The government could have lost Sh12.6 billion since the cash transfer fund for the elderly was launched in 2012.
The Inua Jamii cushions old citizens from harsh economic times.
The auditor general’s office wants the programme strengthened and loopholes sealed.
Auditor General Edward Ouko says employees steal Sh300 million every two months. The officers “disburse cash to dead beneficiaries” long after their burial, despite getting death notifications. Banks are also to blame.
“From figures sampled in a number of counties, 208 dead beneficiaries in January and February 2015 had already died and the caregiver continued to collect payments,” it says.
“In some counties, there were cases where beneficiaries who had been exited in the payroll due to death had reappeared.”
Ouko puts banks on notice over inflated commissions. He says the two per cent they get is illegal.
“The overpaid bank commissions are for a specific payment cycle and in contravention of the contract and should be recovered by the ministry as soon as possible.”
The audit focussed on the management of the Inua Jamii cash transfer programme. The Social Development department under the Ministry of East African Community, Labour, and Social Protection implements the programme.
The report says the ministry lacks sufficient data and documentation on the project. Ouko wants the whole programme investigated.
“The irregular, uncoordinated and unpredictable payments are a major problem, which resulted in questionable payments. The transfer was also not coordinated with other programmes that affected the performance of the Older Persons Cash Transfer programme.”
Read:
The audit established that there were dependents that were automatically enrolled upon the death of a beneficiary.
“During field visits, the audit found that persons below 65 years and households that were not poor were also benefiting from the programme, yet they were not within the target group.”
According to the auditor, unpaid funds of about Sh300 million are kept every two months at a designated account. The stolen cash can benefit another 60,000 old persons if put to good use.
“Conduct in-depth investigations on unpaid arrears due to an insufficient update of payrolls to ascertain amounts involved and its whereabouts. Compensate beneficiaries as required based on breaches of payments and unpaid arrears,” the report recommends.
Last Tuesday, the government said it will disburse Sh9 billion this month. Each beneficiary is to receive Sh8,000 to cover four-month arrears.
The Auditor General pointed out that the funds are delayed and some times beneficiaries wait for up to nine months. He says the banks also get commission for work not done.
“Between January and August 2015, the unpaid commission for 101,335 beneficiaries amounted to Sh1.1 billion. The PSP collects two per cent commission based on the total amount disbursed to its account by the ministry,” Ouko says.
“When a beneficiary misses a payment and the funds are rolled over to the next payment cycle, the PSP [bank] gets a double commission when the arrears are paid. This means the ministry’s transaction cost increases, thus increasing the cost of the cash transfer service delivery.”
Of the 21 analysed cycles, only three were paid within the intended two months as per the operational manual, 10 had a delay of between 15 and 60 days, five had a delay of between 61 and 90 days, and another three also had a delay.
Read:
“The agency agreement states that the minimum service level for paying agents should be 12 hours per day with a penalty of Sh1,000 per visit on reported pay points. The audit found that at times the payment agents arrangements were unreliable in making the cash transfer payments since they did not have adequate cash.”
The auditor has called for adequate and regular follow-ups on beneficiaries to ensure compliance with eligibility status and establish reasons for non-collection of payments.