Only 25 per cent of non-governmental organisations (NGOs) operating in the country submitted their reports for the last financial year, raising concerns about the source of funding for the majority and questions about the projects undertaken.
According to the NGO Sector Report, only 3,005 out of a total of 12,162 organisations licensed to operate in the country submitted their annual reports.
This means that only a portion of the Sh175.9 billion received by organisations to run projects in the country can be traced back to its source, with the Ministry of Interior warning that non-compliant organisations could be using this loophole to facilitate illicit financial flows.
"If you look at the numbers, we're talking about an excess of 12,000 NGOs, but it's interesting that barely 30 per cent filed their returns in the last financial year. To me, that is an indictment not only on the NGO Coordination Board but also on the council that represents the board and all of us," said Internal Security PS Raymond Omollo.
The PS said it was unacceptable that less than 30 per cent were submitting their returns and called on the board to put in place mechanisms that would encourage compliance.
"There is need to embrace transparency in your sources and funding of expenditure and that probably explains why we are having challenges even with some of you filing returns, maybe there are things you don't want to declare in terms of who is funding us. As a country, we are very keen to follow the trail of illicit funding," he said.
The NGO Coordination Board notes that the Sh175.9 billion is the highest amount received in the last decade, whose figures indicate a fluctuating trend, with the 2018/19 financial year being the second highest at Sh165.9 billion.
Under the Proceeds of Crime and Money Laundering Act (2009), the board is mandated to report to the Financial Reporting Centre traces of illicit financial flows in the sector in order to curb funding of criminal activities and use of illicit funds in the country.
According to the reports submitted, the majority of funds came from affiliated NGOs and foreign agencies, mainly from North America and Europe.
During the year under review, NGOs spent most of the total amount received, Sh102 billion, on implementing projects in the country, while Sh16 billion was spent in other countries.
Of the total amount spent in Kenya, over Sh31 billion was spent on implementing health projects, followed by child development programmes at over Sh10.5 billion and education projects at over Sh10.1 billion.
Refugee assistance received Sh3.7 billion, while over Sh72 million was spent on road safety programmes and only a handful of Sh1 million each was spent on peace building initiatives and drug and alcohol addiction programmes.
PS Omollo urged NGOs to now align their projects with the current government's priorities of providing credit to the poor and affordable housing.
"It is important that NGOs prioritise development projects in sectors such as health, education, social welfare, agriculture, water and sanitation. These initiatives should now be aligned with government priorities of access to affordable credit for low-income earners, informal traders, women and youth enterprises through the now famous Hustler Fund and the provision of safe and affordable housing in informal settlements," he said.
He also called for more projects that promote security in the country, including peace-building, resource-based conflict resolution programmes and the effects of climate change.
The sector report identified Nairobi, Kisumu and Nakuru as the counties with the highest number of projects, while Lamu, Elgeyo Marakwet and Bomet counties had the lowest number of projects.
The committee said it had eased past tensions between the government and NGOs to create an enabling environment for them to implement more projects in the country.
"NGOs complement the work of government and complement communities in a way that no other sector can," said Mutuma Nkanata, the board's executive director.
Kenya's Kwanza government promised in its manifesto to operationalise the Public Benefits Organizations (PBO) Act before the end of the year.
The Act aims to ensure transparent and efficient regulation of civil society by providing clear rules for their registration and creating a system of incentives to support organisations engaged in public benefit activities.
Its operationalisation has been pending since it was signed into law in 2013, mainly due to concerns over NGO funding issues and security concerns, with the Ministry of Interior now noting that the concerns have been legally addressed in other areas, so the law needs to be operationalised.