The Auditor General has flagged Sh8 billion allocated to the Hustler Fund in the financial year ending June 2023 as unaccounted for, despite the National Treasury disbursing the amount to the State Department for Cooperatives Development during the period

Auditor General Nancy Gathungu has said in her report for the year ending June 2023 that the state department spent Sh14 billion despite having an approved budget of Sh22.96 billion.

This means there was an under-absorption of Sh8.2 billion, which represents 36 per cent of the entire allocation. Cooperatives Principal Secretary, Patrick Kilemi, who appeared before the National Assembly Public Accounts Committee (PAC) chaired by Butere MP Tindi Mwale, was at pains to explain how the money was spent, as the Auditor General raised questions of underfunding, which came in the way of implementing planned activities.

He, however, acknowledged that a budget of Sh20 billion was allocated towards the Hustler Fund for the financial year.

“The department made a request for the transfer of Sh12 billion to the Hustler Fund which were processed and transferred but no request was made for processing the balance of the final batch of Sh8 billion, thus an under-absorption,” the PS explained.

Kilemi attributed the missing funds to procedural gaps, even as he explained that funding requests in government must be initiated by a department’s Chief Finance Officer through the Principal Secretary, who subsequently forwards to the National Treasury.

Proper channels

“In this case, the Sh8 billion may not have been requested through the proper channels, and that is why it did not come through,” he explained.

Even as he admitted he may not fully account for Sh8 billion, the PS made reference to the transitional challenges in government departments at the beginning of Kenya Kwanza administration.

According to the PS, when the new administration came into power, the State Department for Micro, Small, and Medium Enterprises (MSMEs) had not yet been established in government financial systems.

To this end, Kilemi explained that responsibility of initiating the Hustler Fund rested temporarily on the State Department for Cooperatives, which he was heading at the time.

“This is why I received the funds on behalf of that department and now find myself responding to questions on what transpired at that time,” he explained.

Mwale was concerned over the failure to account for Sh8 billion and accused him of not only neglect but also involving himself in attempts to embezzle public funds.

“The role of requesting for funding from the National Treasury lies with the Principal Secretary, not the Chief Executive Officer of any agency. You should have reviewed documents and flagged the missing Sh8 billion allocated to the Hustler Fund,” Mwale stated.

As he urged the PS to desist from shifting blame, Mwale said the monies were meant for Kenyans and should be accounted for to the last penny.

“You cannot pass the buck by saying there was failure to submit a request. Procedure demands that once the documentation gets to your office, you sign it off before it goes to Treasury,” Mwale insisted.

Funyula MP, Dr Wilberforce Oundo echoed similar sentiments as he sought from the PS on whether due process was followed in reallocating the Sh8 billion.

He also urged the PS to clarify whether an Executive Order was issued to move the funds from Cooperatives to that of Small and Medium Enterprises (SMEs), where the Hustler Fund now falls.

“Could you tell us, was there an executive order that transferred the money from the State Department of Cooperative to the State Department of SMEs and when was that executive order issued?” Oundo wondered.

He also wanted to know from the PS where the money ended up saying either the funds did not get to the beneficiaries or there was negligence in managing the funds.

“Where is the money? We need to understand whether someone slept on the job or if the money was saturated in the economy that Kenyans could not absorb such a large amount,” he said.

But the PS insisted that a comprehensive explanation should be provided by the State Department for MSMEs, which is responsible for the Hustler Fund.

“The State Department for MSMEs and officials in charge of the Hustler Fund should be able to offer a more detailed explanation, including final tallies and reconciliation of the accounts,” the PS affirmed.

He also told the committee that his department made a formal request to National Treasury under the Hustler Fund but did not receive over Sh282 million as anticipated.