UMOJA ESTATE HOUSING GUARANTY PROJECT (AUDIT REPORT)

Evaluation covers the period from mid-1979 to 5/80, and is based on reviews of project documentation; interviews with A.I.D. and Nairobi City Council (NCC) personnel and audit tests of their records; and a final conference with AID/RHUDO/E&SA and NCC. The development of Umoja Estate is one of the most successful A.I.D. development initiatives in Kenya. This success is limited, however, by the problems which are the subject of the recommendations made below, as well as by a political dispute between the Umoja Project Unit (UPU) and the Government of Kenya. It is recommended that RHUDO/E&SA and USAID formally advise NCC that A.I.D. cannot execute a contract guaranty with a U.S. investor for phase two until: (1) homebuyer accounts are brought up to date; (2) a decentralized collection facility has been established; (3) an accounting system has been introduced, and procedures have been developed to pursue delinquent Umoja homebuyers under the terms of their tenant purchase agreements; (4) payments overdue more than two months are assessed penalty charges at least equal to the cost of capital to the UPU; (5) NCC has determined which units have been sublet in contravention of the contractual agreement and applies sanctions accordingly; (6) NCC acts to clean up and maintain the developed public areas at Umoja Estate; (7) NCC ensures that all units are allocated or reallocated according to its eligibility criteria and publicizes this in order to restore A.I.D."s good name; and (8) Umoja"s administrative financial problems are resolved. It is further recommended that the Umoja tenant purchase agreement be amended to include penalty interest charges on late loan payments, and forfeiture of amortization payments by subletting homeowners. Other recommendations are that the availability of rollover funds for project cleanup be ascertained; that NCC agree to provide public services and management funds from its own budget; and verify and/or expedite recordation of tenant purchase.