Kenya and its lost money

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Various disturbing reports that I have read in Kenyan media and elsewhere this week have made me wonder how different Kenya\’s social and economic life would be if less money disappeared into thin air.

I read about the Controller and Auditor General\’s last two reports, which apparently found that Sh714bn of Kenyan Treasury money over two years was uncertifiable (for readers overseas that is about $8.3bn or £5.1bn).  This means that it was unclear whether or not that money existed, or if it did how it was used.  This includes an unexplained discrepancy of over Sh105bn that may or may not have been in the public account.

I also read that according to the Kenya Association of Manufacturers, counterfeiting costs the Kenyan exchequer – in other words the Kenyan taxpayer – over Sh19bn (while it costs the private sector more than Sh50bn).

Other examples of alleged mismanagement, corruption and theft also cost the Kenyan public billions of shillings every year.  From bribes for public officials and police, to big fraud in Ministries and parastatals. 

The education ministry is a particularly disgraceful saga, as corruption and financial mismanagement are harming Kenyan children and their parents across the country – some UK taxpayers\’ money is involved in that, but far more is Kenyan taxpayers\’ money.  The Mars Group estimates that recent major grand corruption scandals have cost Kenya over Sh700bn (£5bn).  That figure may be an overestimate, or an underestimate – it is for the Government of Kenya to explain to its citizens and taxpayers what is going on with their money.

How does this impact Kenya?  I read just yesterday about a number of social sectors for which a great deal more public money is needed to provide basic services.  Here are three examples:

    * The Ministry of Education, itself subject to ongoing scrutiny over alleged fraud, has suffered a budget cut of Sh1.1bn that would have gone towards free primary schooling.  It is at the same time asking the Treasury for new funds to hire an additional 10,000 teachers.
    * The Water Ministry explains it does not have the funds to provide water to all.  Meanwhile farmers in Isiolo divert rivers so that their communities can gain access to water.
    * HIV/AIDS NGOs call for less reliance on donors and more public and private funding to fight the disease.  UNAIDS estimates that 1.5m people continue to live with HIV/AIDS in Kenya, and many still have no access to life-saving anti-retroviral drugs.

So where is all this money going?  Another newspaper article reports that the Kenya Anti Corruption Commission (KACC) thinks that much of it goes to foreign bank accounts, one way or another. 

That\’s why it has to make sense to pass the draft law that will make it illegal for civil servants to run overseas bank accounts, either directly or by proxy.  And where we have evidence of illegally-gained assets or money in the UK, we will act: we can freeze assets, and even seize them and return them to the country concerned, as we have done with Nigeria and other countries.  But we need the cooperation of Kenyan authorities to do so.  

Measures to stop counterfeiting have also been in the news.  One report this week said that the Kenya Anti Counterfeiting Agency was to be given a new boost to tackle counterfeit crime, which incidentally costs the world Sh48tr.  I hope this bears fruit.  On World Anti-counterfeiting Day on 8 June new focus must be put into stamping out this hugely exploitative and dangerous crime.  Dangerous because the damage is not just economic: a huge number of counterfeit medicines contain no active ingredient at all, thus putting health and lives at risk.

I would not want to suggest that Kenyan institutions aren\’t doing anything.  For example the Ministry of Finance has recently conducted a forensic audit of the discrepancies within the Ministry of Education.  That\’s an encouraging step, and we await the publication of their findings.

All of these are examples of goodwill within government to address the culture of corruption and fraud.  However goodwill is not always enough.  Action is needed to implement the new overseas banking law, not just paying of lip service.  Action is needed to prosecute counterfeiters – they cannot just be ignored. 

And action is needed to hold people to account at all levels when government (and sometimes donor) money is stolen.  The examples above show just how much more money could be available to government programmes benefiting ordinary people, if the holes in the system were blocked up.

We have worked consistently to support Kenyans in the struggle against corruption.  We\’re prepared to take difficult and controversial steps such as banning from the UK senior Kenyans associated with major corruption. 

But this is not a fight that can be won by outsiders.  I would like to pay tribute to the committed and principled people I have met, in civil society, the media, in NGOs at local level, and also in the private sector, who really believe in creating a society based on integrity and transparency.  That is what the vast mass of Kenyans want: that is the spirit of the new Constitution. 

I would be interested in hearing views from the readers of this blog: how can you play your part, how can we help more?

This blog was first published on the FCO website http://blogs.fco.gov.uk/roller/macaire/

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