Money has been lying idle since 2015 as the Treasury tries to operationalise the fund.
The five- year car loan is seen as one of the sweeteners that should add to the allure of public service, which in recent years has been competing with the private sector for top talent.
The idle cash comes in a period when the government is struggling to balance its expenses amid below target revenue collection.
More than Sh2.8 billion meant for public servants’ car loan scheme is lying idle at the Central Bank of Kenya (CBK), the auditor-general has revealed.
Auditor-General Edward Ouko said the car loan benefit for State officers and other public servants has disbursed loans since it was established in January 2015, arguing the billions should have been channelled to other items.
The Treasury has since 2015 been allocating millions to funds, leaving the car loan fund with Sh2.83 billion as at June last year.
The five- year car loan is seen as one of the sweeteners that should add to the allure of public service, which in recent years has been competing with the private sector for top talent.
The car loan depends on job grade and comes with annual interest rate of three per cent—which is lower compared to the average lending rate of 13.5 per cent.
“Though cash balance has been confirmed to exist and safe, this amount could have been utilised for other more deserving cases in government while the National Treasury continuous to develop or create an enabling environment for the fund operation,” Mr Ouko says in an audit of the financial statements of the State Officers and Public Officers Motor Car Loan Scheme Fund.
The idle cash comes in a period when the government is struggling to balance its expenses amid below target revenue collection.
In 2016, Treasury secretary Henry Rotich published regulations unlocking billions of shillings to finance a motor vehicle purchase scheme for civil servants.
The regulations provided for procurement of a financial institution that will disburse the loans to applicants once approved by the fund.
Financial experts reckon that those in lower job grades will find it difficult to access the loans and meet a lending rule that requires them to retain at least one third of their pay after taxes and other deductions.
Thousands of civil servants in job groups A, B, C and D, who earn below Sh20,000 per month are technically locked out of the scheme.
A car loan of 600,000 would require a monthly deduction of Sh10,781 for the five years set in the regulations.
Cabinet secretaries, the Attorney General, Secretary to the Cabinet and Auditor-General will be entitled to a maximum Sh10 million car loan.
Principal secretaries, chair and members of independent commissions and the Controller of Budget are entitled to up to Sh8 million, while the Director of Public Prosecutions can access up to Sh6 million.
Chief executive officers of government agencies will get up to Sh5 million while civil servants in grades S, T and U will be entitled to Sh4 million.
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