County empowerment funds aim to support small businesses run by youth and women. These programmes give entrepreneurs access to capital when banks demand strict collateral. However, poor oversight can place public funds at risk. A recent audit discussion exposed such concerns in Trans Nzoia County. Leaders raised questions about millions of shillings issued as loans but backed only by household items.
The issue emerged during a review involving Governor George Natembeya before the Senate County Public Investments and Special Funds Committee.
Sh75.7 Million at Risk
Audit findings show that Sh75.7 million remains outstanding from loans issued through the county’s youth and women empowerment fund. The money forms part of Sh102 million disbursed through the programme since 2013. According to the report by Nancy Gathungu, the Auditor-General, many of the loans were secured using soft assets. Borrowers pledged household items such as radios and television sets as collateral. These items hold limited resale value and cannot guarantee recovery of public funds. Such arrangements raise serious concerns about how counties protect taxpayer resources. The matter reached the Senate of Kenya during a review of county audit reports.
Committee chair Godfrey Osotsi criticised the loan structure. He said public funds should follow strict financial safeguards. Senators warned that issuing loans without strong collateral weakens accountability. Committee member William Kisang also questioned how the county could realistically recover the outstanding Sh75.7 million with such weak security. The committee noted that the arrangement risks violating the principles of the Public Finance Management Act (Kenya), which guides how public resources must be managed.
Political Lending and Poor Records
During the session, Governor Natembeya acknowledged problems in the loan programme. He said some loans were issued under earlier administrations without proper documentation. According to the governor, certain loans appeared to have been issued as political rewards rather than structured financial support. Missing records now complicate efforts to track borrowers and enforce repayment.
County governments often inherit such challenges when leadership changes. New administrations must then reconstruct records and attempt recovery of funds issued years earlier.
Wider Issues in County Empowerment Funds
The Senate committee also flagged irregularities in other county programmes. Members raised concerns about the Nawiri Fund, as well as a car loan scheme where millions of shillings were reportedly issued without adequate security. Such patterns highlight broader governance challenges within county-managed loan programmes. Across Kenya, county governments allocate large sums to empowerment funds every financial year. These funds support small enterprises, farming groups, and youth-led businesses. However, weak monitoring systems can allow funds to be issued without proper risk assessment. When loans go unpaid, the revolving funds shrink and fewer entrepreneurs benefit in the future. Senators directed Trans Nzoia County to conduct a full recovery assessment of the outstanding loans.
The county must also secure remaining debts with stronger collateral and submit a progress report before the end of the financial year. Financial experts say counties must adopt stronger lending practices. These include proper borrower vetting, written agreements, and reliable collateral. Digital loan tracking systems can also improve transparency and help counties monitor repayment. Empowerment funds remain important for economic growth. When managed well, they help young people and women build businesses and create jobs. But without strong oversight, even well-intended programmes can expose public funds to major losses. The case of Sh75.7 million in outstanding loans from a total disbursement of Sh102 million in Trans Nzoia County offers a clear lesson. Sustainable empowerment requires both access to credit and strict financial accountability.
