KISERO: Economic reform way to go if corruption war is to be won - Daily Nation

KISERO: Economic reform way to go if corruption war is to be won

Wednesday June 6 2018

NYS suspects

National Youth Service corruption scandal suspects in court on June 5, 2018. PHOTO | EVANS HABIL | NATION MEDIA GROUP 

I think that the involvement of the National Intelligence Service in the ongoing corruption investigations has made a positive difference.

I have heard people argue that we have too many investigative and audit agencies and that some of them have overlapping mandates.

As a public official today, you can find yourself being investigated by multiple agencies at the same time — the Ethics and Anti-Corruption Commission, Parliament’s Public Investments Committee, Efficiency and Monitoring Unit, Inspectorate of State Corporations, Directorate of Criminal Investigations, National Intelligence Service, Financial Reporting Centre and Assets Recovery Agency.

In my view, however, we need to increase the independence of these institutions and encourage competition between them.

CORRUPTION

In a society like ours, where corruption is systemic and is what oils politics and the difference between a successful and unsuccessful politician is the loads of cash and patronage resources one unleashes on the population,  corruption cannot just be eliminated by jailing many people.

If you choose the toot of locking up culprits, you will soon find yourself without prison space and spending the billions of shillings that should go into building dispensaries and schools on expanding prisons and courts.

A supermarket manager who spends more money on preventing shoplifting by hiring watchmen when the real problem is empty shelves is doomed to stagnation.

Jailing corrupt public officials can serve as a deterrent. But we need to pursue a more robust punishment model that combines jailing, sacking, forced resignations, profiling and naming and shaming the corrupt and barring culprits from holding public office.

FRESH VETTING

Last week, President Uhuru Kenyatta proposed fresh vetting of procurement officers — even introducing polygraphs and lie detectors. It left me with a feeling of deja vu. In 2002, the incoming regime of President Mwai Kibaki suspended all public supplies officers, pending vetting for integrity. Many months later, they were all reabsorbed into the civil service.

We have followed an anti-corruption strategy that is too pre-occupied with new legal frameworks, codes of ethics and conflict of interest.

Because of the nexus between politics and corruption, our best chance of ending graft lies in economic reform — reforming our institutions — and in reducing official discretion by public officials.

Many years ago, we used to have a department in the Ministry of Trade and Industry that was known as the Import Licensing Department.

You could not import anything without of the bureaucrats there. Because of the powers they wielded, they made loads of cash in rent seeking.

TICKET TO RICHES

Then, it was an open secret that working in the department was a ticket to riches. It served more or less as the nursery for the local tycoons we celebrate today.

At the Central Bank of Kenya was yet another key player in the command and control regime of the time, the Foreign Exchange Control Department, whose role was to ration forex. In those days, all foreign exchange in the country belonged to the government.

You had to apply to this department even for foreign currency to purchase and airline ticket. It was an open secret that working here could easily make you a millionaire.

Then we had the Office of the Price Controller. Every year, manufacturers would make applications for price increases. Widespread shortages in the weeks leading to Budget Day were normal.

TOO MUCH POWER

What is my point? It is that when you give civil servants too much power and discretion, the offices automatically become bribery extraction points.

If government officials did not have powers to grant approvals, nobody would give the bribes. If you reduce the number of tax exemptions, waivers and refunds, you will have plugged loopholes for corruption.

If we did away with the fertiliser subsidy — and had not allowed merchants to bring in duty-free maize — the scandals surrounding the National Cereals and Produce Board would not have happened.

Today, the priority of priorities in fighting corruption is undertaking deep reforms in basic accounting and financial management.

FINANCIAL STATEMENTS

Is it not the height of irony that, in this day and age, we still use single-entry, cash- based bookkeeping instead of the modern Enterprise Resource Planning (ERP) that is based on double-entry bookkeeping and a general ledger?

If you wondered why the government does not produce financial statements regularly, it is because it uses an antiquated system where there is no cash. They cannot accrue expenses, hence the perennial shady pending bills.

Economic reform and transparent accounting is where the anti-corruption war should start.