Kenya MPs: Question Bishop Gatimu Ngandu NSE Investment

• Kenyan MPs are questioning Bishop Gatimu Ngandu Girls High School's Sh1 million investment in the Nairobi Securities Exchange (NSE).
• The investment yielded only Sh5,381 in dividends over one year, prompting concerns about 'value for money' from lawmakers.
• The school could not immediately provide documentation of specific companies invested in or required National Treasury approval for the investment.
• Section 119(2) of the Public Finance Management Act mandates explicit National Treasury approval for investments by public institutions.
• Lawmakers emphasized that public schools should prioritize learners' needs over generating minimal investment returns, especially when parents are still contributing to school finances.

Crucially, any investments undertaken by public institutions, such as Bishop Gatimu Ngandu Girls High School, require explicit approval from the National Treasury, channeled through the relevant parent ministry.

Kenyan lawmakers are currently scrutinizing an investment made by Bishop Gatimu Ngandu Girls High School in the Nairobi Securities Exchange (NSE). The public girls' school in Nyeri is under pressure to explain a Sh1 million investment that yielded only Sh5,381 in dividends over a single year. This inquiry by the National Assembly Public Investments Committee on Governance and Education follows an audit by the Auditor-General, which initially flagged Sh1.58 million reported as short-term investments in the school's financial statements for the year ended June 2021. Auditors noted the absence of investment certificates or other supporting documents to confirm the existence and completeness of these funds.

Chief Principal Jane Njuguna clarified to MPs that the Sh1.58 million comprised various balances, with Sh1 million specifically allocated to shares on the NSE, and the remainder held in other accounts. However, the school could not immediately furnish crucial documents detailing the specific companies in which it had invested or evidence of the mandatory approval from the National Treasury. The school's bursar, Racheal Wambui, confirmed the investment remains active, with dividends routed through Absa and Centum, but she was unable to name the specific companies whose shares the school held. Ms. Wambui, who joined the school in 2022, noted the investment predated 2010 and admitted that the low returns raised questions about its economic viability. The committee has since deferred the matter, instructing the school to provide documentation of Treasury approval and details of the shareholdings.

The legal basis for the committee's inquiry into the Bishop Gatimu Ngandu Girls High School audit stems from the Public Finance Management Act. Patricia Esipeya, representing the Auditor-General, informed the MPs that Section 119(2) of this Act mandates accounting officers to manage public funds responsibly and to minimize idle cash balances. This provision underscores the strict requirements for financial stewardship within public institutions.

Crucially, any investments undertaken by public institutions, such as Bishop Gatimu Ngandu Girls High School, require explicit approval from the National Treasury, channeled through the relevant parent ministry. When questioned directly about this statutory requirement for Kenya public school investment approval, Chief Principal Njuguna requested additional time to ascertain whether such approval had been secured for the school's NSE investment. This highlights a significant compliance gap that the committee is seeking to address regarding National Treasury public institution investment.

Lawmakers expressed profound concerns regarding the school's investment strategy and its implications for public accountability and resource allocation. Committee Chairman Dick Maungu of Luanda constituency sharply questioned the minimal returns, asking how a Sh1 million investment could yield only Sh5,000 annually. He emphasized the need for the school to demonstrate 'value for money,' especially when parents are continually asked to contribute to school needs. Maungu criticized the practice of keeping public funds invested for negligible returns while relying on parental contributions, stating that such funds were not adding value to the school.

Embakasi West MP Mark Mwenje further challenged the fundamental premise of a public school engaging in such financial ventures, arguing that schools exist to educate children, not to function as investment centers. He suggested that the invested capital could have been better utilized to address immediate educational needs within the institution, rather than generating what he termed a 'negligible return.' Sotik MP Francis Sigei inquired whether parents had been consulted or had approved the investment, seeking minutes to document any such decision. Kilome MP Thaddeus Nzambia echoed concerns about the economic rationale, demanding comprehensive details on the investment's performance. The committee's directive for further documentation underscores the serious nature of these parliamentary inquiries into the management of public funds.

This case underscores the critical importance for public institutions in Kenya to obtain explicit National Treasury approval for investments and to meticulously document all financial decisions, as required by the Public Finance Management Act. Lawyers advising public entities or involved in public finance audits should note the heightened scrutiny on accountability, 'value for money,' and compliance with statutory investment procedures.

Source: Original reporting via local Kenyan media