Experts: Theft, waste likely to silence calls for austerity

Sunday March 11 2018

Integrity Centre, headquarters of the Ethics and Anti-Corruption Commission: Prosecution agencies and procurement watchdogs have failed to curb graft in the country. FILE PHOTO | NMG

Integrity Centre, headquarters of the Ethics and Anti-Corruption Commission: Prosecution agencies and procurement watchdogs have failed to curb graft in the country. FILE PHOTO | NMG 

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The shock announcement by Treasury Cabinet Secretary Henry Rotich last week that the government is facing difficulties financing some of its development projects has shifted the spotlight on runaway wastage in government and the haemorrhage of State resources through mega graft.

While appearing before the Senate committee on Finance and Budget Wednesday, the Treasury secretary also revealed a proposal to slash funds allocated to counties by between Sh15 billion and Sh17 billion.

Mr Rotich blamed the country’s financial situation on failure by the Kenya Revenue Authority to hit its projected collection targets.

“We have discussed with the KRA on how to catch up by tightening the tax net on the domestic and customs revenue,” Mr Rotich told the committee chaired by Mandera Senator Mohamed Mohamud.

“We need to discuss with you (Senators) and governors that the figure we put on the table is not feasible based on the challenges that I have explained.”

The Treasury wants Parliament to review the Division of Revenue Act, 2017 to cut the current budget for national and county governments following revenue shortfall of Sh84 billion.

Treasury secretary says the annual allocation to county governments will be reduced by Sh18 billion while  that of the national government will be cut by Sh60 billion.

“We are looking at Supplementary II to cut expenditure at both levels of government, which must contribute to lowering of budget deficit so that we can match revenue with expenditure. We have discussed with governors to also institute austerity measures.

“We want every institution to tighten its belt. We have adopted a tighter fiscal framework going forward and pursue revenue enhancement measures going forward,” Mr Rotich told the committee.

But experts and analysts now say that the need for cuts in benefits and public services even as evidence shows that some rogue State officials continue to benefit personally from kickbacks on inflated contracts is misplaced.

“Corruption costs Kenyan economy dearly,” said Consumer Federation of Kenya secretary-general Stephen Mutoro.

Kenya loses a third of its national budget — about Sh666 billion — to theft and wastage every year, reported Ethics and Anti-Corruption Commission in 2016.

According to Mr Mutoro, while austerity measures are well intended, implementing them amid run away graft makes nonsense of fiscal consolidation.

“Austerity measures will achieve quick wins. Regrettably austerity measures cannot succeed in cases where corruption is entrenched. We must start assigning individual responsibility for public servants involved in wastage and misuse of public resources and offices,” Mr Mutoro said.

A glimpse of Kenya’s recent history of multi-billion-shilling scandals shows prosecution agencies and procurement watchdogs have failed to curb runaway graft, say anti-corruption campaigners.

To be sure, the EACC recovered less than one per cent of stolen public cash last year.

The anti-graft agency recovered assets worth Sh256 million out of a possible Sh57.1 billion of public funds that was being pursued in the fiscal year ended June 2017, a 63.45 per cent decline from the previous year.

The figures from the EACC’s annual report of activities only recorded a 0.44 per cent success rate in recovery of public funds and assets, a sharp indication of how far Kenya still has to go in bringing corrupt individuals to book.

In the financial year ended June 2016, the EACC recovered Sh700.58 million out of Sh93.326 billion that was under probe, indicating a 0.75 per cent success rate.

Last year President Uhuru Kenyatta promised to save Sh1 trillion in five years by reducing wastage in public service, and resolving corruption cases in six months, if re-elected.

The promise gains urgency if a look at questionable spending in recent years by State departments is anything to go by. The government cannot account for Sh40 billion in public funds, according to the recent damning report from the Auditor General highlighting the country’s failure to crack down on graft and misuse of State resources.

The report for the 2015/2016 financial year listed a litany of misspending and poor accounting with only less than a third of financial statements of ministries, departments and agencies that were scrutinised being clean, according to the report presented to Parliament.

Kenya still ranks among top 50 most-corrupt countries in the world, a report in the Global Corruption Perception Index (CPI 2017 ) shows.