Bishop Gatimu Ngandu Girls High School has come under scrutiny over a Sh1 million investment in the Nairobi Securities Exchange (NSE) after the school revealed it earned only Sh5,381 in dividends.
The investment was questioned by MPs on Tuesday during a review of the school’s accounts, with the committee seeking to establish whether the decision was properly approved and whether it offered value for money.
Chief Principal Jane Njuguna told the committee that the Sh1 million remained invested in the NSE and generated income for the school.
“The investment amount in the balance is Sh1 million in the NSE, which generates finance income to the school,” Njuguna said.
Asked about the returns, she disclosed that the school received Sh5,381 in dividends during the year.
“This year, we got Sh5,381 as dividends,” she said.
The amount raised concern among MPs, who questioned the decision to put Sh1 million into an investment that generated such a small return.
Thaddeus Nzambia questioned the financial sense of the investment, while Dickson Maungu called for a closer assessment of the returns.
“Let’s look at the value for money. Five thousand in one million what percentage is that in terms of return? We may need to really dig deep into that,” Maungu said.
The committee also sought to establish the source of the money used for the investment. Njuguna said the school had accumulated funds through income-generating activities, including coffee farming.
“The school had income-generating projects. They were growing coffee,” she said.
She, however, said the school no longer had the land required to continue the coffee farming activity.
MPs further questioned whether parents had been consulted before the investment was made.
Francis Sigei asked the school to provide minutes of its annual general meeting to show whether parents had approved the decision.
“I would like to know whether this issue was tabled in the AGM for parents, because we would like to have minutes for public participation on parents agreeing to invest this amount of money in the NSE,” Sigei said.
The committee also raised questions about whether the school’s Board of Management had the authority to make the investment without approval from the National Treasury.
The Director of Audit at the Nyeri Bureau, Esipeya, told MPs that such approval was required through the parent ministry.
“The approval has to actually be obtained from the National Treasury through the parent ministry,” Esipeya said.
Auditors had earlier raised concerns over the investment after the school reported short-term investments of Sh1,583,111 as of June 30, 2021, but could not initially provide adequate documentation.
The school later provided records showing that some of the funds had been invested in the NSE before being transferred back to its operational account. Auditors also reviewed bank statements and Board of Management approval.
However, MPs remained concerned about the low returns. Bursar Racheal Wambui admitted that the investment may not have delivered value for money.
“Economically, I would say that it could not maybe give value for money,” she said.
Njuguna confirmed that the investment remained active.
“The investment is still on.”
The committee directed the school to provide documents detailing the approvals, equities held, relevant minutes and returns from the investment.