MPs question how Sh20b housing levy funds were invested in T-Bills

Parliament is investigating how Sh20 billion housing levy funds were invested in Treasury Bills.

A parliamentary team wants to establish whether due process was followed by the State Department of Housing in hiving off the billions of shillings and diverting them to government securities.

This emerged after Housing Cabinet Secretary Alice Wahome and Principal Secretary Charles Hinga appeared before the National Assembly Committee on Housing, Urban Planning and Public Works to deliberate on the 2024/2025 budgetary allocations.

Bahati MP Irene Njoki revealed that she had received information that the State Department of Housing had channeled billions of shillings meant for the construction of affordable houses for Kenyans towards Treasury bills.

Treasury bills, also known as T-bills, are short-term government securities issued by the National Treasury. They are a type of debt instrument used by the government to raise funds for a short period, typically ranging from 91 days to 364 days.

 President William Ruto's  administration has been deducting Kenyans 1.5 per cent of their gross salary with a similar amount being matched by their employers, towards the construction of one million affordable houses across the country by 2027. 

 “I would like to know from the CS and PS whether this is true. And if so, whether due process was followed?” Posed Njoki.

To which Hinga answered in the affirmative.

“The investment is still in process. The amount to be invested is Sh20 billion and we are opening a CDS account at the Central Bank. The CS Treasury approved and we have a letter to that effect," he said.

The PS's response however sparked more questions from the committee with Nyaribari Masaba MP Daniel Manduku seeking to know the thinking behind the move.

“I have a problem with that. When you collect money from workers then you hear it has been put in financial instruments by the state department, does that signal a problem, a lack of strategy or a problem of low absorption of funds in the housing project?” He posed.

 Wahome however explained that the investment would be for a period of between three to six months and urged the MPs to stop insinuating that her ministry was unable to absorb the funds. 

"Let us not make statements that may appear show that we do not need the money. We need the money for procurement. But remembering there was a month or two where we were not able to disburse because there was litigation saying we can not proceed and so we considered this," she said. 

"In any case if there is money waiting to be paid out because we pay on certificates raised, it would actually be imprudent to leave the money lying idle even for a month," she added. 

Committee chairperson Johana Ng'eno however sought to know whether the board was involved in the process and whether it approved the process. 

 "We are not saying that it is against the law. We are also not saying that it is wrong to invest. The question is procedure. Did the board sit and approve this investment ?" Posed  Ng'eno. 

Sirisia MP John Waluke sought to know how long the funds would be stuck in the securities and what the Housing Department intended to do. 

 "How long will that money stay there because if all these projects are to be implemented, they need money. Will it be accessible when needed?" He posed. 

Waluke also sought know where the interest accrued from the funds would be channeled. 

"Is the interest going to benefit individuals or where is it going?" He posed.

But Hinga assured the House team that the board sat and made a resolution to invest the funds and even wrote to the Treasury seeking approval of the same. 

"The reality of the matter is that we are collecting the levy now. We can't say that we will only collect the levy only when we want to pay. It's impractical. You are collecting the money now and you may need to pay it out in three or six months time but that doesn't mean you do not need the money," he said.

The PS allayed feared that the money would get "stuck" in the securities saying that Kenyans would have full access of the same. 

"Treasury bills are the safest because they are for a short period of time," he said.