Auditor General Flags Gaps in the Proposed Infrastructure Fund Bill

Kenya's Auditor General, Nancy Gathungu, has raised a red flag over the government’s strategy to dispose of public assets to bankroll the country’s ambitious infrastructure agenda. Speaking during a recent parliamentary session, Gathungu warned that liquidating state-owned entities to plug deficits in the infrastructure fund is a short-sighted move that could jeopardize the nation’s future financial stability.

The government has been exploring various avenues to raise capital for massive road, rail, and energy projects, which have traditionally relied on heavy external borrowing. As debt ceilings tighten, the focus has shifted toward the privatization of state corporations, but the country's top auditor argues that this approach lacks a sustainable foundation if the proceeds are merely used for immediate construction costs.

Gathungu expressed concern that once these assets are sold, the government loses a permanent source of revenue and control over strategic sectors. She noted that the strategy, while providing a quick injection of liquidity, does not account for the recurring costs of maintaining new infrastructure or the long-term loss of dividends from profitable state enterprises.

The Auditor General’s stance comes at a time when the Kenyan government is under pressure to find innovative financing models for the construction sector. While public-private partnerships have been touted as a solution, the direct sale of assets remains a contentious issue among policymakers and the public.

Infrastructure development remains a cornerstone of Kenya’s economic growth plan, yet the financing gap continues to widen. Gathungu emphasized that the state must look for more creative and regenerative ways to fund these developments, rather than relying on the disposal of existing wealth.

Historically, Kenya has faced challenges with transparency in the privatization process, which further fuels skepticism toward asset-backed funding for new projects. Gathungu insisted that any move to liquidate public property must be backed by a clear, long-term economic impact assessment that proves the trade-off is beneficial for future generations.

The construction industry, which relies heavily on these funds for large-scale contracts, is watching these developments closely. A shift away from asset sales could mean a slower rollout of projects, or a return to the drawing board for the Ministry of Transport and Infrastructure regarding project procurement.

Gathungu’s report suggests that the government should instead focus on enhancing revenue collection and sealing loopholes in current expenditure. By doing so, the state could potentially find the necessary capital without hiving off its core assets, although this route requires more time than the immediate sale of a parastatal.

The debate over how to sustain the infrastructure fund is expected to intensify as the budget for the next fiscal year is prepared. For now, the Auditor General’s intervention serves as a significant hurdle for the proponents of privatization within the cabinet.