Govt loses Sh3.7bn to ghost students, audit finds » Capital News

NAIROBI, Kenya, Jul 16 — A special audit report has revealed that taxpayers lost over Sh3.7 billion to ghost students and non-existent schools due to widespread discrepancies in the National Education Management Information System (NEMIS).

The audit, sanctioned by the National Assembly Public Accounts Committee chaired by Butere MP Tindi Mwale, covered the financial years 2020/2021 to 2023/2024.

It indicates that 354 secondary schools received capitation funds exceeding their actual enrollment figures, resulting in an overpayment of Sh3.59 billion.

Nearly ninety-nine junior secondary schools were overfunded by Sh30.8 million, while 270 primary schools also received capitation for non-existent learners.

In total, the overfunding across all school levels surpassed the Sh3.7 billion mark, largely attributed to inflated student numbers recorded in NEMIS—contrary to Ministry of Education guidelines that capitation should be based strictly on verified enrollment.

Sh16.6bn paid to non-existent schools

Details presented to the committee by the Office of the Auditor General revealed that, out of eight-three schools sampled, fourteen received capitation totaling Sh16.6 billion, yet investigations showed these schools did not exist.

“However, the schools did not appear in the County Director of Education’s records, and the CDEs were not aware of their existence,” Auditor Justus Okumu told MPs.

The audit also revealed that six schools among those sampled received capitation amounting to Sh889,348 despite having ceased operations.

Thirteen schools that received Sh11 million during the audit period had registered names that differed from those recorded in the NEMIS database.

The audit discovered that the number of learners reported in NEMIS often differed significantly from the actual figures in physical school registers. Some schools received more funds than they were entitled to based on inflated NEMIS data, while others were grossly underfunded due to inaccurate reporting.

Specifically, 354 secondary schools, ninety-nine junior secondary schools, and 270 primary schools were overfunded by a combined Sh3.7 billion over the four-year period. Conversely, 334 secondary schools, 244 JSSs, and 230 primary schools were underfunded by a total of Sh2.14 billion.

The inaccuracies were attributed to weak controls in NEMIS, lack of audit trails, and the absence of harmonized records among key education agencies such as the Teachers Service Commission (TSC), the Kenya National Examinations Council (KNEC), and the Kenya Primary School Education Assessment (KEPSEA).

“These discrepancies indicate weaknesses in data capture and validation controls, which may lead to misreporting, distorted resource allocation, and challenges in policy implementation, potentially enabling fraud,” Okumu stated.

Underfunding

The funding crisis was further deepened by systemic delays in the processing and release of capitation funds, which the Auditor General’s office noted has adversely affected learning activities.

“The main problem facing public schools is underfunding. The Ministry drafts budgets for various school activities, but these are often scaled down. Some activities end up being shelved or are undertaken and turn into pending bills,” said Okumu.

Public schools were underfunded by a staggering Sh117 billion over four financial years, with secondary schools bearing the brunt of the shortfall, according to the special audit report.

Secondary schools were shortchanged by Sh71 billion, junior secondary schools—introduced under the Competency-Based Curriculum (CBC)—by Sh31.9 billion, and primary schools by Sh14 billion. Special Needs Education (SNE) programs in secondary schools missed out on Sh67 million in allocated capitation.

“In the four financial years, a comparison of the State Department’s budget requirements and actual disbursements established that the amount disbursed to schools and programs was less than what was set in policy documents,” noted Okumu.

The audit revealed that while the State Department for Basic Education (SDBE) required Sh419.7 billion to fully fund schools over four years, only Sh334.1 billion was approved and disbursed by the National Assembly—leaving a gap of Sh85.6 billion (20.4 per cent shortfall).

The report noted that the current allocation model is flawed, as it relies heavily on enrollment figures from NEMIS, which the audit found to contain serious inconsistencies.

It further highlighted that the State Department for Basic Education delayed submitting funding requisitions to the National Treasury.

In some cases, schools had already reopened for the term before requisitions were made, resulting in delays of over two months before funds were released.

Waste

The audit flagged cases where schools failed to maintain separate bank accounts for tuition and operational expenses, as required.

Three secondary schools among the 83 sampled operated a single account between 2020 and 2023, through which they received Sh107.3 million in capitation.

Okumu said this commingling of funds weakens transparency and makes it difficult to track how public funds are spent.

The audit also found instances of irregular withdrawals and unauthorized fund transfers from tuition accounts, in violation of Ministry of Education guidelines.

Some school administrators were found to have withdrawn cash or moved funds without proper documentation or oversight.

The audit uncovered variances between the number of textbooks distributed and actual student enrollment.

Excess textbooks were delivered to 394 secondary schools, 94 junior secondary schools, and 182 primary schools, with the value of the excess books totaling Sh90.8 million.

Meanwhile, 415 secondary schools, 194 junior secondary schools, and 245 primary schools experienced textbook shortfalls, amounting to Sh295 million in value.

Additionally, 118 secondary schools, 225 junior secondary schools, and 26 primary schools received textbooks for subjects not offered at the schools.

The audit revealed chronic delays in transferring maintenance and improvement funds from operational to infrastructure accounts. In some cases, delays stretched up to 734 days—nearly two years—jeopardizing the completion of school development projects. Several projects stalled entirely due to lack of timely funding.

“The current capitation model is not only inequitable, but also unsustainable,” the report concluded.