The National Assembly Committee on Public Debt and Privatization, chaired by Hon. Abdi Shurie (Balambala), has raised concerns over the huge Commitment fees paid by the government for the undisbursed loans.

During a meeting a meeting held on Friday, 30^th May, 2025, the Committee asked the Controller of Budget, Dr. Margaret Nyakang’o, to name all the MDAs responsible for the utilization of the undisbursed loans, which the government is incurring a lot of paying for Commitment fees.

“In a previous engagement, it was reported that about Kshs1.1 trillion loans were undisbursed, and we were paying a huge Commitment fee for them.

What happens if those loans are disbursed? And should we push for those loans to be disbursed or stopped?” Hon. Aden Daudi (Wajir East) asked.

The CoB disclosed that as at 31^st March, 2025, the government had incurred Kshs 770.5 million in settling the Commitment fee for the undisbursed loans.

She attributed this to lack of alignment on the project readiness and borrowing of loans.

“Commitment fee is the fee we pay for the undisbursed borrowed loans. Last time we looked at project readiness and we realized that we sign loans when project implementors are not ready and we end up paying Commitment fees and loan interests, which is a double loss, and we need to put our acts together,” Dr. Nyakang’o said.

Additionally, the Members had an issue with the pension performance rate, which stood at 52 per cent in the first nine months of the FY 2024/25 after learning that the exchequer issued for pensions and gratuities totaled Kshs 115.4 billion against a full-year provision of Kshs 223.15 billion.

Hon. Shurie stated that failing to pay pension to retirees exposes them to a lot of suffering in an old age, where they should be able to enjoy what they worked hard to save.

“The more unclear the pension we have, the more the government gets discredited. It is sad to imagine a 70-year-old retiree struggling and suffering out there due to not being paid their pension. Why pay the salaries of independent office holders and deny retirees their dues,” the Chairperson asked.

According to Dr. Nyakang’o, the period the budget execution of pensions and gratuities was impeded by delays in funding pensions and system downtime.

“The ordinary and commuted pensions processed for payment totaled Kshs 131.92 billion, out of which exchequer releases amounted to Kshs 101.78 billion, leaving an unfunded difference of Kshs 30.14 billion,” Dr. Nyakang’o said.

In the FY 2025/26, Dr. Nyakang’o told the Committee that the allocation to Pensions and Gratuities increased by 5.3 per cent from Kshs 223.15 billion to Kshs 234.9 billion.

The Committee asked Dr. Nyakang’o to prepare a Pension update together with all the Commitment fees paid showing which loans are holding the balances and the MDAs involved in utilization of the loans.