KENYA – The recent report from the Auditor General has revealed significant irregularities in the Sh24 billion (US$185,328,000M) edible oil importation scandal involving the Kenya National Trading Corporation (KNTC) and Kenya Commercial Bank (KCB).
The scandal has drawn public outrage and raised critical questions about governance and financial oversight in Kenya’s state agencies.
On August 13, 2024, the Auditor General’s report disclosed that KNTC had been authorized by its board on October 5, 2022, to open a bank account with KCB to facilitate the operationalization of an edible oil program.
The board also sought approval from the National Treasury to procure a line of credit amounting to Sh15 billion (US$115,830,000M) from KCB for importing essential food commodities.
However, the situation quickly became murky when KCB issued an initial loan offer of only Sh10.77 billion (US$83,165,940M) on December 7, 2022, instead of the approved amount.
A month later, on January 10, 2023, a loan enhancement letter was signed, increasing the total facility to Sh24 billion (US$185,328,000M). The Auditor General questioned this discrepancy, stating, “It was not clear why KCB could not initially offer the corporation Kshs 15 billion (US$115,830,000M) as approved”.
The KNTC was tasked with importing and distributing essential commodities, including cooking oil, to stabilize prices amid rising living costs. However, the audit revealed that only 2.8 million out of the 7.5 million 20-liter jerrycans approved for importation were delivered.
This failure to meet procurement targets raises concerns about the effectiveness and integrity of the program.
The report noted that “neither of the suppliers was dated or approved,” suggesting a lack of proper oversight in the procurement process.
The scandal has not only implicated KCB and KNTC but has also led to significant political fallout. Former KNTC managing director Pamela Mutua resigned amid the ongoing investigation, which has seen several senior officials arrested for their alleged roles in the scandal.
The investigation was prompted by revelations that companies linked to government officials were single-sourced to supply the edible oil, raising suspicions of corruption and mismanagement.
Mutua stated, “I opted not to lobby for the second term at the agency” following her tumultuous tenure, emphasizing the pressure faced by officials in the wake of the scandal.
President William Ruto has taken a firm stance against corruption, directing investigations into the actions of three senior government officials implicated in inflating prices for imported cooking oil.
The President’s directive to the Ethics and Anti-Corruption Commission (EACC) to probe the matter illustrates the government’s commitment to accountability.
“The idea to import the edible oil was mooted to protect Kenyans from cartels,” Ruto stated, highlighting the original intent behind the importation initiative.
Despite these efforts, the edible oil scandal has raised broader concerns about the government’s ability to manage public resources effectively.
The Kenya Association of Manufacturers has expressed alarm over the potential impact of such scandals on local industries, arguing that the importation of subsidized edible oil undermines local production and could lead to job losses.
The association warned that “this strange policy shift was a significant departure from the ‘Buy Kenya Build Kenya’ policy”.
As investigations continue, the public remains vigilant, demanding transparency and accountability from their leaders.
The edible oil scandal serves as a stark reminder of the challenges facing Kenya in its pursuit of good governance and economic stability.
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