Car loan? No thanks, say civil servants

Civil servants have kept off a government-run loan scheme meant to help them acquire vehicles, an audit report has shown.

The report by Auditor General Nancy Gathungu has flagged the low uptake of the loans forcing the managers to invest the idle Sh4 billion in Treasury Bills.

Since its launch in 2015, the State Officers and Public Officers Motor Car Loan Scheme Fund has only disbursed Sh315 million to civil servants.

“The disbursed loans balance of Sh315 million remains relatively low at 7.8 per cent in comparison to the total assets balance of Sh4 billion,” Gathungu said.

In a stern verdict, the Auditor General said the objective and purpose for which the fund was established may not be achieved.

“My opinion is not modified in respect of this matter,” Gathungu said in a review of the fund’s books for the period ending June 30, 2024.

The uptake inched up by a paltry 1.2 per cent compared with the 6.6 per cent uptake reported in the financial ending June 30, 2023.

The performance was 3.8 per cent in the year ending June 2021, which is a slight improvement from the previous year’s 1.2 per cent.

Management pledged sensitisation drives but uptake remains stagnant. Following the snub, the fund’s managers were forced to invest the money in Treasury Bills, the report shows.

“The fund experienced low response from state officers and public officers, compelling the management to invest in T-bills so that the allocated funds do not lie idle,” the audit report reveals.

The fund was established in September 2015 to help state and public officers acquire vehicles at flexible loan terms as a benefit extended by the state.

According to the SRC, the fund was to enhance productivity and motivate civil servants, “and save them from ridicule by members of the public over transport struggles.”

Its failure underscores systemic issues in government benefit schemes, including housing. Civil servants of various cadres are eligible for loans ranging from Sh600,000 to Sh10 million.

According to the fund’s manual, Cabinet secretaries, the Attorney General and the Auditor General are entitled to Sh10 million.

Principal secretaries, chairs of independent commissions and the Controller of Budget are entitled to up to Sh8 million.

Director of Public Prosecutions, as per the SRC guidelines, was to get up to Sh6 million while parties registrar, commission and parastatal CEOs are entitled to Sh5 million.

Civil servants of grades S, T and U are entitled to Sh4 million while those from grade N are entitled to between Sh1.5 million and Sh3 million.

Those who take the loans receive the vehicle logbooks from the fund administrator once they complete their repayments.

Earlier audit reviews revealed that some of the targeted beneficiaries were not even aware of the fund’s existence. Management said they would hold sessions to teach civil servants about the fund and the attendant benefits. Related to this, Gathungu has queried an irregular expenditure of more than Sh48 million on facilitations for external training.

Management did not support the training by members of the fund’s advisory board and staff in its accounts.

“The management had not justified incurring expenditure on foreign training,” the auditor said.