Audit reveals deep flaws in Taita Taveta County Education Fund

The Auditor General (AG) has flagged several serious anomalies in the operations of the Taita Taveta County Education Fund, a public initiative modeled after the Higher Education Loans Board (HELB).

The fund was established under the Taita Taveta County Education Fund Act, 2024, to provide bursaries, scholarships, and loans for deserving students from low-income families.

However, the AG’s report for the financial year ending June 30, 2022, raises concerns over high default rates, cash flow problems, underfunding, and mismanagement.

The fund, initially enacted in 2013, has undergone several amendments.

The county administration allocated Sh200 million for the current financial year—double the Sh100 million allocated the previous year—to support bright ,but needy students. However, despite these efforts, the fund faces significant challenges.

The County Public Investments and Accounts Committee (PAIC) reviewed the AG’s findings for the year ended June 30, 2022 and reported critical shortcomings in the fund’s performance.

According to the report, the fund has struggled to recover loans from beneficiaries, leading the board to enter into a service contract with HELB. The contract has resulted in the recovery of over Sh36 million in loans, but many issues remain unresolved.

The report, tabled by PAIC Chairperson Amos Makalo and adopted by the county assembly, pointed to piecemeal funding as a significant issue affecting the fund’s operations. The financial statements reflect long-term receivables from non-exchange transactions balance of over Sh88 million in respects of monies transferred to HELB for disbursement to needy students.

Further, the statement of amount from HELB indicated that a total of sh52 million was transferred to HELB against  over Sh52.8 million which was disbursed to needy students and the difference of Sh856,000 between the two amounts was part of recoveries of Sh5.6 million made by HELB from loans.

However, it was not explained whether the students issued loans totalling more than Sh36.7 million subsequently signed the agreement with HELB and whose responsibility it was to recover the loans from the beneficiary students.

Further complicating the issue, the fund received only Sh58 million against a budget of Sh145 million, leading to severe under-expenditure.

“The county treasury was not able to transfer the entire amount due to cash flow challenges during the period under review,” said the report seen by The Standard.

The report comes at a time when the county administration is still grappling with low revenue collection, huge pending and wage bills, unsustainable bloated workforce and failure by the executive to implement recommendations of the county PIAC and Senate as at  June 30, 2022.

To address the fund’s problems, the PAIC recommended that the fund administrator should provide an ageing list of the loan beneficiaries and their balances at June 2024, recovery plan of the already disbursed loans and an action plan for the loan defaulters.

“We want to see an account of what has so far been recovered out of the already disbursed loans and the balance to be recovered within 14 days after adoption of this report, “ Makalo urged.

He added: “The county treasury should also facilitate the fund board to enable it to discharge its mandate effectively and efficiently. At the same time the fund administrator should also prepare a realisable budget.”