Auditor General Nancy Gathungu has delivered a damning verdict on President William Ruto's Bottom-up Economic Transformation Agenda (BETA), falling short of describing it as a doomed voyage.
She says this is due to the dismal performance of key enablers and implementation gaps in key projects.
Her report, tabled in the National Assembly, highlighting the performance of the budget, has raised alarm over the overall success of the BETA project on which Dr Ruto anchored his campaigns ahead of the 2022 General Election.
“Audit reports for the Financial Year 2023/2024 for the State department responsible for the pillars and the relevant state owned enterprise supporting the pillars have raised concerns about the performance of the pillars highlighting inefficiencies and implementation gaps may hinder overall success of BETA plans if not addressed,” reads the report.
The BETA plan focuses on five pillars, which include agricultural transformation; micro, small and medium enterprises (MSMEs); healthcare; housing and settlement; and digital superhighway and creative industries.
The BETA plan is designed to address the current challenges facing the country's economy, stimulate economic recovery and build resilience.
It places particular emphasis on priorities aimed at reducing the cost of living, creating jobs, achieving a more equitable distribution of income, improving social security, broadening the tax base and increasing foreign exchange earnings.
Key enablers for these pillars include the blue economy, education and training, environment and climate change, foreign policy and regional integration, governance, infrastructure, manufacturing, services, women's agenda, social protection, sports, culture and arts, and youth empowerment and development agenda.
Meru farmers demand compensation over fake fertilizer
On the agriculture front, which is the core pillar of the plan, Ms Gathungu says issues such as the supply of substandard fertiliser, irregular procurement processes, lack of proper documentation and cases where fertiliser was procured but never delivered threaten to undermine the success of this pillar.
The fertiliser subsidy programme was introduced in the 2021/22 financial year as an intervention to cushion farmers from high prices.
“The audit reports for Financial Year 2023/2024 for the State department of agriculture and related State owned enterprises (parastatals) like the National Cereals and Produce Board reveal challenges that will hinder the performance of this pillar,” reads the report.
“Additionally, concerns have been raised over the accuracy of farmer distribution list, delays in project completion and procurement irregularities involving grain dryers and facilities. These challenges pose a significant threat to the successful implementation of agricultural transformation, potentially undermining efforts to enhance food security and support small-scale farmers,” further reads the report.
The broad objective of the agriculture pillar was to improve agricultural productivity to ensure food security in the country, create jobs and increase Kenya's exports.
In the BETA plans, the Kenya Kwanza administration had also prioritised the establishment of County and Industrial Parks (CAIPs) in each county with the main aim of growing the manufacturing sector and investment through agro-allied industries.
However, Ms Gathungu says in her report that the counties are facing financial challenges in realising this project due to late disbursement of funds by the national government.
For example, in the 2023/2024 financial year, the government allocated Sh4.5 billion to 18 counties to establish the parks, but only disbursed Sh1.52 billion, resulting in a shortfall of Sh3.48 billion.
“This means that the counties are facing challenges completing the constructions which will further delay operationalization of these CAIPs and achievement of the objectives,” says Ms Gathungu.
On the Micro, Small and Medium Enterprise (MSME) Economy pillar, Ms Gathungu has singled out issues such as non-performing loans and discrepancies on loan allocation of funds such as the hustler fund, Uwezo, Women Enterprise Fund and Youth Enterprise Fund and their mismanagement as a key risk to achieving the intended purpose of the BETA plan under this pillar.
“Significant issues which include high non-performing loans and discrepancies in the allocations affect key performance of MSMEs. Additionally, concerns have been raised about the criteria used distributing the funds which have resulted in inefficiencies and mismanagement that could hinder MSMEs’ growth and sustainability,” reads the report.
On the Affordable Housing programme pillar, Ms Gathungu says issues such as funding shortfalls, slow procurement, poor planning, financial mismanagement and the disputes on the document ownership for parcels of land under construction risk delaying the programme.
“The programme may be unable to achieve the target of 200,000 units per year, delaying the realization of the housing agenda and its contribution to the economic transformation,” reads the audit report.
“The audit report indicates funding shortfalls leading to project delays despite increased collections through the housing levy,” further reads the report.
President Ruto lays foundation stone for affordable housing project in Voi
Ms Gathungu says she will carry out a comprehensive audit on the programme in 2025/2026 Financial year.
The government through the BETA approach is seeking to address the Housing deficit in the country through the intervention of building 200,000 houses per annum.
According to the government, the move will increase House supply from two percent to 50 percent. This is to be achieved by structuring affordable long-term housing finance schemes, including a National Housing Fund and Cooperative Social Housing Schemes that will guarantee the off take of houses from developers.
According to the National Housing Corporation, the affordable housing deficit currently stands at 2 million units, growing by about 200,000 units per annum.
While the market seems to have a constant supply of high-end houses, the supply of housing in the low and middle-income segment especially in satellite towns is still low.
According to the World Bank, 61 percent of urban households live in slums, an indication of the housing gap in the country.
On the healthcare bit, Ms Gathungu says there is need for urgent reforms and strategic investments in the sector if the programme is to live up to its expectation.
Ms Gathungu says in her report that despite a Sh204.5 billion allocation and the rollout of the Social Health Insurance Fund (SHIF) estimated to cover 15 million citizens, there are still numerous challenges in the sector.
“High healthcare costs, limited rural outreach and unresolved critical governance and structural issues threaten the sectors’ ability to provide seamless accessible and quality care, underscoring the need for urgent reforms and strategic investments,” reads the report.
“The 2023/2024 Financial Year audit reports for the healthcare sector highlights key concerns that may be hampering the achievement of the Universal Health Coverage,” Ms Gathungu says.
The health sector has lately been in shambles over the migration into the new system which is not working in most health facilities.
The problem has further been compounded by failure by the government to release money owed to health providers.
'Scrap the Social Health Authority', kidney patient tells President Ruto
However speaking on March 4, during the funeral of Malava MP Malulu Injendi in Malava, Kakamega County, President William Ruto maintained that there is no reverse gear on the new system which he said is meant to curb fraud that paralysed the defunct National Hospital Insurance Fund (NHIF).
“They do not want a technology system that works because they want to continue stealing from us. The stealing is over. Move on. We are not going to give free money as was being done under NHIF to hospitals without accountability. We are only going to pay for services rendered,” President Ruto said then.
On the job creation initiative, Ms Gathungu says a recent performance audit on the Kenya Youth Employment and Opportunities Project (KYEOP) which is an anchor pillar of the programme raised sustainability and scalability challenges.
The programme aims at equipping youth with business management skills and providing them with seed capital for their businesses.
Ms Gathungu however says that the programme has failed to create a revolving fund for the beneficiaries, inadequate follow-up, monitoring and supervision of the project beneficiaries.
