Auditor-General Exposes County Loan Scandal as Billions Meant for MCAs and Staff Vanish

A new report by the Auditor-General has laid bare a far-reaching abuse of public funds within Kenya’s devolved units, revealing how billions of shillings allocated as revolving loan schemes for county officials were systematically looted and never recovered.

According to the audit, funds established to provide car loans and mortgage facilities for Members of County Assemblies (MCAs) and county staff were effectively converted into handouts. In many counties, beneficiaries exited public office—particularly after the 2022 General Election—without repaying a single shilling.

The report paints a troubling picture of institutionalized impunity, weak controls, and deliberate negligence that allowed public money to be treated as private entitlement.

Loans That Became “Grants”

Auditors found that dozens of MCAs who lost their seats in 2022 walked away with outstanding loan balances, with county governments making little to no effort to recover the funds. In some cases, the loans were not backed by enforceable agreements, collateral, or guarantors—rendering recovery efforts practically impossible.

“The intention was to empower leaders and staff,” the report notes, “but in practice, the funds became a slush pool with no accountability.”

In several counties, loan registers were incomplete or missing altogether. Records failed to capture repayment schedules, balances, or even the identities of some beneficiaries. As a result, auditors were unable to reconcile how much money had been disbursed, repaid, or lost.

Empty Loan Books, No Repayments

Perhaps most alarming are counties where loan books are now empty, yet there is no evidence that repayments were ever made. Vehicles purchased through the schemes—often high-end SUVs—are no longer traceable to county service, while properties acquired through mortgage facilities remain in private hands.

The taxpayer, the audit concludes, is left servicing the cost of luxury cars and homes owned by individuals who no longer hold public office.

In effect, devolved units absorbed the losses, while accountability mechanisms failed to trigger corrective action.

Oversight Breakdown at the County Level

The scandal underscores a broader systemic failure of oversight in county governments, from weak internal audit departments to ineffective county assemblies that failed to exercise their watchdog role

Despite clear red flags—non-performing loan portfolios, expired repayment timelines, and mass exits of beneficiaries after elections—most counties took no enforcement action. In some cases, officials responsible for managing the funds were themselves beneficiaries.

“This is not just mismanagement; it is structured neglect,” said a governance expert familiar with county finance systems. “The safeguards were either ignored or intentionally dismantled.”

Pressure Mounts on EACC

The Auditor-General’s findings have intensified calls for the Ethics and Anti-Corruption Commission (EACC) to intervene. However, the sheer scale of the defaults, coupled with missing documentation, raises questions about how much of the money can realistically be recovered.

Legal experts warn that without clear contracts, securities, or payroll deductions, prosecutions and asset recovery may prove difficult—highlighting how poor governance decisions can permanently expose public funds to loss.

A Devolution Stress Test

The scandal arrives at a sensitive moment for devolution, reigniting debate over financial discipline, accountability, and political culture at the county level. While revolving funds were designed as staff welfare instruments, their misuse has instead deepened public mistrust.

At its core, the report delivers a stark message: devolution without oversight breeds entitlement, and entitlement without consequences becomes corruption.

As counties prepare future budgets and loan schemes, the Auditor-General’s findings serve as a warning that public finance reforms must extend beyond Nairobi and take root at the grassroots—where billions are now quietly missing.