Controller of Budget Raises Questions on SHIF Fund Management

Nairobi – National Treasury Cabinet Secretary John Mbadi has confirmed that the Social Health Insurance Fund (SHIF) and the Housing Levy are not included in the Consolidated Fund but insists that the arrangement is constitutional.

Speaking during an interview on Citizen TV on Wednesday night, Mbadi responded to concerns raised by the Controller of Budget (COB), Margaret Nyakang’o, clarifying that the law allows for the creation of specific-purpose funds outside the Consolidated Fund.

“The Constitution, alongside the Public Finance Management Act, stipulates that all money raised or received by the national government should be deposited into the Consolidated Fund unless a separate fund is legally established for a specific purpose,” Mbadi explained.

He further emphasized that SHIF and the Housing Levy operate under this provision, just like other funds such as the Road Maintenance Fund, commonly known as the fuel levy.

The COB’s recent report had sparked public concern after alleging that funds remitted by Kenyans for SHIF were not being directed to the Consolidated Fund, raising questions about transparency and accountability. However, Mbadi assured that the funds are legally structured and subject to audit.

“The law allows for the creation of funds where money can be channeled directly without passing through the Consolidated Fund. These funds are also audited, so there is no indication of mismanagement unless proven otherwise,” he stated.

To clear any doubts, Mbadi invited both the COB and the Auditor General to conduct a thorough audit of the funds.

“I urge the independent offices to carry out their responsibilities. If SHIF funds were misappropriated, then let the COB or the Auditor General expose it. However, the COB’s role is primarily limited to withdrawals from the Consolidated Fund, and these funds operate independently within the law,” he added.

SHIF, which was rolled out in October 2024, has faced multiple challenges, including low registration numbers and public resistance. The latest revelations from the COB report have further fueled skepticism over the fund’s operations, leading to calls for increased scrutiny.

Despite the ongoing controversy, Mbadi reiterated that the government remains committed to ensuring that public funds are used appropriately and transparently.