Over the last decade, one of the most topical issues emerging in debates around Kenya’s public finance management has been on public procurement improprieties. To address these improprieties, Parliament enacted into law the Public Procurement and Assets Disposal Act No. 33 of 2015 and subsequently revised it in 2016. The law is among the most progressive in Kenya’s public finance sector and if enforced to the letter, would aid in averting the loss of public funds. The law addressed previous loopholes on procurement undertaken by public sector institutions, especially direct procurement. For all public spending, the Constitution of Kenya requires the Auditor General to confirm whether public monies have been spent lawfully and effectively. Effectiveness means that the public should get value for every shilling spent.
Since the #COVIDMillionaires expose, an investigative report by the Nation Media Group on COVID-19 related expenditures was aired by NTV, it has generated various responses from the Kenya public, legislators, and the international community. The expose detailed how the Kenya Medical supplies Agency bought nonpharmaceutical supplies at inflated prices from traders in Kenya. Since then, major donors in the health sector have threatened to pull out donor funds from the health sector, due to persistent failure to account for public funds. The Global Fund for instance made a decision not to channel direct cash grants to the government institution going forward, due to fears of corruption. They will instead do the direct provision of supplies. The Fund supports HIV/Aids, tuberculosis, and malaria programs in Kenya.
Failure to adhere to the law
The Nation newspaper reported that specific companies were handpicked by the government and invited to supply various COVID response goods . Even though the Public Procurement and Assets Disposal Act provides for the use of direct procurement by procurement entities, there are specific conditions that have been set out that must be met by accounting officers. Section 103(1) of the PPADA of 2015 specifies that a procuring entity may use direct procurement as allowed, provided the purpose is not to avoid competition. Even though the pandemic required various supplies including personal protective equipment to be sourced urgently, the Kenya Medical Supplies Agency and other entities must show how the public obtained value for money, for the purchases made.
Section 103(2)(e) of the PPADA compels the procurement entity that uses direct procurement for the acquisition of goods, works, or services to show value for every shilling spent. It specifies that a public entity must ensure that the acquisition price for goods, works, and services is fair and reasonable and compares well with known prices of goods, works, or services in the circumstances. Any government official who contravenes the provisions of that section commits an offense.
Failure to Allocate Properly
When the first COVID-19 cases were reported in Kenya in March 2020, it was expected that the Cabinet Secretary in charge of Health would come up with an incidence action plan. An incidence action plan is a document that guides the response for a specific operational period. It contains the overall incident objectives and strategy, general tactical actions, and supporting information to enable the successful completion of objectives. The Incidence Action Plan would then be costed and used to inform policymakers on what needs to be procured based on urgency and risk. The incidence action plan is equivalent to a need’s assessment. The result of this process would provide highlights of COVID-19 specific expenditures. A procurement plan would then be quickly drafted based on the expenditures projected. Several countries prepared such plans and these include South Africa’s $ 26 Billion COVID-19 specific expenditures. Others, like Gabon, committed to the International Monetary Fund and other development partners to undertake the ex-post audit of crisis-related spending and the publication of all crisis-related procurement contracts.
When the #COVID19millionaires expose was aired by the NTV, various lobby groups petitioned Treasury CS Ukur Yattani to publish detailed expenditure information on all funds advanced for the Covid-19 response. Had the incidence action plan been published and publicized as per the law and a COVID-19 specific budget published in the first place, there would have been more transparency which would make the task of scrutiny an easier one. The Daily Nation reports that in under two months, Kenya was able to secure over Sh223 billion for its Covid-19 war chest from the international community in just under 60 days. This was significant, given it is the equivalent of forty-five days of Kenya’s daily revenue collection.
Lack of Adequate Oversight
Treasury CS confirmed that Ksh 130.4 billion out of Ksh 134 billion had been disbursed for COVID-19 related expenditures. Failure by the National Treasury to publish and publicize the COVID-19 related expenditures has hampered the ability of citizens to scrutinize what is being funded by the taxpayer. The highest level of complacency has come from both chambers of Parliament. It was imperative for Parliament to demand the procurement plan and its justification, and reports on purchases made even on a monthly basis. Parliament could have arrested the blatant misuse of public resources before it went too far. Legislators ordered for an audit of Covid-19 funds, five months after the commencement of expenditures. If Parliament had been proactive and interrogated the procurement earlier, the losses made could have been averted. The Health Committees in both Chambers of Parliament are now probing allegations of misappropriation of COVID-19 funds.
Conclusion
The breakdown in Kenya’s public procurement and contracting process in Kenya is the collective failure by various actors tasked with the management of public resources. Parliament must take more responsibility going forward. The ongoing probe ordered by Kenya’s President must show the extent of mismanagement of public resources but also show the beneficial owners.
End Notes
Article 229(6) of Kenya’s constitution requires an audit report by the Auditor General shall confirm whether or not public money has been applied lawfully and in an effective way.
Okari, Dennis. “NTV Weekend Edition: #Covid19Millionaires by Dennis Okari.” YouTube Video. YouTube, August 16, 2020. https://www.youtube.com/watch?v=0_P6h0D-bhM.
Oketch, Angela. “Fund Withholds Sh40 Billion over Graft.” Nation, August 22, 2020. https://nation.africa/kenya/news/fund-withholds-sh40-billion-over-graft–1923472.
“Traders Who Made Millions from COVID Supplies.” Nation, August 3, 2020. https://nation.africa/kenya/news/traders-who-made-millions-from-covid-supplies-1911288.
Kemboi, Leo Kipkogei. “Assessment of Kenya’s Preparedness for the COVID-19 Emergency.” papers.ssrn.com. Rochester, NY, April 27, 2020. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3609153.
Kazeem, Yomi. “African Governments Are Being Forced to Develop Social Welfare Programs in an Economic Crisis.” Quartz Africa, June 23, 2020. https://qz.com/africa/1872046/african-countries-offer-cash-relief-covid-19-welfare-programs/.
Wafula, Paul. “Lobbies Want Accounts of Covid-19 Millionaires Frozen, Probe Hastened.” Nation, August 24, 2020. https://nation.africa/kenya/news/address-covid-19-funds-theft-groups-tell-uhuru-1924854.
Mwere, David. “Push for State to Explain Spending of Covid-19 Funds Gains Steam.” Nation, August 13, 2020. https://nation.africa/kenya/news/explain-covid-19-funds-use-state-told-1918158.
Mutai, Edwin. “Sh9 Billion COVID Cash Lies Idle in CBK Vaults.” Business Daily, August 14, 2020. https://www.businessdailyafrica.com/economy/Sh9-billion-Covid-cash-lies-idle-in-CBK-vaults/3946234-5608698-da3p7qz/index.html.
Mwere, David. “MPs Order Audit of Covid-19 Funds.” Nation, August 25, 2020. https://nation.africa/kenya/news/mps-order-audit-of-covid-19-funds-1925880
Statehouse. “Covid-19 Pandemic: President Kenyatta’s 11th Speech in Full.” Nation, August 26, 2020. https://nation.africa/kenya/news/covid-19-pandemic-president-kenyatta-s-11th-speech-in-full-1926324.
Case Adjournments is one of the key issues that contributes to case backlogs because it reduces the efficiency of courts. An adjournment in a legal setting involves pausing or temporally stopping ongoing proceedings to be continued at a later time, date, or location. It may also indicate the end of the day’s proceedings. Parties involved […]
Introduction In February 2023, the Kenyan government announced its intention to establish a framework that will enable Savings and Credit Cooperative Societies (SACCOs) to extend loans to each other. This inter-Sacco lending framework shall be set up by the Sacco Societies Regulatory Authority (SASRA) and was anticipated to be in effect from August 2023. This […]
While Kenya has long implemented the NHIF (National Hospital Insurance Fund) whose core mandate is to provide medical insurance coverage to all its members and their declared dependants and also to make medical care affordable, enrolment rates, particularly in the voluntary and informal sectors, remain low. Yet, NHIF is the most common type of health […]
Introduction According to the United Nations, Double Taxation Agreements (DTAs) are “bilateral agreements between two countries which allocate taxing rights over income between those two countries thereby preventing double taxation of income. The main objective of DTAs therefore, is to prevent and or eliminate avoidance and evasion of taxes on income and capital by both […]
Courts as Monopolies Access to justice is fundamental in any democratic society, ensuring individuals can pursue their legal rights and seek redress for grievances. However, when courts operate as monopolies, it can have implications for access to justice. Monopolies have exclusive control or dominance over a particular market or industry. Courts are monopolies because they […]
Post date: Wed, Sep 23, 2020 |
Category: Finance |
By: Jackline Kagume, Leo Kipkogei Kemboi, |
Over the last decade, one of the most topical issues emerging in debates around Kenya’s public finance management has been on public procurement improprieties. To address these improprieties, Parliament enacted into law the Public Procurement and Assets Disposal Act No. 33 of 2015 and subsequently revised it in 2016. The law is among the most progressive in Kenya’s public finance sector and if enforced to the letter, would aid in averting the loss of public funds. The law addressed previous loopholes on procurement undertaken by public sector institutions, especially direct procurement. For all public spending, the Constitution of Kenya requires the Auditor General to confirm whether public monies have been spent lawfully and effectively. Effectiveness means that the public should get value for every shilling spent.
Since the #COVIDMillionaires expose, an investigative report by the Nation Media Group on COVID-19 related expenditures was aired by NTV, it has generated various responses from the Kenya public, legislators, and the international community. The expose detailed how the Kenya Medical supplies Agency bought nonpharmaceutical supplies at inflated prices from traders in Kenya. Since then, major donors in the health sector have threatened to pull out donor funds from the health sector, due to persistent failure to account for public funds. The Global Fund for instance made a decision not to channel direct cash grants to the government institution going forward, due to fears of corruption. They will instead do the direct provision of supplies. The Fund supports HIV/Aids, tuberculosis, and malaria programs in Kenya.
Failure to adhere to the law
The Nation newspaper reported that specific companies were handpicked by the government and invited to supply various COVID response goods . Even though the Public Procurement and Assets Disposal Act provides for the use of direct procurement by procurement entities, there are specific conditions that have been set out that must be met by accounting officers. Section 103(1) of the PPADA of 2015 specifies that a procuring entity may use direct procurement as allowed, provided the purpose is not to avoid competition. Even though the pandemic required various supplies including personal protective equipment to be sourced urgently, the Kenya Medical Supplies Agency and other entities must show how the public obtained value for money, for the purchases made.
Section 103(2)(e) of the PPADA compels the procurement entity that uses direct procurement for the acquisition of goods, works, or services to show value for every shilling spent. It specifies that a public entity must ensure that the acquisition price for goods, works, and services is fair and reasonable and compares well with known prices of goods, works, or services in the circumstances. Any government official who contravenes the provisions of that section commits an offense.
Failure to Allocate Properly
When the first COVID-19 cases were reported in Kenya in March 2020, it was expected that the Cabinet Secretary in charge of Health would come up with an incidence action plan. An incidence action plan is a document that guides the response for a specific operational period. It contains the overall incident objectives and strategy, general tactical actions, and supporting information to enable the successful completion of objectives. The Incidence Action Plan would then be costed and used to inform policymakers on what needs to be procured based on urgency and risk. The incidence action plan is equivalent to a need’s assessment. The result of this process would provide highlights of COVID-19 specific expenditures. A procurement plan would then be quickly drafted based on the expenditures projected. Several countries prepared such plans and these include South Africa’s $ 26 Billion COVID-19 specific expenditures. Others, like Gabon, committed to the International Monetary Fund and other development partners to undertake the ex-post audit of crisis-related spending and the publication of all crisis-related procurement contracts.
When the #COVID19millionaires expose was aired by the NTV, various lobby groups petitioned Treasury CS Ukur Yattani to publish detailed expenditure information on all funds advanced for the Covid-19 response. Had the incidence action plan been published and publicized as per the law and a COVID-19 specific budget published in the first place, there would have been more transparency which would make the task of scrutiny an easier one. The Daily Nation reports that in under two months, Kenya was able to secure over Sh223 billion for its Covid-19 war chest from the international community in just under 60 days. This was significant, given it is the equivalent of forty-five days of Kenya’s daily revenue collection.
Lack of Adequate Oversight
Treasury CS confirmed that Ksh 130.4 billion out of Ksh 134 billion had been disbursed for COVID-19 related expenditures. Failure by the National Treasury to publish and publicize the COVID-19 related expenditures has hampered the ability of citizens to scrutinize what is being funded by the taxpayer. The highest level of complacency has come from both chambers of Parliament. It was imperative for Parliament to demand the procurement plan and its justification, and reports on purchases made even on a monthly basis. Parliament could have arrested the blatant misuse of public resources before it went too far. Legislators ordered for an audit of Covid-19 funds, five months after the commencement of expenditures. If Parliament had been proactive and interrogated the procurement earlier, the losses made could have been averted. The Health Committees in both Chambers of Parliament are now probing allegations of misappropriation of COVID-19 funds.
Conclusion
The breakdown in Kenya’s public procurement and contracting process in Kenya is the collective failure by various actors tasked with the management of public resources. Parliament must take more responsibility going forward. The ongoing probe ordered by Kenya’s President must show the extent of mismanagement of public resources but also show the beneficial owners.
End Notes
Article 229(6) of Kenya’s constitution requires an audit report by the Auditor General shall confirm whether or not public money has been applied lawfully and in an effective way.
Okari, Dennis. “NTV Weekend Edition: #Covid19Millionaires by Dennis Okari.” YouTube Video. YouTube, August 16, 2020. https://www.youtube.com/watch?v=0_P6h0D-bhM.
Oketch, Angela. “Fund Withholds Sh40 Billion over Graft.” Nation, August 22, 2020. https://nation.africa/kenya/news/fund-withholds-sh40-billion-over-graft–1923472.
“Traders Who Made Millions from COVID Supplies.” Nation, August 3, 2020. https://nation.africa/kenya/news/traders-who-made-millions-from-covid-supplies-1911288.
Kemboi, Leo Kipkogei. “Assessment of Kenya’s Preparedness for the COVID-19 Emergency.” papers.ssrn.com. Rochester, NY, April 27, 2020. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3609153.
Kazeem, Yomi. “African Governments Are Being Forced to Develop Social Welfare Programs in an Economic Crisis.” Quartz Africa, June 23, 2020. https://qz.com/africa/1872046/african-countries-offer-cash-relief-covid-19-welfare-programs/.
Wafula, Paul. “Lobbies Want Accounts of Covid-19 Millionaires Frozen, Probe Hastened.” Nation, August 24, 2020. https://nation.africa/kenya/news/address-covid-19-funds-theft-groups-tell-uhuru-1924854.
Mwere, David. “Push for State to Explain Spending of Covid-19 Funds Gains Steam.” Nation, August 13, 2020. https://nation.africa/kenya/news/explain-covid-19-funds-use-state-told-1918158.
Mutai, Edwin. “Sh9 Billion COVID Cash Lies Idle in CBK Vaults.” Business Daily, August 14, 2020. https://www.businessdailyafrica.com/economy/Sh9-billion-Covid-cash-lies-idle-in-CBK-vaults/3946234-5608698-da3p7qz/index.html.
Mwere, David. “MPs Order Audit of Covid-19 Funds.” Nation, August 25, 2020. https://nation.africa/kenya/news/mps-order-audit-of-covid-19-funds-1925880
Statehouse. “Covid-19 Pandemic: President Kenyatta’s 11th Speech in Full.” Nation, August 26, 2020. https://nation.africa/kenya/news/covid-19-pandemic-president-kenyatta-s-11th-speech-in-full-1926324.
Case Adjournments is one of the key issues that contributes to case backlogs because it reduces the efficiency of courts. An adjournment in a legal setting involves pausing or temporally stopping ongoing proceedings to be continued at a later time, date, or location. It may also indicate the end of the day’s proceedings. Parties involved […]
Introduction In February 2023, the Kenyan government announced its intention to establish a framework that will enable Savings and Credit Cooperative Societies (SACCOs) to extend loans to each other. This inter-Sacco lending framework shall be set up by the Sacco Societies Regulatory Authority (SASRA) and was anticipated to be in effect from August 2023. This […]
While Kenya has long implemented the NHIF (National Hospital Insurance Fund) whose core mandate is to provide medical insurance coverage to all its members and their declared dependants and also to make medical care affordable, enrolment rates, particularly in the voluntary and informal sectors, remain low. Yet, NHIF is the most common type of health […]
Introduction According to the United Nations, Double Taxation Agreements (DTAs) are “bilateral agreements between two countries which allocate taxing rights over income between those two countries thereby preventing double taxation of income. The main objective of DTAs therefore, is to prevent and or eliminate avoidance and evasion of taxes on income and capital by both […]
Courts as Monopolies Access to justice is fundamental in any democratic society, ensuring individuals can pursue their legal rights and seek redress for grievances. However, when courts operate as monopolies, it can have implications for access to justice. Monopolies have exclusive control or dominance over a particular market or industry. Courts are monopolies because they […]