By Billy Mijungu
There is a small paragraph in the Public Finance Management Act that most Kenyans have never heard of, yet it has silently caused some of the biggest financial mysteries in our country. Hidden in Section 50 subsection 7 paragraph (d) is a rule that allows part of any loan Kenya borrows from abroad to be deducted at the source to pay things like fees, commissions, arrangers, book runners, lawyers and rating agencies. These charges are removed abroad long before the money reaches Kenya.
At first this sounds normal. But it is one of the largest loopholes in our financial laws because the deductions happen outside the country and never pass through the Consolidated Fund. That means Parliament, the Auditor General and the public cannot see them. Kenyans hear that a certain amount has been borrowed, but what finally arrives at home is far less. Yet the country must repay the full amount plus interest. This is how corruption hides in plain sight. Money disappears before it even touches Kenyan soil, and because the deals are negotiated quietly and abroad, no one truly knows who agreed to what or whether the charges were reasonable.
This loophole is the reason the first Eurobond became a national riddle. The government proudly told Kenyans how much had been raised. But when Kenyans asked to see the money or understand where it had gone, the answers never lined up. The figures kept shifting because some of the money had already been taken at the source under this same provision. Since the deductions were made abroad, giving a clear and simple account of the funds became almost impossible. That confusion fuelled mistrust. Kenyans asked honest questions: which account received the money, who took what, why the numbers kept changing and why no clean paperwork was produced. The truth is that the problem began long before the money reached Nairobi. It began with a law that allows a loan to shrink quietly on foreign soil.
This is why the Ethics and Anti Corruption Commission must step in. Modern corruption is no longer carried in brown envelopes; it hides in contracts, legal phrases and financial structures that look harmless. EACC must investigate how much Kenya has lost through these external deductions and who benefits from them. Most importantly, it must push for an amendment to ensure every coin of every loan first enters the Consolidated Fund so that all fees are publicly declared and approved before signing.
Kenya cannot keep repaying money that never fully reaches its people. Closing this loophole is not just a legal fix it is a step toward restoring trust, accountability and honesty in public finance.
Members of Parliament should wake up and Amend.
