Summary

The United States has provided more than $300 million in economic and military aid to Kenya since 1987--a period of mounting allegations of Kenyan government misuse of foreign aid. Inadequate controls and other problems make some U.S. assistance vulnerable to ineffective use or to diversion by the Kenyan government. GAO did not identify specific instances of diversion of U.S. funds or equipment; however, the United States cannot be certain that all assistance is being used for its intended purposes. For example, the Agency for International Development's accountability for local currency funds is inadequate, housing guaranty repayments by the Kenyan government are delinquent, food aid distribution is sometimes delayed, military aid monitoring could be strengthened, and questions exist about the potential use of U.S.-supplied helicopters.

GAO found that: (1) between 1986 and 1991, the United States transferred approximately $125 million in cash and commodities to Kenya to generate local currency; (2) local currency funds remained vulnerable to misuse or diversion due to weaknesses in AID monitoring and documentation controls over program expenditures, withdrawals, and use; (3) AID strengthened its policy guidance for local currency accountability, however, guidelines for existing local currency programs remained vague; (4) AID lacked adequate oversight over whether local currency fund expenditures were meeting program objectives; (5) since 1969, the United States has made guaranteed low-income housing improvement loans totalling $50 million; (6) delinquent housing loan repayments and the growing insolvency of the housing programs have delayed funding for other ongoing U.S. programs; (7) a local Kenyan government board was responsible for delays in food aid distribution; (8) since 1987, the United States has provided $47.3 million in military aid to Kenya; (9) Kenyan inventory controls over U.S. supplied military equipment were often weak and inadequate; and (10) there was a lack of integration between the Kenyan Army helicopter unit and the rest of the Kenyan Army and uncertainty existed about the potential use of U.S.-supplied helicopters.