How budget is made a tool of corruption

What you need to know:

  • Budgeting is where need to start if we are to win the war against corruption. But how do we guarantee the integrity of the process?

  • First, EACC should engage a reputable consulting firm to guide and audit the Appropriation Bill process to ensure the credibility of the 2018/2019 budget.
  • Then, all those found to have abused their powers and privileges should be made to face the law, irrespective of status or position.
  • Second, we need to reform the budgeting process itself. As part of this, both the Treasury and the counties should fully adopt zero-based budgeting.

Treasury Cabinet Secretary Henry Rotich last Thursday presented the 2018/2019 budget outlining the government’s Sh3.07 trillion spending plans. It allocated Sh653 billion to the national government’s development expenditure. The counties were allocated Sh372 billion, of which approximately 30 per cent will likely go towards development. This means approximately Sh760 billion of the total will be used for development.

A big chunk of the recurrent expenditure will also go towards buying goods and services, meaning over Sh1 trillion is earmarked for these. But will the goods and services, assuming a 100 per cent absorption of the budget, be worth that amount of money? If a private entity or a household were to budget for the same goods and services, they would probably use a fraction of this money.

Not the government, though! Like in all past budgets, the 2018/2019 undoubtedly contains lines of frivolous expenditure, exaggerated figures, and repeated items that will most likely gulp billions of shillings. In other words, the budget is padded.

LEGITIMATE

Padding means proposing higher spending than the actual estimates. This is done by increasing expenses in order to be granted approval for artificially high funding for the proposed projects, goods and services; some sort of irresponsible foresight where, for example, public officers will be supplied with this newspaper at a cost of Sh120.

Budget padding is corruption. But, although unethical, in this case it is legitimate and legal. Today, much of the graft occurs through budgeting. What will be looted in the next financial year is already sitting nicely in the budget. The Executive and Legislature at both the national and county governments blatantly allocate public money to themselves, brokers or businesses by manipulating the budgets.

How does this happen? The budgeting cycle generally has four key phases – formulation, adoption, execution and control. Although the formulation and adoption stages do not deal with actual money flows, they are crucial parts of a corruption process that manifests itself only in the actual payments or transfer of money at the execution stage.

OVERPRICED

It all starts at these "kutenga" stages, although the "eating" occurs at the "kutender" stage. It is where fraudulent and frivolous allocations, many of which are clearly meant to be reaped in the later stages of the budgeting process, are sown. Some of the allocations are either repeated several times, over-priced, or are vendor-driven, obvious misplaced priorities. It is at this initial stage that graft is planned and budgeted for.

Then comes the next stage: adoption. The Budget Committee, and Parliament in general, come on board after almost a year of deliberations between the "budget mafia" in the line ministries, brokers and vendors. Using its oversight mandate, Parliament is, in theory, expected to expose any corruption that took place at the formulation stage. But, in practice, the adoption stage is where Parliament becomes part of the problem rather than the solution. The Constitution allows Parliament to amend the national budget but unfortunately, MPs use this to influence public policy for their own benefit, meaning more corruption is added at this stage than is detected.

LOOTING

A few years ago, the Budget Committee was accused of allocating each of its members millions of shillings to undertake various projects in their respective constituencies before they could approve the proposals. The institution that is supposed to oversee the budgetary process is, thus, itself caught up in the corruption web.

The execution, the first of the two ex-ante stages, is merely where corruption gets transmogrified into outright looting. It is at this stage that what has been cooked at the formulation stage gets "eaten" via the "kutender" process, where corruption in the budget gets legalised and there is hardly anything one can do to stop the procurement of newspapers for Sh120.

In the final stage, control, the deed is done. The Auditor-General presents Kenya’s deadliest corruption wild cats. We learn at this stage of the billions that have disappeared through  greed and corruption. The Auditor-General will report how we spent over one trillion on projects, goods and services worth a tiny fraction of that amount. We accept and move on, and planning for how to pad the next one begins.

PRIVILEGES

Budgeting is where need to start if we are to win the war against corruption. But how do we guarantee the integrity of the process?

First, The Ethics and Anti-Corruption Commission (EACC) should engage a reputable consulting firm to guide and audit the Appropriation Bill process to ensure the credibility of the 2018/2019 budget. Then, all those found to have abused their powers and privileges should be made to face the law, irrespective of status or position.

Second, we need to reform the budgeting process itself. As part of this, both the Treasury and the counties should fully adopt zero-based budgeting. This would lead to each year's budget being created from scratch, as opposed to the current process where they take the previous year's and then build on it. It will also force the line ministries to justify every expenditure, every year.

The budget has become an instrument of corruption. If the Uhuru administration and the anti-corruption watchdog do not stop the process, then corruption would become legitimate and legal.

Mr Wehliye is a senior adviser, Saudi Arabian Monetary Authority