Kenya Losing $2.5 Billion Annually To Poor Governance And Corruption

NAIROBI, Kenya — Kenya is losing at least KES 270 billion (U.S$2.5 billion) annually due to poor corporate governance, corruption and illicit financial flows, according to a report on Global Financial Integrity published by transparency international.   

But economic and financial analysts say these massive losses would have eased if the government committed itself to a system of transparency and accountability that it signed up to years ago. The failure of the Kenyan government to contribute financially to a national and global open government partnership programme (OGP) is undermining the effectiveness of accountability systems, according to these critics.

For the past eleven years, the East African nation has failed to fully commit to the global OGP by not passing the enabling legislation, which would help to bring a sharper focus on the management of public finances.

“Kenya needs to do better regarding budget transparency,” Said Muchuri Nyaga, executive director of the Local development research institute (LDRI). 

Muchiri is a key member of the OGP technical committee and multi-stakeholders forum.

The government’s weak approach, critics say, promotes abuse of funds sourced for OGP operations, including suspicions that some of the money is being siphoned out of Kenya into individual accounts.

Since 2011, the OGP Kenya national operations have been hosted in three government departments – at the ICT board, the deputy president’s office, and the Office of prime cabinet secretary (OPCS). NAP 5 will be operated from the OPCS office, which is currently contentious since the office does not exist in the Kenyan constitution.  

But Commissioner Lucy K.Ndungu’s office of the Ombudsman said the OGP system has already started having a positive impact.

“The OGP is helping government open up progressively, for example, the implementation of the Access to information act was championed heavily by OGP; it has made information available to citizens on website, open data portal or even on request,” said Commissioner Lucy.  

However, analysts believe that if effectively implemented, the OGP system could help save millions of dollars that Kenya needs to support development projects, building on some positive results some officials are already reporting.

“There are some proud milestones driven by OGP projects, such as access to information, open contracting, open data portal, transparency and accountability through service delivery,” said Philip Thigo, the OGP contact person in Kenya. 

“The OGP projects promote open governance and ensure that projects align with ‘government priorities’,” Mr Thigo added. 

A number of players have assisted Kenya in implementing its OGPs over the years. For instance, the co-creation grant for the national action plan (NAP 4) was received from the OGP Support Unit and Twaweza East Africa.

The Mzalendo Trust, in the co-creation and initial implementation process of OGP NAP 4, was supported by  OGP Support Unit and Twaweza East Africa to the tune of about $90,000 between 2020 and 2022.

According to Mr Jefferson Gathumbi, the finance officer at Mzalendo Trust, other support for subsequent co-creation, documentation and coordination processes were from the National Endowment for Democracy (NED), International Centre for Non-Profit Law and The Ford Foundation. But projects like the Business Registration Services (BRS) and things around Open Contracting are funded through the exchequer & funders/ traditional bilateral funders, According to Mr, Thigo.

Kenya’s public debt stock was projected to reach Ksh 9.4 trillion by June 2023 and to cross the Ksh 10 trillion debt ceiling by June 2024, according to the 2023 Public Finance Management Regulation Amendments. 

Kenya also has  U.S$2 billion in financial support from the World Bank and IMF, which will last until June 2024. Kenya receives millions of dollars in aid, but there are concerns about transparency and accountability.

As indicated on the International Aid Transparency Initiative website, the upward trajectory of donor funding is as follows.

Donor funding & expenditure by organisation in 2022 

Donor funding & expenditure by organisation in 2023

OGP operations have also proven a lucrative way for CSOs and NGOs to continue getting donor funding for projects with claims to support OGP projects in the grand scheme of affairs. Since its inception in Kenya in 2011, OGP national has been convened by three CSOs, the International Commission of Jurists (ICJ), Article 19 East Africa, and the Mzalendo Trust. 

“OGP national action plans commitments have not in the past been included in the Kenyan government’s budget bills. The ongoing process of NAP5 commitments creation have also not been factored in the 2023/2024 financial budget,” said Gitungo Wamere, Senior programs officer at Mzalendo Trust. 

As a result of poor corporate governance systems, Mr Muchiri said that OGP projects are challenging to implement due to limited resources.

OGP is meant to be a co-creation space whereby governments and CSOs design solutions to improve service delivery and influence meaningful policy development. 

The OGP action plans are built on the principle that an open government is more accessible, responsive, and accountable. It is anticipated that this will lead to a good relationship between people and their government. For this principle to be effective, a government must work hard to deliver its commitments to its citizens. 

Governments are expected to set their targets and then independently evaluate and report progress and achievements through the Independent Reporting Mechanism (IRM).

“OGP as an accountability and participatory mechanism provides an equal table around which the government, civil society, citizens and other stakeholders can identify problems, co-create solutions, and in the process build trust,” said Caroline Gaita, executive director of Mzalendo Trust. 

Mzalendo Trust receives co-creation grants to aid in their role as CSOs lead convener of OGP in Kenya. 

“There is a place where CSOs and the government can collaborate to create and hold each other accountable for commitments without compromising the independent roles they both play in society,” said Mr Gitungo Wamere, Senior programs officer at Mzalendo Trust.

Mzalendo sources funds from donors to convene and run OGP-related programs, depending on donors’ interests.

The projects are either driven forward or stalled by financial availability. Mr Wamere said, “OGP Kenya’s multi-stakeholder group is creating a national action plan five (NAP5); the commitments that will be made are not included in the 2023/2024 financial budget. The commitments risk remaining aspirational until they are allocated some resources in the next year’s budget.”

Nandi county, one of the counties in Kenya that have adopted OGP local principles, had in the just concluded NAP 4 made two commitments: to achieve open contracting and civil engagement in public participation. Nandi County intimately had no resources to accomplish these commitments resulting in OGP Kenya National collaborating with HIVOs, and looking for funds to create an open contracting portal system. 

However, up to this time, the second commitment remains a desire Nandi County one day hopes to achieve. However, Wamere is optimistic that many commitments would be met since the NAP 5 would be implemented over four years as opposed to the previous two years. But to achieve this, the Kenyan government needs to be more truthful about financial sources and how much money goes into the OGP projects.

Kenya is not alone in this weakness. Since 2011, governments worldwide have formed many national commitments with targets of between two and three years.  

In Kenya, a Country which prides itself on being a member of the global OGP steering committee, the action plans of the previous NAPs have simply been carried forward to the next action plan. For instance, just concluding the NAP4 of 2020 to 2022 was a continuation of six commitments from the previous three action plans and additions of new ones, such as access to justice. 

The NAP4 labored to promote the adoption of open contracting data standards, implementing the Access to Information Act, and fostering meaningful participation in legislative processes. “The lack of resources cuts across OGP levels, national and local,” Mr Wamere said.

“It is crucial to ensure that during the creation, there is a buy-in with the political class who can champion OGP commitments efforts in the governance,” he added. 

The Ombudsman’s Office says the current drive for transparency, including the disclosures of directors and owners of entities doing business in the counties, should help Kenya.

“We hope all this transparency leads to accountability and improved services,” the commissioner said. 

“This story was produced by Sharon . W. Kiburi. It was written as part of Wealth of Nations, a media skills development programme run by the Thomson Reuters Foundation. More information at www.wealth-of-nations.org. The content is the sole responsibility of the author and the publisher.”

Edited by Alberto Arellano and Jason Reed