The Auditor-General has asked the state to invest more than Sh3 billion that had been allocated to the publicly-funded car loan scheme due to slow uptake by Civil Servants.
An Auditor-General’s report shows that a paltry Sh141.31 million was advanced in loans to buy cars in the year ended June 2021 leaving a balance of Sh3.7 billion in the fund.
The dismal uptake of the loans prompted Auditor-General Nancy Gathungu to call for investing idle cash in income-generating ventures.
The State rolled out the scheme in 2015 in the public service to attract and retain top talent in face of increasing competition from the private sector.
The car loan scheme is fully funded by the Exchequer and has been receiving more than Sh2 billion every financial year since its inception.
“The objectives and purpose for which the fund was established may not be Achieved and the value for the idle money has not been realised as the amount could have been invested on income-generating securities,” says Ms Gathungu in a report to Parliament.
The idle cash comes at a time the government is grappling with fast-maturing debts that have taken up to over 60 percent of the annual revenue collections and squeezed funds for development projects.
Debt payments in the year starting July will gobble up about 65 percent of taxes or Sh1.34 trillion hampering efforts to free up funds for labour-intensive development projects that the State has relied on to ease youth unemployment.
The loans disbursed to the State officers and public servants in the period under review represent a 220.6 percent jump from the Sh44.07 million given out in the year ended June 2020.
The car loan depends on job grade and comes with an annual interest rate of three per cent — which is lower compared to the average lending rate of 13.5 per cent.
All State officers except those serving in the Judiciary, Parliament staff and Civil Servants under the Public Service Commission are eligible to apply for the fund.
Applicants are required to submit details on their job group, date of appointment to Civil Service, their net salary and list of beneficiaries, among other details. They pay an application fee of Sh1,000.