Lack of capacity to execute big projects undoing in first term

Here is my short letter to President Uhuru Kenyatta, with some suggestions on what he ought to consider doing on the economic front as he begins his second and final five-year term.

First, you must accept that the biggest weakness of your first administration has been the lack of capacity to execute projects.

I will give just a few examples.

The school laptop project did not happen.

GALANA-KULALU

Indeed, the best indication that your administration has more or less given up on the project is the massive cut effected in the latest supplementary budget.

The much-touted annuity road project conceived on a model borrowed from India did not see the light of day.

The one million-acre irrigation project did materialise.

The much-touted Silicon Savanna project has not progressed.

Early in the administration, your blue-ribbon task force on parastatal reforms came up with what was widely and positively received as the most far-reaching and imaginative reforms in the public sector since independence.

PARASTATALS

Mr President, you endorsed the recommendations in November, 2013.

Where is the Government Investment Corporation? Where is the government-owned Enterprises Bill that was supposed to anchor all these reforms?

We were supposed to merge all parastatals with overlapping mandates.

For example, all agencies dealing with investment promotion, the Export Promotion Council, Brand Kenya, Ken Invest and the Kenya Yearbook were supposed to be merged.

We were supposed to create a Kenya Development Bank by merging the ICDC, IDB, and KTDC.

CABINET

The proposed grand merger of the Kenya Industrial Estates, Youth Development Fund, Women Development Fund, and Uwezo Fund into a single agency to serve SMEs did not happen.

Where is the Sovereign Wealth Fund we were planning to create to improve management of our national resources wealth?

Mr President, the idea of a Cabinet of technocrats, especially at the principal secretary level with talent from the private sector was not bad.

But in terms of capacity to implement projects, the performance of this regime has been less than satisfactory.

You must maintain an optimal mix of career civil servants and private-sector talent.

ACCOUNTING SYSTEMS
Mr President, reforms are urgently required in public finance management.

Government accounting is in a total mess. You should jettison the integrated financial management system (Ifmis) and to implementing a completely new system.

Why can’t we be publishing quarterly management accounts for ministries as happens in South Africa?

We need accounting systems that can furnish the President, ministers, and principal secretaries with a dashboard that gives them visibility into revenue and expenditure transactions on a real-time basis.

CORRUPTION

If we had a functioning accounting system based on double-entry book keeping and running on an integrated financial management system, the infamous mobile clinics scandal would not have happened.

Unscrupulous civil servants working in cahoots with corrupt contractors were able to process a whopping Sh1 billion on the last accounting day of the financial year.

With a proper financial management system, we will no longer have a National Youth Service-style fiasco where the CEO and Treasury staffers were found logging in arbitrarily and from any location to effect billions in fraudulent payments.

NATIONAL DEBT

Which brings me to the issue of mounting public debt.

The first thing you must do, Mr President is to accept that we are on an unsustainable path.

At the rate we are accumulating debt, a sovereign debt default is not a remote possibility.

Mark you, we already experienced a technical default in October when we had to beg bondholders to reschedule payments to April.

We are living from hand to mouth, borrowing from Peter to pay Paul.

LOANS

Mr President, start by imposing a blanket freeze on all new external or commercial loans.

Freeze all shady commercial agreements and between ministries and foreign contractors whose effect has been to saddle the external debt register with poorly and opaquely negotiated foreign debts.

Lead the country into discussing alternative ways of financing infrastructure such as asset-recycling.

POLICY

Let us also discuss a framework that allows the government to access long-term money from our local pension industry funds to finance infrastructure projects.

The industry is holds $10 billion in long-terms funds. Better and effective management of debt is a priority.

Introduce international best practice in management of debt by creating an independent Treasury Management Agency to take charge of issuance, liquidity management and redemption of debts.

We can then give the agency a long-term target and glide path we want out debt to follow on a long term basis.

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