NAIROBI, KENYA – Senior Counsel and former legislator Paul Muite has ignited a fierce public debate on fiscal accountability, demanding answers from the National Treasury and the Central Bank of Kenya (CBK) regarding Ksh300 billion in bond proceeds that auditors have been unable to trace. The controversy stems from a recent performance audit report by the Office of the Auditor-General on the management of domestic debt, which has cast a harsh spotlight on the government's financial oversight mechanisms.

In a direct social media post on Tuesday, November 25, 2025, Muite questioned how such a colossal sum could vanish without the knowledge of the country's primary fiscal and monetary authorities. "Diplomatic way of saying stolen. Who has the capacity to walk away with 300B of government bonds without the Treasury and CBK's knowledge or complicity?" Muite stated, articulating a sentiment of deep public concern over what he termed "mind-boggling impunity."

Auditor-General's Damning Findings

The report, which reviewed Kenya's domestic borrowing between July 2018 and June 2023, presented stark findings. During this period, the government raised Ksh2.97 trillion through Treasury bonds, funds ostensibly meant to finance development projects. However, the audit revealed that the vast majority of these funds, approximately Ksh2.67 trillion, were channeled into the Consolidated Fund Services account to cover recurrent expenditures such as salaries, pensions, and servicing other debts.

Most critically, the report disclosed that the audit trail for Ksh300 billion of these bond proceeds went cold, making it impossible for the auditors to identify the final destination of the funds. The Auditor-General, Nancy Gathungu, clarified that the report does not accuse any specific officials of wrongdoing but highlights a significant systemic weakness: the National Treasury lacks a framework to ring-fence bond proceeds, meaning there is no mechanism to ensure borrowed funds are used exclusively for the development projects for which they were intended.

A Widening Chorus of Concern

Muite's remarks amplify a growing wave of anxiety over Kenya's public debt, which the Controller of Budget, Dr. Margaret Nyakang'o, reported had reached Ksh11.7 trillion by the 2024/25 financial year. Just days before Muite's statement, Kiharu Member of Parliament, Ndindi Nyoro, had raised similar alarms in Parliament, criticizing the government's daily borrowing rate which he claimed was over Ksh3 billion.

The issue of untraced public funds evokes memories of past financial scandals, such as the Anglo-Leasing and Eurobond controversies, which eroded public trust and raised questions about the integrity of public financial management systems. These historical precedents form a sensitive backdrop to the current controversy, placing increased pressure on the Treasury and CBK to provide a transparent account of the missing funds.

As of Wednesday, November 26, 2025, neither the National Treasury nor the Central Bank of Kenya had issued a detailed official statement directly responding to the specific concerns raised by Paul Muite or the Auditor-General's findings on the Ksh300 billion. However, in a recent appearance before the National Assembly's Public Debt and Privatisation Committee, CBK Governor Dr. Kamau Thugge acknowledged the strain on public finances, stating that while the country's debt remains sustainable, it faces a "high risk of debt distress" due to liquidity challenges and ambitious borrowing targets.

Implications for Kenya's Economy

The controversy has significant implications for Kenya. The diversion of development funds to recurrent expenditure starves critical infrastructure and social projects of necessary investment, hindering long-term economic growth. Furthermore, the lack of transparency and accountability in the use of borrowed funds risks damaging investor confidence, both domestically and internationally. This could lead to higher borrowing costs in the future as investors demand a greater risk premium.

Financial analysts and civil society organizations have long called for greater fiscal discipline and transparency. The Institute of Public Finance Kenya, in a recent report, highlighted how soaring debt servicing costs are crowding out spending on essential services like health and education. The current controversy underscores the urgency of implementing robust systems to track public funds from borrowing to expenditure, ensuring that every shilling is accounted for and used for its intended purpose. As Kenyans await an official response, the questions posed by Paul Muite continue to resonate, demanding a clear and comprehensive explanation for the untraceable Ksh300 billion. FURTHER INVESTIGATION REQUIRED.