Report shows why NYS is in the red, near collapse
By Mercy Mwai, July 29, 2025The National Youth Service (NYS) is on the verge of collapse as it operates with negative working capital, according to a new report.
A report by Auditor General Nancy Gathungu reveals that as of June 30, 2024, total assets amounted to Ksh3.3 billion against liabilities of Ksh3.3 billion, resulting in a negative working capital of Ksh550.2 million, excluding historical pending bills of Ksh16.4 billion.
Of the Ksh16.4 billion in historical bills, the multi-agency pending bills committee formed to review all outstanding payments has only authenticated bills worth Ksh5 billion, while the remaining Ksh10.9 billion is being held by an investigative agency.
According to Gathungu, due to this poor performance, the service may not be able to meet its obligations when they fall due.
Liquidity issues
The report states: “The statement of financial performance reflects a deficit of Ksh211,675,213, being an increase of Ksh182,301,542 from a deficit of Ksh29,373,671 reported in the previous year 2022/2023.”
It adds: “The service is therefore facing liquidity issues and may not be able to meet its short term obligations as and when they may fall due. The financial statements have been prepared as a going concern assuming continued support from the government. In the circumstances, the service’s sustainability of service and meeting short term obligations is therefore doubtful.”
The damning report also reveals that 2,247 hectares of NYS land in Yatta, Mavoloni, Athi River, Mombasa Technical Institute, and Mwatate have been encroached upon.
The report specifically cites the NYS Engineering Unit land, which has been encroached upon by private developers who have constructed structures.
Land at risk
Gathungu has warned the service that it risks losing the land due to encroachment by informal settlers, as it remains unclear whether proper legal action has been taken to reclaim it.
The report states: “Parcels of land have not been fenced and are encroached. Although management has initiated the process of demarcation of the respective parcels of land, the process has not been finalized.”
Additionally, the report reveals that the NYS holds land valued at Ksh20.2 billion comprising 58 parcels that lack ownership documents.
Only documents for 16 parcels were provided for audit review, while ownership documents for the other 42 parcels were not provided.
Furthermore, the report notes that two parcels of land located in Nyaki/laki/kburine and South Ugenya/Rangala were not included in the asset register, despite land title deeds indicating that the parcels belong to the NYS.
Refundable deposits
Beyond land and sustainability issues, Gathungu also flagged the service for having unsupported refundable deposits from customers, unsupported adjustments, unconfirmed receivables, long outstanding trade payables, and unsupported inventory balances.
Regarding customer deposits, the report raises questions about Ksh315.4 million relating to cohorts who participated in a six-month youth empowerment programme between September 2014 and February 2015.
According to the report, although management explained that it had dispensed some payments and was making efforts to trace and pay the remaining youths, a schedule and confirmation for those who have been paid was not provided for audit verification.
The report states: “In the circumstances, the accuracy and completeness of the refundable deposits from customers totalling Ksh315,434,595 could not be confirmed.”
Trade payables
Concerning long outstanding trade payables, the report shows that a review of the ageing analysis reveals that Ksh500 million has been outstanding for more than three years.
Consequently, the NYS might face litigation, penalties, and withdrawal of services from dissatisfied suppliers.
On unsupported inventory balance, the report raises concerns that the inventory balance of Ksh419.7 million has not been supported by any schedule, including board of survey certificates to confirm accuracy.
The report notes: “Accumulation of the accounts payables is against the National Treasury Circular No. 10/2020 Reference No. DGIPE/A/1/80 dated 16th June 2020 which directed pending bills be treated as a first charge on the approved budgets.”
It adds: “In the circumstances, the accuracy and completeness of the inventory balance of Ksh419,716,455 as shown in the financial statement could not be confirmed.”