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"content": "Mr. Speaker, Sir, the lessons learnt from KKV1 have helped to shape the formulation of KKV2. With the benefit of adequate time for preparation, together with expert advice from the World Bank (WB) and the International Labor Organization (ILO), the Government has rolled out KKV2 with a much stronger governance structure. The project has been expanded to target youth who have completed tertiary level education and vocational skills. KKV2, also known as Youth Empowerment Project, is supported by credit from the World Bank to the tune of US$60 million. It has three components; one, labour intensive works funded at US$43 million and implemented directly by line Ministries. Two, private sector internships and training funded at US$15.5 million and implemented by the Kenya Private Sector Alliance (KEPSA). Three, capacity building and policy development funded at US$1.5 million and implemented by the Ministry of Youth Affairs and Sports. The Office of the Prime Minister provides co-ordination, oversight, monitoring and evaluation services to the project under a grant of US$400,000 from the WB. The Office of the Prime Minister has only US$400,000 out of the US$60 million. Mr. Speaker, Sir, I am pleased to report to you that the World Bank has completed its financial management review. In forwarding the results of the review, the World Bank wrote to the Government on October 31st, 2011 emphasizing that the article in the SundayNation newspaper under the headline “ Kazi kwa Vijana – PM Office on the Spot”, was based on a working draft not even a preliminary paper and that the phrase ineligible expenditures meant only that those expenditures were not to be paid with the World Bank funds. The World Bank has acknowledged that the working draft on which the SundayNation newspaper article was based appears to have been leaked by the Bank staff. This is what the Bank has said:- It is addressed to my Permanent Secretary, Dr. Mohammed Isahakia and it is Financial Management Review of the Kenya Youth Empowerment Project. “I write in response to your letter of October 26th 2011 requesting clarification of the results of the Financial Management Review that the Word Bank was undertaking of the Kenya Youth Empowerment Projects. This review inadvertently came to the attention of the public on October 23rd when the Sunday Nation on the basis of what appears to have been a leaked World Bank working document stated that KYEP expenditures totaling Kshs33,061,925 maybe ineligible for World Bank financing. As you know, the Financial Management Review in question aims to determine whether the project team had charged the World Bank Project Account or, in fact, eligible for World Bank financing. Such financing can only be used to pay expenditures that accord with the provisions of the Project Financing Agreement. The expenditures that do not accord with those provisions are ineligible for World Bank financing. More particularly, ineligibility may result when financing is not used for the intended purpose of the project as defined in the Financing Agreement or does not comply with the World Bank policies and procedures or is not adequately supported by documentation. The leaked World Bank document was a working draft that recorded preliminary understanding in an iterative review process that was not yet complete hence the picture that was presented was also incomplete. In light of the Sunday Nation article, we have accelerated our efforts to complete the review process and clarify the status of the expenditure listed in the leaked document. Our further review of those expenditures shows that Kshs20,623,600 was not eligible for World Bank financing because the expenditures either were not in the agreed procurement plan or were not related to an agreed project activity or were for payment to supplement the salary of a Government employee, a type of payment that was not allowed under the World Bank guidelines. The review also found that the expenditures totaling Kshs1,350,266 were eligible for World Bank financing but expenditure totaling Kshs5,577,564.45 were erroneously posted to the World Bank Project Account and subsequently, correctly reposted to the Government account and that expenditures of Kshs5,510,495 were wrongly recorded in the working draft. Annexed matrix provides further details of the ineligible expenditures. The World Bank regrets the fact that an internal working document was shared with a member of the media without authorization. Such behavior on the part of a World Bank staff member may be contrary to the World Bank’s staff rules. The World Bank takes its staff rules seriously and we have already initiated an internal review to determine what occurred in this instance and whether disciplinary action is warranted."
}