Based on the Auditor-General’s reports for the period ending June 30, 2025, the National Social Security Fund (NSSF) is facing serious governance and financial management challenges. Here is a comprehensive analysis of the key issues raised:
1. Asset Management Failures: Idle Prime Properties Worth Sh4 Billion
The Issue: The Auditor-General flagged that NSSF owns at least five prime properties within Nairobi’s central business district (CBD) valued at Sh4.02 billion that have remained completely idle and undeveloped .
Why It Matters: This constitutes a direct breach of the Fund’s Investment Policy Statement, which requires that assets be “structured and invested in a prudent manner at all times” .
Worse, the Auditor-General warned that “beneficial ownership of the properties could not be confirmed” —meaning the Fund cannot legally prove it owns these assets, leaving them vulnerable to grabbers .
Management’s Admission: NSSF CEO Davis Koross conceded that some of the Fund’s title deeds are effectively “worthless papers” because:
· The Fund was duped into buying public land irregularly allocated to private individuals
· Some properties sit on forest land (two on Ngong Road)
· Others are on road reserves (along Jogoo Road)
· The Fund purchased land belonging to Kenya Prisons in Eldoret
2. Lost Member Records: Sh163 Million Belonging to “Ghost Contributors”
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The Issue: The audit reveals that NSSF is holding Sh163 million belonging to retirees whose records have been completely lost or are incomplete . These funds cannot be linked to any identifiable beneficiary.
Additionally: Another Sh81.9 million sits in a suspense account with no documentation to determine rightful ownership .
The Consequence: Retirees who contributed to NSSF for decades cannot access their savings because the Fund literally lost their files. The Auditor-General stated: “Management did not provide satisfactory explanations for the delay in clearing the balances” .
3. Stalled Housing Projects: The Nyayo Embakasi Scandal
The Issue: The Nyayo Embakasi Estate Phase Four project, valued at Sh2.15 billion, was contracted in February 2013 with completion expected by November 2014 .
Current Status (2025): Only 44 out of 324 planned housing units have been constructed—more than a decade later .
Management’s Excuse: NSSF blamed “lack of approval for change of user by Nairobi City County Government.” However, the Auditor-General noted “no evidence was provided to support this explanation” .
The Irony: While this project stalls, NSSF continues committing resources to new ventures—including Sh1.4 billion for projects in Machakos and Kisumu, and plans to borrow Sh1.6 billion for a Kisumu housing project .
4. Irregular Allowances: Sh21.2 Million Paid Unlawfully
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The Issue: The audit reviewed staff costs of Sh5.66 billion and found Sh21.2 million in irregular payments made outside approved public service rules .
Breakdown:
· Sh6.5 million paid in acting allowances to employees serving beyond six months without Board approval
· Sh14.7 million paid to officers on special duty without proper authorization
The Verdict: The Auditor-General concluded that NSSF management “was in breach of the law” . Public Service Commission rules explicitly limit acting appointments to between 30 days and six months, requiring Board approval for extensions. This was ignored.
5. Weak Financial Controls: Pending Bills and Doubtful Debts
The Issue: The audit flagged Sh633 million in pending bills carried forward without satisfactory explanations for delayed settlement .
Additionally: A staggering Sh1.08 billion was classified as doubtful debts—money owed to NSSF that is unlikely to be recovered . This raises serious questions about:
· The robustness of credit assessments
· The effectiveness of recovery mechanisms
· Due diligence when lending member funds
6. Non-Performing Investments: Sh199.4 Million in Loss-Making Assets
The Issue: The audit identified Sh199.4 million tied up in non-performing assets—investments generating no returns .
Share Losses: Additionally, Sh47 million was lost after certain share investments dropped 10.5% in value during the review period .
The Concern: These losses reflect broader investment challenges, with the Fund struggling to meet internal return benchmarks and exposing member savings to unnecessary risk.
7. Systemic Weaknesses: The Pattern of Impunity
Recurring Issues: The Auditor-General’s findings are not new. They reflect systemic, long-standing failures that management has repeatedly failed to address:
>Issue Amount Affected Root Cause
>Idle Prime Properties Sh4.02 billion Poor due diligence, possible fraud in land purchases
>Lost Member Records Sh163 million Inadequate data management systems
>Suspense Account Funds Sh81.9 million Poor record-keeping
>Stalled Housing Project Sh2.15 billion Contract mismanagement, lack of oversight
>Irregular Allowances Sh21.2 million Breach of HR policies, weak internal controls
>Doubtful Debts Sh1.08 billion Weak credit assessment
>Non-Performing Assets Sh199.4 million Poor investment decisions
The Bigger Picture: A “No-Consequence Culture”
While specific to NSSF, these findings mirror a broader problem in public entities: what South Africa’s Auditor-General Tsakani Maluleke calls a “no-consequence culture” where officials implicated in irregular expenditures are seldom held accountable .
For NSSF specifically:
· Management has received these queries repeatedly through audit reports and management letters
· The same issues recur year after year
· No officials have been publicly disciplined
· Contributors continue bearing the risk
What COFEK is demanding
1. Forensic Audit: Given the scale of questionable land purchases and lost records, a full forensic investigation is warranted—not just a financial audit.
2. Asset Recovery: The Sh4 billion in idle properties must be secured, developed, or sold. If titles are indeed “worthless papers,” those responsible must be pursued.
3. Data Modernization: The Fund must urgently digitize and secure member records to prevent further loss of contributor funds.
4. Board Accountability: The Board must explain why acting allowances were paid for extended periods without its approval—and why internal controls failed.
5. Parliamentary Scrutiny: The Public Investments Committee should summon NSSF management to explain why audit queries remain unresolved years after being raised.
TThe Auditor-General’s report reveals an institution where billions in member savings are at risk due to incompetence, weak oversight, and potentially outright malfeasance.
Without urgent intervention, the retirement security of millions of Kenyans hangs in the balance.
