By Brian Kiprono - Reporter
Kenya, January 14, 2026 - Auditor-General Nancy Gathungu has raised alarm over the handling of a Sh19.6 billion loan meant to expand access to affordable housing, saying she has been unable to verify how the funds were spent or whether repayments have been made nearly seven years after the deal was signed.
The money, borrowed from the World Bank’s International Bank for Reconstruction and Development (IBRD), was channelled through the Kenya Mortgage Refinance Company (KMRC) to support long-term home loans. However, gaps in oversight have made it difficult to confirm the loan’s utilisation.
In December 2019, Kenya secured a EUR219 million facility, valued at about Sh33.1 billion at current exchange rates, to boost housing finance for eligible Kenyans. Under the arrangement, KMRC was to on-lend the funds to banks and other financial institutions, which would then extend mortgages to potential homeowners.
According to Gathungu’s report, “records provided for audit revealed that disbursements amounting to EUR 148,028,519 (Sh19,620,451,418) have been made to KMRC as at June 30, 2025, for on-lending to beneficiaries”.
The audit further shows that in March 2024, the government cancelled EUR45 million of the loan and took over responsibility for a EUR4.8 million (Sh725.8 million) technical assistance component.
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The project comprised two key parts: financial support to KMRC as the primary lender, and technical assistance managed by the National Treasury and the Ministry of Lands and Physical Planning.
Under a subsidiary agreement signed in February 2020, KMRC was required to begin repaying the principal in 40 semi-annual instalments starting March 2024. However, Gathungu says no repayment records have been availed for audit.
“This is because the financial statements of KMRC are not audited by the Auditor-General or a delegated auditor appointed in line with Section 23 of the Public Audit Act, 2015. In the circumstances, the accuracy and appropriate utilisation of Sh19,620,451,418 disbursed to KMRC for project implementation could not be confirmed,” she states.
The findings point to continuing weaknesses in the monitoring of large public loans within the housing sector, fuelling concerns about transparency and accountability in programmes intended to make home ownership more affordable for Kenyans.
