State to cancel stalled projects worth billions

Itare Dam

The multi-billion shilling Itare Dam in Kuresoi North, Nakuru County on October 8, 2020. Italian contractors CMC di abandoned the project.
 

Photo credit: File | Nation Media Group

The government plans to cancel 437 projects that have gobbled up billions of shillings in taxpayer funds but have never been completed.

This sheds bad light on the State’s rapid rollout of multi-billion shilling development initiatives in recent years without conducting proper study on their viability or how they would be funded.

Some of the projects were also approved merely as a conduit for pilferage of public funds with no intention of their completion.

The International Monetary Fund (IMF) last year revealed that out of 1,000 projects being implemented by the government, half (about 500) had stalled and needed Sh1 trillion to be completed.

But inadequate revenue collection coupled with a ballooning public wage bill and debt-servicing costs have increasingly thinned the State’s spending power, stalling hundreds of projects over continuous underfunding.

The National Treasury has, however, told the IMF it will cancel the 437 stalled projects by the end of March pending Cabinet approval.

It told the global lender it has done a study of all projects and the amount of money required to complete them and picked hundreds that will be cancelled.

Treasury said the marked stalled projects have not received budget funding for several years but have nevertheless remained in the portfolio of State plans even as others are held back by endless court battles.

This as Kenyans will continue to pay dearly for other cancelled projects, most of which the government borrowed heavily to finance, and is still servicing the loans. “We have expanded to cover all sectors through a stocktaking exercise of projects and associated commitments. This was an extension of a similar exercise completed in March 2021 that specifically targeted the education, health, and infrastructure sectors,” Treasury told IMF.

“Based on this extended exercise, we have identified 437 stalled or underperforming projects that should be canceled. A Cabinet decision to terminate these projects is expected by March 2022, as there are contractual issues to be addressed prior to executing that decision,” it said. A report submitted to Parliament by the National Assembly’s Budget and Appropriations Committee in June shows the value of all stalled government projects is Sh9 trillion, nearly the size of Kenya’s gross domestic product (GDP).

“The total cost of stalled projects is Sh9 trillion. This is a worrying trend as it indicates there is no adherence to the project guidelines issued by the National Treasury,” said the committee.

An audit report by Auditor General Nancy Gathungu last year for the financial year 2017/18 also shows the government sunk more than Sh9.6 billion into stalled projects that cut across eight ministries and departments.

The Treasury says it is developing a framework that will guide appraisal of public investment projects to ensure future plans are viable and can be properly funded before they are included in the budget.