NAIROBI, Kenya, Sep 15 – A public girls’ school in Nyeri has been ordered to explain a Sh1 million investment in the Nairobi Securities Exchange after MPs questioned why the money earned only Sh5,381 in dividends in a year.
Bishop Gatimu Ngandu Girls High School was also unable to immediately provide key documents showing which companies it had invested in or whether the investment had received the required approval from the National Treasury.
The matter came before the National Assembly Public Investments Committee on Governance and Education after the Auditor-General raised questions over Sh1.58 million reported as short-term investments in the school’s financial statements for the year ended June 2021.
Auditors said the school had not provided investment certificates or other supporting documents to establish the existence and completeness of the amount.
School chief principal Jane Njuguna told MPs that the Sh1.58 million comprised different balances, including Sh1 million invested in shares at the NSE, while the rest was held in various accounts.
The disclosure prompted questions from MPs over whether the investment was generating sufficient returns for a public institution.
“Can you imagine we have Sh1 million and this year you got Sh5,000?” committee chairman Dick Maungu (Luanda) asked.
Mr Maungu said the school would have to demonstrate that the investment represented value for money, particularly at a time when parents were being asked to contribute towards school needs.
“We need to provide that indeed there is value for money,” he said.
He questioned why the school would keep public funds invested for minimal returns while continuing to rely on parents to meet some of its financial obligations.
“Girls will continue asking parents for money, yet they have money sitting in a platform, and that money is not adding value to the school,” Mr Maungu said.
Embakasi West MP Mark Mwenje questioned whether a public school should be engaging in investments instead of directing available resources towards learners’ needs.
“Schools are there to educate children. They are not investment centres,” Mr Mwenje said.
He argued that the money could have been used to address immediate needs at the institution rather than earning what he described as a negligible return.
Sotik MP Francis Sigei also sought to establish whether parents had been involved in the decision to invest the funds and whether the school had minutes documenting their approval.
Kilome MP Thaddeus Nzambia questioned the economic rationale of the investment.
“How can you invest Sh1 million and just get a return of Sh5,000?” he asked, demanding details on the investment’s performance.
The committee further sought to establish which companies’ shares the school had purchased.
The school’s bursar, Racheal Wambui, told MPs that the investment remained active and that dividend payments were received through Absa and Centum. However, she could not immediately identify the specific companies whose shares the school held.
Ms Wambui said the investment had been made before 2010, while she joined the school in 2022.
She conceded that the returns raised questions about whether the investment was providing value for money.
“Economically, I would say that it could not maybe give the value for money,” she told the committee.
The committee also questioned whether the school had obtained Treasury approval for the investment.
Auditor-General’s representative Patricia Esipeya told MPs that Section 119(2) of the Public Finance Management Act requires accounting officers to manage public funds responsibly and minimise idle cash balances.
She said investments by public institutions require approval from the National Treasury through the relevant parent ministry.
When Ms Njuguna was asked whether such approval had been obtained, she asked for more time to establish the details.
The committee deferred the matter and directed the school to submit documentation showing Treasury approval, details of the shares purchased, investment certificates and records of the investment’s performance.
The school was also directed to provide minutes of relevant board and parents’ meetings relating to the investment.
Kiminini MP Maurice Kakai Bissau called for former school officials who initiated the investment to appear before the committee and explain the decision.
“We need to understand what exactly was in their mind when they decided to do an investment where there is no value for money,” Mr Bissau said.
Ms Esipeya explained that auditors had initially flagged the investment because the school had failed to provide investment certificates. The auditors later established from bank statements that the funds had been invested in the stock market.
She said the money was subsequently transferred back to the school’s operational account when auditors were assessing the school’s response to the audit query.
The committee, however, said the explanation did not resolve the outstanding questions and directed the school to return with the requested records.
The matter will be considered further once the school submits the documents.
