KENYA – A special review by Auditor-General Nancy Gathungu has revealed that debts to millers who supplied maize flour under the State’s subsidy last year have hit Sh3.4 billion (US$22M), pushing some processors out of business even as the government remains adamant on settling the bills.
The auditor report further notes that as the government delayed payment of the bills to some 116 millers who participated in the programme, interest on the debts had accumulated by about KES400 million (US$ 2.6M) by the end of October.
The maize subsidy was an initiative by retired President Uhuru Kenyatta that was aimed at stemming the high-cost flour that had hit KES230 for a two-kilogram packet.
Payment to millers has however been delayed over disagreement on the amount that the state owes the millers.
The Committee on Agriculture in the National Assembly had earlier paused any payments to further interrogate the matter which later said that some millers might have extended the supply by up to six days after the contract between them and the State had been revoked.
The Treasury approved KES4 billion (US$26M) for the flour subsidy but stocks worth KES6.39 billion (US$41.5M) were supplied.
The actual amount approved for the subsidy was KES3.367 billion (US$29M) while KES533 million (US$3.5M) was to be spent settling pending bills under a similar subsidy in 2017.
“As at the time of the audit, the millers had supplied sifted maize flour valued at KES 6,390,033,525 (US$41,5M) and were paid an amount of KES 3,366,999,499 (US$29M) leaving a balance of KES3,023,034,026 (US$19.6M) as pending bills,” the audit found.
Document review revealed that millers had unpaid invoices, one year since the programme was implemented.
According to the auditor, this has negatively affected their maize flour milling operations, especially for small and medium enterprises, leading to the closure of business for some millers.
No provision has been made in the financial year 2023/2024 budget to settle the pending bills for the Programme,” the audit stated.
Auditors were unable to verify claims by four millers valued at KES 173.47 million (US$1.1M) because they had either discontinued their operations or could not be traced, said the report.
In the contract, the government committed to pay millers for supplied maize flour on the fifth calendar day after submitting the required papers.
Analysis of the pending bills owed to the sampled millers indicates that the unpaid amount of KES2,626,040,768 (US$17M) had accumulated a probable interest of KES 355,055,101 (US$2.3M) as of October 31, 2023,” Ms Gathungu said.
At least 67 millers confirmed supplying maize flour valued at KES5.1 billion (US$33M), out of which KES2.49 billion (US$19M) was paid, leaving nearly KES2.6 billion (US$17M).
The audit also established the subsidy did not lower prices as intended. “This was because the subsidised maize flour was not branded to differentiate it from the nonsubsidised flour, except for one miller, Trident Miller in Nandi County.”
Consequently, there was alleged hoarding and selling of the subsidised flour at the normal retail price.
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