitment fee.


The Sh1.1 trillion readily available is close to twice the country's fiscal deficit of Sh657.4 billion in the current financial year, which the government plans to borrow to bridge.

However accounting officers have given the funds a wide berth even as public debt continues to swell, currently at Sh6.048 trillion from domestic and foreign borrowing.

“Only half of the donor funding has been utilised. Why is it that there is lack of motivation to spend donor funding , there must be a reason," Haron Sirma, director-general of public debt management at Treasury said yesterday

He spoke at a workshop in Nairobi, on prudent financial management, which brought together Principal Secretaries (government accounting officers), state accountants, finance officers , supply chain managers, internal auditors and director generals of state agencies.

"The Cabinet Secretary is under extreme pressure to borrow more, while Sh1.1 trillion is available for you to spend but you are not willing to spend. We continue incurring expenses. Why do we waste taxpayers money? Sirma posed.

The government received Sh6.5 billion in grants alone in the financial year to December. Another Sh10.1 billion was received as loans from foreign governments and organisations, Treasury data shows.

Speaking at the forum Treasury CS Ukur Yatani  called for implementation of donor funded projects to save the country from extra costs. He warned against misuse of public funds.

“We borrow but the implementation of these projects takes a lot of time. We want to discourage that. When you borrow, you must be ready to spend that money because when that money is not utilised, we end up paying commitment fee for nothing,” Yatani said.

He blamed lack of proper planning for delays in drawing from donor funds, concessional loans and grants.

“We have put ministries on notice. Should there be expenditure of donor or development partners funds, they must fast track implementation and the process,” the CS said.

Ministries are however seen to be reluctant from drawing from these funds owing to strict measures and procedures put in place by donors and foreign governments, which seal off corruption loopholes.

CS Yatani said Kenyans end up failing to benefit from donor funded projects due to delays in utilising the funds.

“We have had cancellation of concessional lending. We have projects that have not taken off for eight years, ten years , a lender has provided you a facility and you are unable to draw. We must stop this,” the CS said.