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CBK must embrace blockchain to stop theft of public money

Monday March 4 2019

Blockchain technology

Blockchain technology basically harnesses cryptography, which is basically secret writing, to encode digital data. PHOTO | FILE | NATION MEDIA GROUP 

FAUSTINE NGILA
By FAUSTINE NGILA
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With increasing appetite for the purloining of public funds and empty theories being coined to justify graft, it is time for new remedies to tame the monster.

Mainstream media reports on the number of scandals Kenya has witnessed since 2013 are shocking. More than Sh1 trillion has ‘evaporated’ from government coffers and landed in people’s pockets.

EXASPERATED

And nobody seems to provide a clear, sensible and executable solution to the plunder. We have even heard President Uhuru Kenyatta admit that every time he tries to fight corruption it fights back, once rhetorically asking, “Sasa mnataka nifanye nini? (What should I do?)”.

The Sh21 billion dams scandal is the latest in a long list of financial falsification, fudging and subversion cases in Kenya, where money meant to curtail water shortage in the dry parts of the country was channelled into the accounts of individuals. This has left Kenyans exasperated since no methodology seems efficient enough to eradicate corruption.

Our learned policy makers seem to have run out of ideas to curb theft of public funds, citing lack of goodwill and claiming that citizens fan the graft fire. But there is a simple solution: Blockchain technology. Yes, a digital ledger system of managing all government transactions in an open and accountable manner, with no loophole for theft without detection, is all we need.

The technology behind it is cryptography, which enables establishment of a digital identity using private (password) and public (username) keys. That provides a reliable system for management of all data records in both dynamic and static forms of registration, transactions and distribution.

RECORDS

Such data is recorded and arranged in an array sequence to one another; thus, changing one piece of data will mean changing all the data, leaving your public key traceable by every other user on the system.

Countries such as Botswana, Liberia, Colombia and Chile have successfully used this technology to lower corruption levels while others like Kenya, South Africa and Zimbabwe still grapple with financial impiety.

Kenya’s government tendering, supply chain management and payment systems have all the chinks for graft to thrive, arising from a transparency gap left agape during their creation.

I admit that, when the government came up with the Integrated Financial Management Information System (Ifmis) in 2003, the blockchain technology was not as vibrant as today. But any management information system as vital as Ifmis can always be updated if it is a financial liability in itself.

Central Bank of Kenya should consider using cryptography to at least reduce the corruption vice and kill impunity. All State-funded projects would be under the close monitoring of blockchain, which would have records of who gets paid what, by who and at what time.

TRANSFERS

Blockchain is so reliable that looters cannot chest-thump before a court of law that they never received overpayments for the supply of goods or services to the government.

If CBK did this, there would be no temptation for pillagers to inflate prices and register fake companies with their kins’ names, claim they won tenders fairly and embezzle and misappropriate funds or get double payment. Trust me, with blockchain, the Sh215 billion Eurobond money would be intact and usage record public.

The embedment of blockchain on Ifmis would scare any IT officer masquerading as a ‘certified ethical hacker’ receiving ‘orders from above’ to transfer huge amounts of money to certain bank accounts without question as long as they get their ‘facilitation fee’.

IT ‘gurus’ who have been colluding with greedy politicians and influential business people to delete records of illegal transfers of billions of shillings would have nowhere to hide.

Those who suborn to clinch government tenders would have to expunge the habit from their memory as none would be given just because ‘you know someone who knows someone at Ifmis’.

Mr Ngila is the online editor, Taifa Leo. [email protected]; @faustination

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