A Sh96 million banking arrangement dating back to 2019 has returned to haunt Machakos Governor Wavinya Ndeti’s administration after Senators questioned why millions of shillings belonging to the county have remained tied up with SBM Bank while only a fraction of the money has translated into loans for county employees.
The arrangement, presented by the county as security for an employee car and mortgage scheme, came under fresh scrutiny on Monday, September 28, 2026, when Ndeti and her officials appeared before the Senate Committee on County Public Investments and Special Funds.
At the centre of the controversy is the Sh96 million deposited by Machakos County with SBM Bank.
According to the county’s financial records, the Executive and Chief Officers’ Car Loan and Mortgage Scheme began operating in the 2019/20 financial year and is managed externally by SBM Bank under a memorandum of understanding.
By 2022, official records showed that the county had transferred the entire Sh96 million directly to SBM Bank.
But the money has not translated into an equivalent amount of loans.
The 2022 financial statements recorded only five loans worth Sh15.285 million at that stage. More recent figures presented to the Senate show that only six beneficiaries have received a combined Sh55.3 million, despite the county maintaining the Sh96 million security arrangement.
That gap has now triggered questions over what exactly the county gets in return for committing such a large amount of public money to the arrangement.
Sh96 million locked up while employees provide their own security
Senators were particularly concerned that the county’s money was being used as security for a lending arrangement while employees taking the loans are themselves required to provide security, including title deeds and motor vehicle logbooks.
Committee Vice-Chairperson Beth Syengo questioned why the public funds had apparently generated no interest while sitting under the arrangement.
The Senate has demanded that Machakos demonstrate how the arrangement provides value to taxpayers and whether the terms adequately protect county resources.
Ndeti defended the arrangement, telling Senators that the Sh96 million was not simply sitting idle in an ordinary bank account.
Her explanation was that the money functions as collateral, allowing SBM Bank to advance loans from its own funds to qualifying county employees.
The Governor nevertheless acknowledged concerns over the terms and said the county was engaging the bank with a view to renegotiating the agreement.
That admission has effectively reopened questions about a deal that has been running for years.
If the arrangement is commercially beneficial to the county, why does it require a substantial public cash security while borrowers also pledge their own assets?
And if the structure is no longer giving the county value, why has it taken until 2026 for its terms to come under serious Senate scrutiny?
Those are among the questions now hanging over the Machakos administration.
The paper trail goes back to 2019
The scheme was not created by the current Senate inquiry.
Machakos County’s 2024 financial statements state that the County Executive Committee and Chief Officers’ Car Loan and Mortgage Scheme was established under a Salaries and Remuneration Commission circular and became operational in the 2019/20 financial year.
The same document states that SBM Bank externally manages the fund under an MOU with the county. It also admits that uptake by qualified employees had remained relatively low.
The county attributed the low uptake partly to the duration of the loans, which some eligible employees considered incompatible with the remaining period of their employment contracts.
Machakos subsequently proposed changing the scheme so that all county employees could benefit.
But the central financial structure remained.
Public money had been placed with the bank as security while the bank administered the lending scheme.
The Auditor-General had already raised questions about the Sh96 million balance.
In the audit of the scheme for the year ended June 30, 2021, the Auditor-General recorded Sh96 million as cash and cash equivalents but noted that the cash book showed Sh95,993,760, leaving an unexplained Sh6,240 difference. The Auditor-General said the accuracy and completeness of the cash and cash equivalents balance could therefore not be confirmed.
The issue was not merely accounting.
The audit trail shows that the Sh96 million was a real and longstanding financial commitment by the county.
SBM relationship is older than the Ndeti controversy
There is another important detail that complicates the political narrative around the arrangement.
SBM Bank’s relationship with Machakos public-sector loan schemes predates the current controversy and extends beyond the Executive’s car and mortgage fund.
Machakos County Assembly records show that SBM has also been involved in administering the Assembly’s housing and car loan scheme under an MOU. The Assembly’s 2023 financial statements described SBM as the external fund manager.
Earlier Assembly records also show disagreements over deposits and the terms of MOUs involving the bank.
In one 2021 Assembly debate, officials questioned why a default reserve of Sh6.6 million had been established when the bank already held money under lien to cushion itself against defaults. The Assembly records further questioned why the reserve was earning no interest.
This suggests that questions about the structure of Machakos’ loan arrangements with SBM are not new.
They have been appearing in official records for years.
The “secret deal” question
The latest Senate proceedings have inevitably revived speculation about whether there was a private understanding between the county administration and the bank.
However, the available official documents do not establish a secret personal deal between Governor Ndeti and SBM Bank.
What they establish is an institutional agreement between Machakos County and SBM Bank under which county funds were committed as security for a loan scheme.
That distinction matters.
There is currently no documentary evidence in the public record reviewed for this story showing that Ndeti personally benefited from the arrangement or that SBM withheld county money because of a private agreement with the Governor.
The documented controversy is instead about the terms of a public-sector banking arrangement and whether those terms adequately protect taxpayers.
The Senate has now demanded the paperwork.
Senator William Kisang told the county that verbal assurances would not be sufficient. The committee wants a revised agreement, evidence of negotiations with SBM and the loan book showing how the scheme operates.
That demand could become important because the MOU is effectively the document that should answer the questions now being raised in public.
Who controls the Sh96 million?
Under what circumstances can the county withdraw or replace the security?
Does the money earn interest?
What happens when a beneficiary defaults?
What fees does SBM receive?
What happens to the security when the scheme is terminated?
And why should public funds remain committed to the arrangement when the scheme has had relatively low uptake?
A county already under financial pressure
The timing of the Senate inquiry is particularly uncomfortable for Machakos.
The county is simultaneously facing wider questions about its financial management.
In April 2026, Senate scrutiny of the county’s 2024/25 financial statements highlighted trade payables of about Sh4.3 billion, including obligations that had remained outstanding for more than a year.
The county has also been caught in a political fight over its 2026/27 budget.
Ndeti rejected the Sh17.8 billion appropriation bill passed by the County Assembly, alleging that MCAs had altered the Executive’s spending plan by approximately Sh853.96 million.
At the same time, county employees have complained about delayed salaries, unpaid statutory and third-party deductions and problems with medical cover. Workers staged protests in September over the outstanding issues.
Against that background, the sight of Sh96 million tied up under a loan-security arrangement inevitably raises a basic public-finance question:
Could the county be making better use of its money?
The Senate is now demanding an answer.
What the Senate wants from Ndeti
The committee has directed Machakos to renegotiate the agreement with SBM Bank and submit the revised draft.
It also wants the county to provide the loan book and demonstrate how the Sh96 million security is being safeguarded.
The inquiry could therefore move beyond the question of whether the money is “idle”.
The real issue is whether the arrangement represents prudent management of public resources.
For almost seven years, Machakos has maintained a substantial financial commitment to an externally managed employee loan scheme.
Only six beneficiaries have reportedly received loans totalling Sh55.3 million.
The bank has the county’s security.
Borrowers have their own security.
And Senators now want to know what the county receives in exchange.
For Governor Ndeti, the controversy is no longer simply about an old MOU.
It is about explaining why Sh96 million of public money has remained locked into a banking arrangement since 2019, what the county has earned from it, and whether taxpayers have received value for the deal.
Until the MOU, transaction records, interest arrangements and loan book are placed before the Senate, the most explosive claims about a “secret deal” remain allegations rather than established facts.
But one thing is already documented: Machakos handed SBM Bank Sh96 million as security, and seven years later Senators are demanding to know why the arrangement still makes financial sense.
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