Co-operatives Principal Secretary Patrick Kilemi faced intense scrutiny from MPs after admitting he could not account for the Ksh8 billion allocated to the Hustler Fund during the 2022/23 financial year.

Appearing before the Public Accounts Committee (PAC), Kilemi attributed the missing funds to transitional challenges within government departments during the early days of the Kenya Kwanza administration.  

The department had been allocated Ksh20 billion but only spent Ksh12 billion, leaving Ksh8 billion unaccounted for.

“The State Department made a request for the transfer of Ksh12 billion to the Hustler Fund, which was processed and transferred. However, no request was made towards the processing of the balance of the final batch of Sh8 billion, thus under absorption,” Kilemi explained.

Transitional confusion

Kilemi, who appeared before the committee to respond to Auditor General Nancy Gathungu’s queries, said that when the new administration took office, the State Department for Micro, Small, and Medium Enterprises (MSMEs) had not been fully established in government financial systems.

Consequently, responsibility for initiating the Hustler Fund was temporarily assigned to his Co-operatives unit.

Despite acknowledging procedural gaps, Kilemi deflected full responsibility, suggesting the State Department for MSMEs – now fully operational and directly responsible for the Hustler Fund – should provide comprehensive explanations.

“I was tasked to initiate the process of the Hustler Fund as the State Department for MSMEs was getting established. That’s why I received the funds on behalf of that department and now find myself responding to questions about what transpired at the time,” he said, adding that the Ksh8 billion “wasn’t requested through the proper channels, which is why it didn’t come through”.

Auditor General’s findings

Kilemi also revealed that his department had requested Exchequer funding under the Hustler Fund but failed to receive over Ksh282 million as anticipated, receiving only Ksh3.6 million in appropriations-in-aid at the financial year’s close.

Gathungu’s report for the financial year ending June 2023 revealed the department spent Ksh14 billion against an approved budget of Ksh22.96 billion, resulting in 36 per cent under-absorption.

The underfunding and under-expenditure hindered planned activities and may have undermined public services.

Committee chairperson and Butere MP Tindi Mwale immediately blamed Kilemi for failing to account for the funds, accusing him of neglect and attempted embezzlement.

“Procedurally, it is the principal secretary, not the CEO, who is mandated to request funding,” Mwale said.  

“You ought to have reviewed the documents and flagged the missing Sh8 billion allocated to the Hustler Fund. You cannot pass the buck by saying the officer failed to submit a request. Once the documentation reaches your office, it is you who signs off on it before it goes to the Treasury.”

Funyula MP Wilberforce Oundo attributed the loss to negligence and questioned whether due process was followed in reallocating the funds. He sought clarification on whether an executive order had been issued to transfer funds from the Co-operatives department to the SMEs department.

“I’m just wondering – when was there an executive order that transferred the money from the State Department of Co-operatives to the State Department of SMEs or whatever it is called, the Hustler Fund?” Oundo asked.  

“Where is this money, so that we understand whether someone slept on the job or if the money was so saturated in the economy that Kenyans, so-called hustlers, could not absorb such a large amount?”

‘Gross negligence’

Aldai MP Marianne Kitany accused Kilemi of gross negligence and abdication of responsibility, questioning whether he understood inclusive governance principles.

She argued that his failure to follow through with the funding process undermined a crucial programme intended to uplift ordinary Kenyans, particularly the youth.

“Chair, the PS has already admitted that he was holding the vote for this particular fund and acting on their behalf. If that is the case, then it was his responsibility to ensure that the fund received the necessary budgetary allocation,” Kitany said.  

“He himself said he had been tasked with overseeing the vote until the relevant State Department was fully constituted. If so, why didn’t he take action? Why is he quoting someone else who isn’t here to defend themselves?”