Last week, Kenya’s President Uhuru Kenyatta publicly declared on television that corruption had become a national security threat. He then proceeded to unveil a string of tough measures to tackle the pervasive graft in the country.
Among other things, the President announced that all companies doing business with county and national governments in the future must sign and adhere to a business code of conduct; all customs and revenue officers will be mandated to undergo a vetting exercise, and banks that are discovered to break anti-money-laundering laws will forfeit their banking licenses while their directors will be held culpable for abetting money laundering.
President Kenyatta’s latest campaign against corruption comes on the heels of the 2013/2014 Auditor General’s report for Kenya which provided insights into the gross financial impropriety and mismanagement of public funds by government officials.About 98.8% of the money spent by Kenya’s ministries in the 2013/14 financial year could not properly be accounted for, according to several news reports, laying credence to the pitiable state of public financial management in East Africa’s largest economy.
Kenyan President Uhuru Kenyatta (Photo credit should read ALAIN JOCARD/AFP/Getty Images)
Some of the more outrageous expenses in government offices have come to light over the last few weeks. In its ornate spending, one county government is said to have paid $11,650 as consulting fee for opening and maintaining the county government’s Facebook account while another county purchased 10 wheelbarrows at $1,050 each. One ministry is implicated in buying a TV set and desktop computer at $17,000 and $11,000 respectively, more than ten times the cost at the swankiest electronic stores in Kenya.
The Ethics and Anti-Corruption Commission, Kenya’s anti-corruption body, says 70% of all corruption in the country is related to procurement. In Kenya today, the most lucrative business opportunities are now government procurement contracts, unpacking a bundle of entrepreneurs either supplying goods or services at inflated prices or cashing in on fictitious tender supplies and purchases. Identified in the Kenya social media circles as “Tenderpreneurs” a portmanteau word of “tender” and “entrepreneur” – many of these entrepreneurs are known to be business proxies of politicians and senior government officials.
In one of his articles in the Business Daily, Kenyan Economic Analyst Tony Watima describes “tenderpreneurship” as the behavioral attribute responsible for distorting the nature of the country’s money multiplier effects. Good service is being replaced by competition for tenders in corrupt practices devaluing the economic growth and development turnover of government-led projects.
The thin line between public expenditure and corruption is traced to a 1967 government policy change that allowed politicians and civil servants to engage in private business. This convergence of motive, opportunity and unethical orientation monopolized power in the absence of accountability.
Kenyan politicians are very wealthy. Kenya’s Deputy president William Ruto is reportedly building an $11 million palatial home and the Nairobi Governor Evans Kidero reportedly just acquired a Rolls Royce.
In an interview, Tony Watima says the country’s economic prospect is quite bleak.
The government is grotesquely borrowing to finance its overwhelming fiscal budget but these public resources are being channeled to investments possessing little value for money thus arraying massive scale of wastage and a tide of corruption.
“Both levels of government have chosen a more expansive role and a big government is the perfect perch for bureaucrats to latch on for their rent-seeking behaviors as we are seeing now,” Says Watima.
Kenya is ranked amongst the world’s most corrupt countries. It came 145 out of 174 nations on the recent Transparency International’s global corruption perceptions index.
What’s more worrying, Watima says, is the bureaucratic system being ring fenced around potential investors and multinationals in a rent-seeking target exercise.
Del Monte, an American company that produces fruit juices, is currently in court challenging the revocation of its 22,500-acre land lease renewal revoked under unclear reasons. Unilever Kenya, which exports tea, and Dominion Farms, a company owned by American businessman Calvin Burgess, are also facing similar threats of license revocation without any plausible reason.
“Samsung had been targeting Kenya as its base to build an assembly plant for the Eastern African region and a top government official asked for a $10m parting kickback for the license forcing them to move to Ethiopia. One governor asked for a $10m kickback – an amount that was larger than the intended capital of the proposed investment,” says Watima.
In June last year, the Kenya government floated a $2.75 billion Eurobond at the Irish Stock Exchange but according to the Auditor General and Controller of Budget, the money was deposited and spent from a mysterious offshore account whose signatories are not known.
Watima retorts: “There is an audaciously ignorant understanding of what constitutes public resources and the need for them to be protected in this country. No one knows who in government is running these foreign accounts, contrary to the law, where the Eurobond proceeds were also deposited. Treasury Cabinet Secretary says $2 billion of that money was pumped into the budget for government spending but there are little traces of it.”
In 2013, a top civil servant in the Office of the President in the previous government was identified later to have been withdrawing $2million daily from the Ministry’s account walking away with more than $30million.
Recently, the Minister for Interior ordered the arrest of the Parliamentary Editor of the Daily Nation, the country’s biggest selling newspaper, over a story heralding alleged corruption in his Ministry.
“The economy is slowly crumbling and government has adopted a see no evil hear no evil reclusive kind of attitude not only in the fight against corruption but in its general management of public policy. We are now seeing this attitude take a repressive form. That’s not how democratic economies are run.” Watima responds.
The government’s current cash crunch experienced and also the recent collapse of some commercial banks, Watima say is a signal of loads of money being stashed out from the country.
Foreign envoys have threatened corrupt public officials with travel bans and asset freezing.
“The big challenge is how this semi-stupor economy will navigate through the election period turbulence ahead,” concludes Watima.