By Camillus Eboh

ABUJA (Reuters) - The use of Nigerian government funds earmarked for assisting displaced people who are living in desperate conditions in the former stronghold of Boko Haram, is to be investigated because of suspicions of corruption, lawmakers said on Tuesday.

More than two million have been displaced, and some 15,000 people have been killed, during the jihadist group's seven-year insurgency in which it has sought to create a state adhering to a strict interpretation of Islamic law.

Last week UNICEF said 75,000 children could die in the next year in northeastern areas previously controlled by the group before it was pushed back by Nigerian troops and others from neighboring countries in early 2015.

Bashir Gabai -- a senator from Borno, the state where the insurgency began -- tabled a motion, passed by the upper house of parliament, to investigate the use of government funds.

"The rather incoherent and largely fragmented state of the procurement process so far points to a vague and corrupt scheme that is not in tune with helping our people in the north east," stated the motion.

The motion stated that 63 trucks carrying grains intended for displaced people in camps in Borno state had been diverted.

It also said 80.7 million naira ($260,323) was paid to a company to refurbish a police station and 203 million naira ($654,839) was paid to another company for the removal of invasive plant species along river channels.

And it said another company received 117 million naira($377,419) for supplying temporary shelters but there was "no record of these shelters anywhere".

The Senate set up a committee, which would report its findings in two weeks and be followed up by a public hearing, to establish how much of the government's funds had been used and how the money was spent.

Boko Haram's move to its stronghold in the northeast's vast Sambisa forest in the last few months has enabled government and aid agencies access to areas that were previously hard to reach.

President Muhammadu Buhari, who took office last year, has vowed to crack down on corruption and crush the Boko Haram insurgency.

Africa's most populous nation, which has the continent's biggest economy, is in recession for the first time in more than 20 years largely due to low oil prices which have slashed revenues from the OPEC member's economic mainstay.

(Writing by Alexis Akwagyiram; Editing by Richard Balmforth)