The Uwezo Fund is facing potential consolidation with other government affirmative action funds following damning revelations by the Office of the Auditor General regarding its financial mismanagement and ineffective loan recovery structures. This development comes as Members of Parliament, led by National Assembly Special Funds Committee Chairperson Fatuma Zainab, voiced serious concerns over the fund’s accountability mechanisms and operational inefficiencies.
During a committee session, Zainab lamented the Uwezo Fund’s inability to establish a reliable system to track and recover disbursed loans, warning that continued non-compliance could trigger a restructuring of public empowerment funds, including the Women Enterprise Fund and the Youth Fund.
“The structures in place are too weak to ensure accountability. Loans are disbursed without a robust system for tracking repayments, making recovery almost impossible,” she said. “We are now forced to consider merging these funds so that they can operate more efficiently and reduce the risk of financial losses.”
The Auditor General’s reports for the financial years 2022/2023 and 2023/2024 paint a bleak picture. In 2022/2023, Uwezo Fund addressed only three out of ten audit issues, with over KSh 4 billion in loans remaining unrecovered. The fund also reported an under-expenditure of KSh 193 million despite adequate budgetary allocation.
In 2023/2024, the situation worsened, with bad debt swelling to over KSh 5 billion. The audit flagged the fund’s failure to distinguish between recurrent and non-recurrent receivables, a KSh 74 million deficit, and an over-expenditure of KSh 58 million, raising further questions about financial discipline.
Staffing challenges were also highlighted, with only 21 employees—largely seconded from other government departments—managing operations originally designed for 70 personnel.
Alarmingly, up to 75 percent of loans remain unpaid, a trend echoed in the Women Enterprise Fund and Youth Fund, prompting MPs to consider a broader consolidation to improve efficiency and accountability.
The Uwezo Fund has been issued a 14-day ultimatum to respond to the audit findings. The committee’s final decision on consolidation will be influenced by the adequacy of these responses and the fund’s demonstrated commitment to reform.
