Civil servants home loans hit Sh600m in June

Land PS Mariam el Maawy. PHOTO | FILE

At least 190 civil servants received loans amounting to Sh600 million to buy or put up residential housing units under the Civil Servants Housing Scheme Fund in the year to June 2015, the latest report by Auditor- General Edward Ouko shows.

The scheme also commenced the construction of the Kisumu Shauri Moyo Housing project that comprised 250 one and two bedroom houses at a cost of Sh764 million.

The scheme further initiated the public private partnerships for construction of Park Road and Starehe housing projects in Nairobi.

“The department issued loans to civil servants amounting to Sh600 million for purchase or construction of residential houses.

“The funds raised for the year amounted to Sh663,959,154, broken into government grant through the Treasury of Sh500 million and revenue reserve at the end of the financial year of Sh163,959,154,” Mariam el Maawy, Land principal secretary and the administrator of the fund, said in a report forwarding the financial statements to Mr Ouko for audit.

She said the civil servants housing scheme regulations have been reviewed through the Civil Servants Housing Scheme Regulations 2015 to ensure adequate and affordable access to housing by public officials.

Under the reviewed regulations, the loan repayment period was increased from 18 years to 20 years to facilitate low monthly loan repayments by beneficiaries.

The maximum loan facilitation under the scheme was revised from Sh5 million to between Sh4 million and Sh25 million, depending on one’s job group.

The PS said the new rules paved the way for the introduction of provisions for engagement of partners in construction projects to take advantage of private sector resources through the PPP.

“Down payment for construction loans was lowered from 30 per cent to 10 per cent to ensure high initial costs don’t deter civil servants from accessing housing loans.

“The scheme was limited to employees working at the ministry within national government,” she said.

Ms El Maawy said the scheme faces financing challenges due to insufficiency of funds owing to low government allocations against approved budget which limited the number of applications approved and commencement of new projects.

She said grabbing of land earmarked for construction of projects by private individuals or developers had hindered the fast realisation of the fund objectives.

The PS wants the National Land Commission to establish the status of government land reserved for housing purposes and where land identified for development has been irregularly allocated, the titles should be cancelled.

She said land banks should be set aside for future housing development.

“Delayed remittance of mortgage funds by ministries and county governments, delay in completion of construction projects and lengthy procedure in procurement of projects under the Public Private Partnership arrangements are some of the challenges that we faced,” the PS said.

Ms El Maawy said although the fund performance for 2014/15 was good, there is need to make use of the Public Private Partnership to ensure more housing units are constructed for civil servants.
“There is also need to use cheaper and faster construction technologies in order to achieve adequate housing for civil servants,” she said.

Mr Ouko in his qualified audit opinion of the scheme financial position questioned a balance of Sh1 billion at the Kenya Commercial Bank.

“Included in the cash and cash equivalent of Sh1,785,355,732 is a balance of Sh1,010,450,730 at Kenya Commercial Bank whose bank balance confirmation certificate had been altered by hand and this change had not been counter signed by the bank manager,” Mr Ouko said.

He also queried another Sh949,247 relating to receipts from individuals which were recorded in the cashbook but not credited in the bank statement

“In the circumstances, it was therefore not possible to confirm the accuracy and the validity of cash and cash equivalent balance as at June 30, 2015,” Mr Ouko said.

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