Audit Reveals Gaps in Management of Funds in Nairobi Learning Institutions

In July 2025, a special audit by the Office of the Auditor General exposed significant irregularities in the management of education funds across Kenya, with Nairobi among the counties most affected. The audit, which reviewed financial records from the 2020/2021 to 2023/2024 fiscal years, revealed that over KSh 16.6 billion was disbursed to non-existent or unverified schools. These ghost schools appeared in the National Education Management Information System (NEMIS) but had no physical presence or learners, raising serious concerns about data integrity and financial oversight.
The report detailed that KSh 3.7 billion was sent to 33 ghost schools, while KSh 3.5 billion was overpaid to secondary schools due to inflated enrollment figures. Additionally, 723 out of 1,039 sampled schools were found to have ghost students, leading to exaggerated capitation claims. In Nairobi, several institutions received funds under names that did not match official NEMIS records, with KSh 11.02 million disbursed to 13 such schools. These discrepancies have contributed to stalled projects, overcrowded classrooms, and resource shortages in legitimate schools.
In response, the Ministry of Education introduced new safeguards in September 2025 to tighten capitation disbursement. Schools must now undergo a rigorous validation process, including physical audits, updated enrollment verification, and confirmation of registration with county education boards. Only schools with a substantive headteacher appointed by the Teachers Service Commission (TSC) will be eligible for funding. The Ministry also pledged to publish a school funding transparency portal to allow public tracking of disbursements and promote accountability.
Nairobi County leaders have echoed the call for reform, urging the national government to decentralize oversight and involve local stakeholders in monitoring school budgets. Education stakeholders have welcomed the reforms but emphasized the need for sustained enforcement and community engagement. The National Assembly’s Public Accounts Committee is expected to summon education officials for further questioning, while civil society groups have called for criminal investigations into fraudulent claims. The audit has reignited debate over the need for a unified, transparent education financing framework that ensures every shilling reaches the learner.