Bursaries for 14,000 in limbo

A cloud of uncertainty hangs over the future of the Jomo Kenyatta Foundation, a state agency mandated to provide scholarships and publish educational materials, after a damning audit exposed deep financial distress, governance lapses and the risk of institutional collapse.

A new report by Auditor General Nancy Gathungu paints a bleak picture of an entity struggling under the weight of massive losses, mounting debts and dwindling relevance amid shifting education policies.

For the year ending June 2025, the foundation recorded accumulated losses of Sh934 million, underscoring years of financial deterioration.

Although JKF posted a net loss of Sh167 million during the year under review—an improvement from the Sh303 million loss reported the previous year—the auditor cautioned that the marginal recovery does little to alter the broader insolvency outlook.

Gathungu issued a qualified opinion, citing material uncertainty over the foundation’s ability to continue operating as a going concern.

“The losses have resulted in substantial erosion of the net worth of the foundation,” the auditor general noted, warning that JKF may be unable to meet its financial obligations as they fall due and is therefore technically insolvent.

The audit reveals a stark mismatch between JKF’s assets and liabilities.

As at June 2025, the foundation’s current liabilities stood at Sh779 million against current assets of just Sh207 million, leaving a negative working capital position of Sh571.6 million.

In the auditor’s assessment, this imbalance casts serious doubt on the institution’s financial sustainability.

JKF management attributed the worsening position largely to the collapse of its publishing business, which had historically been its main revenue stream.

The introduction of new policies that opened the textbook market to private publishers significantly eroded JKF’s dominance.

According to the report, publishing revenues plunged by 79 per cent to Sh25 million from Sh117 million in the previous year.

The foundation cited the absence of government textbook orders, stiff competition in the private schools market and large volumes of obsolete stock rendered unusable by the transition to the Competency-Based Curriculum (CBC).

“Lack of any government orders meant that the public schools segment was largely locked out for Jomo Kenyatta Foundation, leaving her to compete with other publishers in the very small private schools market,” JKF chairperson Rose Waruhiu stated in the annual report.

Beyond its financial woes, the foundation is also facing an existential shift in its mandate.

JKF is currently managing the World Bank-funded Elimu Scholarship Programme, which supports more than 14,000 students across the country.

However, the education reforms task force appointed by President William Ruto has recommended the establishment of a Kenya Basic Education Bursary and Scholarship Council to take over this role.

Compounding the uncertainty, JKF has been listed among state agencies earmarked for dissolution under the government’s ongoing parastatal reforms programme, raising questions about the long-term continuity of its functions.

The audit further uncovered serious operational and compliance failures that deepen the crisis. JKF failed to remit Sh99.4 million in statutory deductions, including Pay-As-You-Earn, NSSF, NHIF and pension contributions, exposing the entity to penalties, interest and possible legal action.

“The foundation risks paying penalties and interest on the unremitted amount, and management was in breach of the law,” Gathungu stated.

Pending bills amounting to Sh737 million remained unpaid at the time of the audit, with Sh548 million outstanding for more than a year.

The auditor warned that prolonged non-payment increases the risk of litigation and loss of public funds through accrued interest and penalties.

Additional red flags included JKF’s failure to conduct quarterly stock takes, casting doubt on the accuracy of Sh31 million worth of inventory reported in the financial statements.

The foundation was also found to be non-compliant with statutory requirements on employment of persons with disabilities, falling short of the mandatory five per cent threshold.

The audit further identified staff receiving net pay below the legally required one-third of basic salary, unexplained adjustments to payables, inaccuracies in cash flow statements and misstatements in grant disclosures, all pointing to weak internal controls.

In response, JKF management cited persistent cash flow constraints and appealed to the Ministry of Education for financial support.

The directors expressed optimism that the foundation could remain afloat through a new strategic plan and a transition into a scholarship-focused mandate.

“The foundation is a going concern despite its poor financial position,” the directors maintained, banking on continued government backing and institutional restructuring.