In the last three decades, Kenya has been bedeviled with public and private sector corruption. In the public sector, the most prominent forms of corruption include loss of public funds and wanton waste.
The severity of public sector corruption forced the drafters of the Constitution of Kenya, 2010 and subsequent legislation to codify the process of how governments buy their goods and services(including human labour) and also how it accounts for the same. The subsequent legislation referred to in this case includes Public Finance Management Act, Public Procurement and Disposals Act, Public Service Commission and Public Audit Act. From looking at the public finance architecture from the Constitutional and legal standpoint, the provisions are comprehensive and set out an elaborate process on how public resources shall be used and accounted for. The provisions in the chapters of Public finance, executive, Judiciary and Parliament can be seen as a bundle of public finance conventions that sought to set principles of how the resources in Kenya are managed. There’s a lot of literature on how corruption has besieged the public sector. To cite a few, they include Kiai(2009)[1], Nyambariga (2016)[2], Kabathi(2009)[3], Schröder(2009)[4], Ndii(2020)[5], andSalmon(2002)[6].
The drafters of the Constitution of Kenya 2010 gave more powers and independence to an entity outside the National Police Service to investigate issues around misuse of state power and resources. The drafters gave the entity (Ethics and Anticorruption Commission) and giving it autonomy by designating it as an independent commission. The 2010 Constitution also introduced the separation of powers where Parliament has bestowed the role of providing checks and balances to all arms of government. The 2010 Constitution went as far as disentangling the powers of the Purse from the Executive and handing them to peoples’ representatives(Parliament). The powers of the purse essentially in this case the fiscal policy. The Constitution has various provisions requiring a confirmation process for high-ranking officials placed in the management of resources. This ensures that the persons placed on the management of public resources are persons of integrity.
In this brief, I adopt the definition of corruption from Vito Tanzi in Begovic (2005) where Corruption is defined as the calculated non-compliance with the arm’s-length principle to derive some advantage for oneself or related individuals from this behavior [7]. This definition of corruption must satisfy these basic principles described as follows.
Despite a new Constitution and legislation that elaborates extensively on the mechanisms on the protection of resources, the loss of resources has exceeded its expectations. In the last decade, the independent state-funded anticorruption agency Ethics and Anticorruption Commission claimed that Kenya loses one-third of its budget annually putting the figure at approximately $6 billion in 2016[8]. This approximation puts Kenya’s loss of public resources as a moving average. The President of Kenya also claimed that Ksh 2 billion is lost daily[9]. On an annual basis, the amount of public money lost would be equivalent to Ksh 730 billion or $6.8 billion. This is equivalent to 7% of Kenya’s GDP in 2020.
Corruption in Kenya exists primarily in two forms. In this article, I distinguish them by the basis of how its manifests.
The argument that the corruption problem in Kenya is a result of a lack of laws or provisions that prohibit wastage of resources or public officials conferring themselves of public resources is very weak. So, the most important question is where did the ball fall? To answer these questions, I identify majors problems that lie on the supply side that made the public sector corruption evolve to grand corruption. They are as follows,
The 2010 Constitution is embedded with the principle of the doctrine of separation of powers which was a major deviation from the previous Constitution. The powers to appropriate funds, determine the vertical and horizontal allocation of resources, raise revenue and approve borrowing was left to Parliament. At the County level, the power to raise revenue and appropriate expenditures was left to County Assemblies. On appropriations, Article 221(3) requires the accounting officers of legislature and Judiciary to submit estimates to Parliament for approval. The doctrine of separation of powers intended to separate the powers and functions of the executive and parliamentary branches to enhance accountability and transparency on the use of public resources.
Between 2010 and 2019, National Treasury submitted a budget on behalf of branches of government. Although the Public Participation was robust, the Public Finance Process was in contravention of the Constitution. When National Treasury began budget cuts in 2019, the Hon Chief Justice David Maraga in a public statement issued to the public instructed the Chief Registrar of Judiciary to take budget proposals directly to Parliament instead of National Treasury[11]. The move by Chief Justice Maraga reinforced the Constitutional principle in the budget-making process requiring each branch of government to submit estimates to the people’s representatives to make decisions.
Parliament enacted the Constituency Development Fund and put it under the National Government Constituency Development Fund (NGCDF) Board while members of the National Assembly acted as patrons for the fund. The fund is used to provide public sector entities. In doing so, Parliament was performing the functions of the executive branch of government. To make it worse, CDF was set at 2.5% of all the national government’s share of revenue as divided by the annual Division of Revenue Act enacted according to Article 218 of the Constitution as per section 4(1) an of the National Government Constituencies Development Fund Act of 2015[12]. This provided members of Parliament with the incentive to raise the budget annually.
The Institute of Economic Affairs carried out a study that identified that the most number of queries was the failure to reconcile books of accounts[13]. This implies that the entities failed to adhere to report sufficiently and meet the reporting standards as required by the financial management. By Ministries, departments and Agencies failing to report sufficient financial information, it misinformed the Parliament which is expected to provide checks and balances on other arms of government.
In the earlier 2000s and the runup to 2012, the clamour for more development projects became faster. This was reflected in Vision 2030 which outlined comprehensive infrastructure plans amongst other plans. The period after 2013 to present witnessed rapid fiscal expansion to cater for infrastructural expansion. The premise is that building infrastructure could stimulate economic growth more quickly. Some of the infrastructure projects undertaken in the last decade include Rail, Roads, Ports, Pipelines. In the end, procurement fraud became a more pervasive form of corruption. Projects were too many and too rapid, with fewer meeting the value for money principle outlined in the Constitution. This ended in the non-delivery of contractual items christened as, “government bought air”.
Corruption has evolved to be a market phenomenon with many players on both the demand side and supply side. Aside from requiring the executive and parliament to live within the Constitutional limits, disciplining spending, and robust project approval process, there’s a need for a radical measure that will ensure that the runaway corruption will stop.
End Notes
[3] Kabathi, Mwangi. 2009. “Public Service Besieged by Corruption.” June 2009..
[8] Miriri, Duncan. “Third of Kenyan Budget Lost to Corruption: Anti-Graft Chief.” Reuters, March 10, 2016. https://www.reuters.com/article/us-kenya-corruption-idUSKCN0WC1H8.
[10] Tenderpreneurs is a Kenyan term for politically connected persons participating in unlawful tendering processes with the aim to confer themselves public property contrary to the law and the Constitution.
[12] “The National Government Constituencies Development Fund Act, 2015.” 2015. Kenyalaw. 2015..
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Post date: Wed, Jul 7, 2021 |
Category: Corruption |
By: Leo Kipkogei Kemboi, |
In the last three decades, Kenya has been bedeviled with public and private sector corruption. In the public sector, the most prominent forms of corruption include loss of public funds and wanton waste.
The severity of public sector corruption forced the drafters of the Constitution of Kenya, 2010 and subsequent legislation to codify the process of how governments buy their goods and services(including human labour) and also how it accounts for the same. The subsequent legislation referred to in this case includes Public Finance Management Act, Public Procurement and Disposals Act, Public Service Commission and Public Audit Act. From looking at the public finance architecture from the Constitutional and legal standpoint, the provisions are comprehensive and set out an elaborate process on how public resources shall be used and accounted for. The provisions in the chapters of Public finance, executive, Judiciary and Parliament can be seen as a bundle of public finance conventions that sought to set principles of how the resources in Kenya are managed. There’s a lot of literature on how corruption has besieged the public sector. To cite a few, they include Kiai(2009)[1], Nyambariga (2016)[2], Kabathi(2009)[3], Schröder(2009)[4], Ndii(2020)[5], andSalmon(2002)[6].
The drafters of the Constitution of Kenya 2010 gave more powers and independence to an entity outside the National Police Service to investigate issues around misuse of state power and resources. The drafters gave the entity (Ethics and Anticorruption Commission) and giving it autonomy by designating it as an independent commission. The 2010 Constitution also introduced the separation of powers where Parliament has bestowed the role of providing checks and balances to all arms of government. The 2010 Constitution went as far as disentangling the powers of the Purse from the Executive and handing them to peoples’ representatives(Parliament). The powers of the purse essentially in this case the fiscal policy. The Constitution has various provisions requiring a confirmation process for high-ranking officials placed in the management of resources. This ensures that the persons placed on the management of public resources are persons of integrity.
In this brief, I adopt the definition of corruption from Vito Tanzi in Begovic (2005) where Corruption is defined as the calculated non-compliance with the arm’s-length principle to derive some advantage for oneself or related individuals from this behavior [7]. This definition of corruption must satisfy these basic principles described as follows.
Despite a new Constitution and legislation that elaborates extensively on the mechanisms on the protection of resources, the loss of resources has exceeded its expectations. In the last decade, the independent state-funded anticorruption agency Ethics and Anticorruption Commission claimed that Kenya loses one-third of its budget annually putting the figure at approximately $6 billion in 2016[8]. This approximation puts Kenya’s loss of public resources as a moving average. The President of Kenya also claimed that Ksh 2 billion is lost daily[9]. On an annual basis, the amount of public money lost would be equivalent to Ksh 730 billion or $6.8 billion. This is equivalent to 7% of Kenya’s GDP in 2020.
Corruption in Kenya exists primarily in two forms. In this article, I distinguish them by the basis of how its manifests.
The argument that the corruption problem in Kenya is a result of a lack of laws or provisions that prohibit wastage of resources or public officials conferring themselves of public resources is very weak. So, the most important question is where did the ball fall? To answer these questions, I identify majors problems that lie on the supply side that made the public sector corruption evolve to grand corruption. They are as follows,
The 2010 Constitution is embedded with the principle of the doctrine of separation of powers which was a major deviation from the previous Constitution. The powers to appropriate funds, determine the vertical and horizontal allocation of resources, raise revenue and approve borrowing was left to Parliament. At the County level, the power to raise revenue and appropriate expenditures was left to County Assemblies. On appropriations, Article 221(3) requires the accounting officers of legislature and Judiciary to submit estimates to Parliament for approval. The doctrine of separation of powers intended to separate the powers and functions of the executive and parliamentary branches to enhance accountability and transparency on the use of public resources.
Between 2010 and 2019, National Treasury submitted a budget on behalf of branches of government. Although the Public Participation was robust, the Public Finance Process was in contravention of the Constitution. When National Treasury began budget cuts in 2019, the Hon Chief Justice David Maraga in a public statement issued to the public instructed the Chief Registrar of Judiciary to take budget proposals directly to Parliament instead of National Treasury[11]. The move by Chief Justice Maraga reinforced the Constitutional principle in the budget-making process requiring each branch of government to submit estimates to the people’s representatives to make decisions.
Parliament enacted the Constituency Development Fund and put it under the National Government Constituency Development Fund (NGCDF) Board while members of the National Assembly acted as patrons for the fund. The fund is used to provide public sector entities. In doing so, Parliament was performing the functions of the executive branch of government. To make it worse, CDF was set at 2.5% of all the national government’s share of revenue as divided by the annual Division of Revenue Act enacted according to Article 218 of the Constitution as per section 4(1) an of the National Government Constituencies Development Fund Act of 2015[12]. This provided members of Parliament with the incentive to raise the budget annually.
The Institute of Economic Affairs carried out a study that identified that the most number of queries was the failure to reconcile books of accounts[13]. This implies that the entities failed to adhere to report sufficiently and meet the reporting standards as required by the financial management. By Ministries, departments and Agencies failing to report sufficient financial information, it misinformed the Parliament which is expected to provide checks and balances on other arms of government.
In the earlier 2000s and the runup to 2012, the clamour for more development projects became faster. This was reflected in Vision 2030 which outlined comprehensive infrastructure plans amongst other plans. The period after 2013 to present witnessed rapid fiscal expansion to cater for infrastructural expansion. The premise is that building infrastructure could stimulate economic growth more quickly. Some of the infrastructure projects undertaken in the last decade include Rail, Roads, Ports, Pipelines. In the end, procurement fraud became a more pervasive form of corruption. Projects were too many and too rapid, with fewer meeting the value for money principle outlined in the Constitution. This ended in the non-delivery of contractual items christened as, “government bought air”.
Corruption has evolved to be a market phenomenon with many players on both the demand side and supply side. Aside from requiring the executive and parliament to live within the Constitutional limits, disciplining spending, and robust project approval process, there’s a need for a radical measure that will ensure that the runaway corruption will stop.
End Notes
[3] Kabathi, Mwangi. 2009. “Public Service Besieged by Corruption.” June 2009..
[8] Miriri, Duncan. “Third of Kenyan Budget Lost to Corruption: Anti-Graft Chief.” Reuters, March 10, 2016. https://www.reuters.com/article/us-kenya-corruption-idUSKCN0WC1H8.
[10] Tenderpreneurs is a Kenyan term for politically connected persons participating in unlawful tendering processes with the aim to confer themselves public property contrary to the law and the Constitution.
[12] “The National Government Constituencies Development Fund Act, 2015.” 2015. Kenyalaw. 2015..
In principle, Excise taxes are levied on goods and services whose consequences are considered socially undesirable. Most developing countries, including Kenya, rely on excise taxes for revenue. Furthermore, it can be used to achieve public health goals by discouraging the consumption of harmful products such as alcohol and tobacco, thereby addressing negative externalities of that […]
The Central Bank of Kenya Act, (Cap 491) created the Central Bank as one of its autonomous agencies. The Central Bank’s mandate is to develop Kenya’s monetary policy, foster price stability, print money, and carry out other tasks assigned by a parliamentary act. The Constitution stipulates that the Central Bank of Kenya shall not be […]
The 12th Parliament has had its share of successes and setbacks. The sheer volume and diversity of legislation passed by the 12th Parliament demonstrate the effort made by legislators and committees in enacting both consequential and inconsequential government policies. The problem with increased volume is that it adds legal obligations to the already existing legal […]
A look at the total income taxes collected by the government of Kenya in the Financial Year 2020/21 shows that collectively, working Kenyans paid a total of Ksh 694.1 billion for personal income taxes. While this is easy to compute, many Kenyan citizens are aware of how much of their income goes into taxes on […]
What Are Six Policy Lessons that Prof. Yuen Yuen Ang Thinks China’s Experience has Offered the World? Yuen Yuen Ang identifies six policy lessons that China has offered the world. The six lessons are Experiment, within boundaries, Induce incremental changes broadly and in an interconnected way In the first case, define success narrowly. Give all […]