The Women Enterprise Fund is under intense scrutiny after Auditor General Nancy Gathungu exposed a string of questionable transactions totaling Ksh1.4 billion in her latest audit report.
In the damning review for the financial year ending June 30, 2024, Gathungu accused the fund’s management of gross financial mismanagement, including unaccounted expenditures, unauthorized transfers, and inflated costs that may have compromised the fund’s core mission of empowering women.
Among the glaring red flags is Ksh212 million transacted through unauthorized mobile paybills, which officials failed to account for. The fund had been operating three separate paybills to facilitate loan disbursements and repayments for women’s groups, but auditors found that the board irregularly instructed the transfer of funds from these paybills into the fund’s main account.
Worse still, the finance committee resolved to invest this money in call deposits, defying an Executive Order from President William Ruto that required all state payments to be processed through a unified platform—paybill number 222222.
The directive, issued in August 2023, also mandated the closure of all non-designated paybills by August 10. The fund’s failure to comply has left the Ksh212 million mobile money balance untraceable.
Another Ksh20 million was withdrawn from a paybill in August 2023, but no documentation was provided to show where the funds went. The report also highlights Ksh34 million paid out in gratuities without any supporting paperwork, such as details of the recipients or employment contracts.
“Given these gaps, we could not confirm the accuracy and completeness of the gratuity payments,” Gathungu noted in the report.
Ksh1.4 Billion Irregularities Expose Deep Rot
The audit also uncovered troubling discrepancies between the fund’s ledger entries and its financial statements—an issue that raises serious questions about the reliability of its records. Ideally, ledger entries should reconcile with financial statements, but auditors found major variances across multiple expenditure lines.
In total, the review flagged unexplained differences amounting to Ksh1.2 billion. These include a Ksh70 million gap in travel expenses, Ksh29 million in board costs, Ksh118 million in loans disbursed to women’s groups, and Ksh59 million allocated for computer maintenance. Notably, while the fund’s financial statements reported Ksh68 million spent on computer upkeep, only Ksh9 million appeared in the general ledger.
Gathungu also flagged Ksh678 million that was completely omitted from the fund’s ledgers, casting further doubt on the credibility of its financial statements. In another discrepancy, the fund reported Ksh374 million in staff costs, while payroll records reflected only Ksh369 million.
“In the circumstances, the accuracy and completeness of the financial statements could not be confirmed,” the report stated.
Loan Recovery Efforts
Loan recovery efforts have also come under fire. The audit revealed that the fund risks losing Ksh71 million from defaulted loans due to lax follow-up. The legal office failed to produce any evidence showing it was pursuing recovery of the funds.
“It was not possible to confirm whether the legal office was actively following up the cases. The recoverability of the Ksh71.3 million couldn’t be confirmed,” the report said.
Adding to the fund’s woes, its financial health appears to be deteriorating rapidly. Losses climbed to Ksh330 million during the year under review, with profitability plunging by 49 per cent compared to the previous year’s Ksh220 million surplus. Gathungu warned that if the trend continues, the fund may not sustain operations much longer.
“The fund continued to operate at a loss which, if not managed, may affect its future operations and the sustainability of its services,” she warned, further noting that it may soon be unable to meet its financial obligations—raising the risk of technical insolvency.
Compounding the situation, the audit found Ksh5 million in undisclosed income from interest earned on fixed deposits, and an additional Ksh4 million in undeclared assets and property.
The report also revealed that management failed to prepare financial statements for the fund’s loans and mortgage scheme. With no activity reflected in the scheme’s account, auditors suggested that the program may have been abandoned by intended beneficiaries.
Adding to governance concerns, employee salaries consumed a staggering 94 per cent of the fund’s revenue—far above the recommended ceiling of 35 per cent. Meanwhile, the board held 43 meetings during the year, a figure auditors labeled as excessive.
