Bishop Gatimu Ngandu Girls High School has been ordered to provide documents explaining a Sh1 million investment in the Nairobi Securities Exchange (NSE) after MPs questioned its low returns and lack of proper documentation.
The National Assembly Public Investments Committee on Governance and Education (PIC-G&E) raised concerns over the investment after the Auditor-General flagged Sh1.58 million recorded as short-term investments in the school’s financial statements for the year ended June 2021.
The audit found that the school had failed to provide investment certificates or other supporting documents, making it impossible for auditors to confirm the existence and completeness of the Sh1.58 million balance.
School Chief Principal Jane Njuguna told the committee that the amount comprised various balances, including Sh1 million invested in stock exchange shares, while the remainder consisted of funds held in different accounts.
She said the investment generated finance income for the school.
However, MPs raised concerns after Njuguna disclosed that the Sh1 million investment had earned only Sh5,381 in dividends over a year.
“Can you imagine we have Sh1 million and this year you got Sh5,000?” committee chairman Dick Maungu (Luanda) asked, questioning whether the investment was providing value for money.
The committee also sought to establish whether the investment had been approved by the National Treasury, as required when public funds are invested.
Auditor-General’s representative Patricia Esipeya told MPs that Section 119(2) of the Public Finance Management Act requires accounting officers to responsibly manage banking arrangements and keep public cash balances at a minimum, rather than allowing funds to remain idle without earning optimal returns.
She added that investments by public institutions require approval from the National Treasury through the parent ministry.
When asked whether the school had obtained Treasury approval, Njuguna requested more time to establish the details.
The response did not satisfy Maungu, who ordered the matter deferred until the school provides the required documentation.
“We need to provide that indeed there is value for money,” Maungu said.
The committee chairman questioned the rationale of a public school investing money while continuing to face financial challenges and seek contributions from parents.
“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,” he said.
Embakasi MP Mark Mwenje was more critical, arguing that public schools should not operate as investment centres.
“Schools are there to educate children. They are not investment centres,” Mwenje said, adding that the Sh5,000 annual return on a Sh1 million investment amounted to misuse of funds.
He argued that the money could instead have been used to address needs directly affecting learners.
Sotik MP Francis Sigei sought to establish whether parents had been involved in approving the investment and whether minutes existed showing that the matter had been presented during a parents’ meeting.
Kilome MP Thaddeus Nzambia also questioned the economic rationale of investing Sh1 million for such a small return.
“How can you invest Sh1 million and just get a return of Sh5,000?” Nzambia asked, describing the situation as unacceptable and demanding details on the investment’s rate of return.
The committee further sought clarification on the companies whose shares the school had purchased.
The school’s bursar, Racheal Wambui, said the investment remained active and that the school received dividend payments through Absa and Centum.
However, Wambui could not immediately identify the specific equities in which the school had invested.
The bursar told MPs that the investment dated back to before 2010 and that she had joined the school in 2022.
She acknowledged that, based on the returns, the investment did not appear to offer value for money.
“Economically, I would say that it could not maybe give the value for money,” she said.
Maungu also questioned how auditors had cleared the matter when school officials appeared unable to provide basic details about the investment.
Esipeya explained that auditors had initially raised the query because the school lacked investment certificates. However, they later verified through bank statements that the money had been invested in the stock market.
She said the investment had subsequently been moved back to the school’s operational account when auditors were evaluating the school’s response.
The explanation, however, did not resolve the committee’s concerns.
Maungu directed the school principal to return before the committee with the relevant investment records, including evidence of Treasury approval, details of the shares purchased, board and parents’ meeting minutes, and information on the investment’s performance.
Kiminini MP Maurice Kakai Bissau also called for former school officials who initiated the investment to appear before the committee and explain the rationale behind 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,” Bissau said.
The committee will revisit the matter after the school submits the requested documentation.
