Ballooning Fines for Idle Loans and Missed Deadlines
Kenya’s budget is already under a lot of pressure, but it just got worse. Over the past four years, the country has forked out a staggering Ksh6.6 billion just in penalties connected to foreign loans that never left the bank and late payments on big projects. Auditor General Nancy Gathungu’s latest report pulls no punches—these losses are completely avoidable and add fuel to the country’s debt worries.
The single biggest leak in this financial bucket comes from what’s called "commitment fees." This isn’t some rare, technical glitch; it simply means Kenya agreed to take out loans for projects then failed to actually use the cash. For 2023/2024, auditors looked at 14 big infrastructure and development projects set to receive Ksh515.1 billion. Shockingly, Ksh304.4 billion—or nearly 60%—of that money sat idle. The result? A punishing Ksh1.6 billion bill just for not using what was borrowed. That’s on top of Ksh1.4 billion in similar fees the year before.
It’s not a new problem, either. Across four years, the pattern repeats: government departments secure ambitious funding, sign contracts, then stall, letting millions get eaten up by bank fines instead of roads, hospitals, or schools.
Late Payments Hit Key Projects Hard
Delayed payments are another headache, one costing taxpayers an extra Ksh4.3 billion since 2020. The breakdown is eye-opening. The much-hyped Covid-19 Health Emergency Response project not only struggled to deliver vaccines on time, but the delays pushed up Kenya’s penalty bill by almost Ksh1 billion—money that could have gone toward more doses or expanded clinics.
- Ksh930.59 million in fines for late Covid-19 vaccine supply payments
- Ksh614.2 million lost due to slow funding for the Kibwezi-Mtomo-Kitui-Migwani road construction
- Ksh657 million drained from the Sirare Corridor Project for similar reasons
- Even vital farming projects like the Mwea Irrigation Development faced Ksh43.1 million in penalties
- The Coastal Regional Water Project saw Ksh178.6 million disappear through late settlement fines
So why does this keep happening? Gathungu lays it at the door of poor financial planning. Ministries and agencies are slow to release payments or react to changes, meaning contractors, suppliers, and even international partners sit and wait—charging ever-increasing interest for missed deadlines. It’s not just bad math; it's impacting people who rely on these projects for jobs, clean water, safer roads, and healthcare.
With the country’s outstanding debt casting a larger shadow every year, the Auditor General is urging real change. There’s a clear warning here: unless government departments tighten up their budgeting and delivery, Kenya will keep paying hefty fines to international lenders instead of funding real progress. If you’re wondering where all the borrowed money goes and why projects often miss their mark, look no further than these wasted billions. One thing is pretty clear—the time for stronger financial discipline isn’t just coming, it’s overdue. For taxpayers and anyone waiting for those long-promised roads, clinics, or water taps, every lost shilling matters.