Auditor General Raises Red Flag Over Sh4.4 bn Payment for Konza City

Auditor-General Nancy Gathungu has raised concerns over direct payments of Sh4.4 billion from a Chinese bank to Huawei for the construction of the Konza Data Centre.

Gathungu says the bank was unable to produce documents to validating the payments it made to Huawei, pointing that taxpayers will lose billions of shillings through that undocumented transaction.

Konza project was initiated in 2017 by the ministry of  ICT and the telecos giant Huawei. The project aims to develop key infrastructures including a national cloud data centre, a smart ICT network, a public safe city, smart traffic solution and a government cloud & enterprise service.

“Annexes to the contract containing the terms and conditions of the contract including timelines, deliverables, and payment schedules in support of the payments were not provided,” Ms Gathungu said.

“Consequently, the validity of Sh4,393,499,464 included in the reported proceeds from foreign borrowings totaling Sh11,273,229,015 for the year ended June 30, 2020 could not be ascertained,” she added in a report dated May 12, 2021.

According to Article 206 of the Constitution, all monies raised or received by or on behalf of the national government should be deposited into the Consolidated Fund but the Chinese lender went against this provision.

“Money may be withdrawn from the Consolidated Fund only in accordance with an appropriation by an Act of Parliament, in accordance with Article 222 or 223 or as a charge against the Fund as authorized by this Constitution or an Act of Parliament,” the Constitution states.

Auditor General Nancy Gathungu [p/courtesy]
The law also bars the withdrawal of money from the Consolidated Fund without the approval of the Controller of Budget.

The Auditor General further stated that the financing agreement for the Konza Data Centre was signed on April 19, 2019, two years after the contract awarded in 2017.

The project delivery agreements signed between Kenya and China for the Konza Data Centre and Smart Cities Project by Huawei and the Jomo Kenyatta International Airport-James Gichuru expressway, the 27 kilometre double-decker road which is under construction in Nairobi worth Sh67.5 billion.

Konza Techno City is part of Vision 2030 flagship projects that began in 2008 with an aim of developing technology-intensive and high-tech industries in ICT, biotechnology, and e-commerce.

Government project that Phase I of the project will create some 17,000 jobs and pump Sh90 billion into the economy. Phase I sits on 410 acres of land and it is distributed into mixed-use (89 acres), university (39 acres), residential (26 acres), and life science (26 acres).

In February 2012, The Konza Technopolis Development Authority (KOTDA) reported that the laying of 500 kilometres of ICT cabling in Konza city was complete.

And by February next year, Konza City will complete horizontal infrastructure including design and construction of roads, parks, sub-services, water treatment plants, sewage treatment plants, and an automatic waste collection system.

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