Auditor General's Report Reveals How Underpricing Rent Cost KAA Billions

A signpost at the Kenya Airports Authority (KAA) headquarters in Nairobi
A signpost at the Kenya Airports Authority (KAA) headquarters in Nairobi

A report by Auditor General Nancy Gathungu on the Kenya Airports Authority (KAA) has revealed how the authority lost billions.

In the report released in June and covering the financial year 2022/2023, Gathungu revealed that there was some gap in the collection of revenue especially in rent and car parking.

She noted that some shops at the Jomo Kenyatta International Airport (JKIA) were underpriced at Ksh6 per square foot annually instead of the market value rate between Ksh20 per square foot to Ksh122 per sq. ft annually.

Meanwhile, another company offered to lease a space area of 64,583 at Ksh6 per sq ft annually for a period of 45 years, the company had declined the Ksh20 per square foot annual rate. The contract began in 2007, which indicates the authority over Ksh15 million to date.

"There was no rate escalation clause for a duration of 45 years to cover inflationary and other economic dynamics thereby disadvantaging the authority," read part of the report.

Travellers receiving services at Jomo Kenyatta International Airport (JKIA).
Travellers receiving services at Jomo Kenyatta International Airport (JKIA)
Larry Madowo

According to the report, there was a company occupying a space estimated at 8,343 sq. ft, but the area was larger than recorded which resulted in an unbilled amount.

Gathungu added that the authority did not explain why the inconsistencies and low rates had not been resolved to reflect the market value.

Additionally, no aeronautical and non-aeronautical revenue was collected from Nakuru and Nyaribo Airstrips despite them being operational at the time under review. KAA did not offer a satisfactory explanation as to why no revenue was collected.

On parking, Gathungu revealed that an inspection conducted in February this year indicated that KAA uses manual systems to issue receipts and at no time no receipts given at all. This was at Kisumu International Airport, Malindi International Airport and Eldoret International Airport.

"It was therefore not possible to ascertain the completeness and accuracy of car park revenue declared and collected of their airports," read part of the report.

At JKIA, the Auditor General uncovered a few weaknesses in the parking services offered. KAA was faulted for relying on the report provided by the service provider rather than relying on the electronic records.

She added that this exposes the authority to loss of funds since it did not conduct any verification and reconciliation to ensure accuracy.

Another weakness identified by Gathungu was that some motorists pay cash at the exit point and the payment is not recorded. The exit point has a manual operation that enables car exit without actual payments further leading to losses.

"The automated car parking managing system at JKIA  is not fully car registration number plate controlled as the system sometimes captures and prints symbols on tickets instead of the specific car registration number. This exposes the authority to loss of revenue because one car ticket can be used by a different car to exit creating a lapse in the security system," she remarked. 

Auditor General Nancy Gathungu speaking during the sensitization Forum on the Auditor General's PFM framework tool on September 4, 2023.
Ndindi Nyoro