The Kenyan government has initiated a comprehensive audit of donor-funded projects worth Ksh2.17 trillion, raising alarm bells about initiatives that prioritize foreign suppliers’ interests over genuine local development needs.
Treasury Cabinet Secretary John Mbadi launched the sweeping review to identify low-value projects and address chronic funding gaps that leave taxpayers footing massive bills when initiatives stall due to missing counterpart contributions.
The National Treasury warns that many donor-funded projects have been designed primarily around donor agendas rather than Kenya’s actual development priorities, creating a dangerous financial burden when the government struggles to meet its funding obligations.
234 Projects Face Collapse Without Ksh130 Billion InjectionTreasury officials have identified 234 at-risk projects valued at Ksh2.17 trillion that could grind to a halt unless the government urgently injects Ksh130 billion in counterpart funding, money that ultimately comes from Kenyan taxpayers.
In an interview with Business Daily, Mbadi exposed the fundamental flaw in Kenya’s donor financing model, explaining that the current system serves suppliers rather than citizens.
“It is because the donor funding we are getting in this country has to some extent relied on the suppliers. It’s supplier-driven, not demand-driven. You find that some projects are initiated because some donors want to come in and put money,” he revealed.
The Cabinet Secretary disclosed that government officials have been engaging donors through the Deputy President’s office while systematically reviewing the entire project pipeline to weed out initiatives delivering minimal public benefit.
Counterpart Funding Gaps Burden Taxpayers With High FeesBeyond identifying questionable projects, the review tackles persistent challenges in providing counterpart funding, which generates hefty commission fees that drain public resources.
“We are reviewing all the portfolios that are there, the pipeline of portfolios. It’s a meeting we have been having, and we have been engaging donors through the DP’s office,“ Mbadi explained.
The Treasury’s revelations align with recent findings from the Parliamentary Budget Office (PBO), which last month flagged that Kenya manages 234 donor-funded projects worth Ksh2.17 trillion facing potential collapse without the Ksh130 billion counterpart funding injection.
The PBO breakdown shows Ksh1.92 trillion comes from loans and Ksh251 billion from grants, but both financing mechanisms require Kenya to provide matching funds before projects can advance.
Bureaucracy and Delays Compound Absorption Crisis“Kenya has previously experienced low absorption of donor funds due to bureaucratic hurdles, capacity constraints, and delays in counterpart funding. The risk of stalled or incomplete projects, especially those with significant public investment value and locally financed components, remains high,” the PBO warned.
The budget watchdog further cautioned that this crisis poses severe risks to Kenya’s development agenda, as domestically financed development spending will likely remain constrained by pending bills tied to these donor-funded initiatives.
This audit represents a pivotal moment in Kenya’s development financing strategy, as the government attempts to reclaim control over projects that should serve national interests rather than external commercial agendas.
The outcome could reshape how Kenya negotiates future donor partnerships, potentially establishing new frameworks that prioritize local needs and sustainable financing models.
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