Nyeri County Assembly members will start receiving Sh5 million each in 2018 as car loans and house mortgages.
The 43 MCAs will receive a total of Sh215 million to purchase vehicles and build houses but are expected to have paid back the money by the end of their term in 2022.
The ward reps are currently opening accounts with Family Bank and submitting their securities for valuation and verification.
This comes amid demands by some new MCAs in some parts of the country that they be given unsecured loans, contrary to legal requirements.
WILLING TO COMPLY
“While most members are unhappy with the requirement to submit securities. We are willing to comply with the law,” said an MCA who requested not be named.
In the 2017/2018 supplementary budget Nyeri county allocated Sh90 million for car loans and Sh35 million for mortgages.
According to a report published by Auditor General Edward Ouko on expenditure for the financial year, the sustainability of the fund is at stake.
In Nyeri, the county assembly transferred Sh100 million to Family Bank to facilitate car loans.
However, the logbooks of the motor vehicles financed by the loans were not submitted for purpose of charging them as collateral.
“Therefore, the loans were unsecured, making it difficult for the county assembly to recover the funds in case of default in payments,” he said.
However the county assembly clerk said that all the MCAs had cleared their loans and collected logbooks and title deeds submitted as security.
The auditor found that two county executives had defaulted in repaying car and house mortgages amounting to Sh7.3 million.
In Laikipia, taxpayers lost Sh6.9 million in loans advanced to an MCA who died while in office in December 2015 and another one who lost her seat before the end of the five-year term.
“As with the case of the late MCA, the car and mortgage was not charged by the assembly and therefore the management may not be able to recover the outstanding debts,” observed the auditor.
Again, logbooks for the cars purchased by MCAs through the loan scheme were not registered as required under the fund’s regulation.
In Murang’a, the auditor faulted the assembly’s decision to receive copies of title deeds instead of original titles in car loans amounting to Sh191 million.
The auditor also observed the agreement signed with the banks serving as administrators of the fund did not specify how much interest the assembly will earn on deposit and loan advanced to the ward reps.
“Sixteen MCAs secured their loans with properties registered in different names and there was no commitments from true owners to repay the loans in case of default,” said Mr Ouko.
However, in a phone interview, the Murang’a County Assembly clerk who has since recorded a statement with the police over recent fracas in his office, said that former ward reps settled their loans before leaving office.
In Kirinyaga County, the auditor’s report indicates that the county assembly had entered into an agreement with Fortune Sacoo as the administrator of the Sh150 million fund, but lacked books of accounts like loan registers and bank reconciliation statements.
“There was no loan register to show individual members’ cumulative loans and the running loan balance. Further, most of the MCAs had no log books or title deeds filed,” indicated the report.
Mr Ouko found the county assembly to be in breach of the mortgage fund regulations, warning that there is risk of default and recovering the money.