Massive Plunder of National Treasury Indicates Bad Governance Under Uhuru Kenyatta
The newly released Auditor General’s damning report on Kenya’s “suspected expenditure” totaling KSh450 bllion within Government for the fiscal year 2013-14, has shocked Kenyans a few days after President Obama’s tough-talk on corruption, while visiting the country. Specific Ministries, Departments and Commissions, have accumulated a total loss of KSh66 billion. The Auditor General, Mr. Edward Ouko, has also noted that only 1.2% out of the country’s KSh1 trillion budget can be accounted for. The report shows how far the roots of corruption have permeated the fabric of Kenyan society.
The World Bank’s Report “Decision Time: Spend More or Spend Smart? Kenya Public Expenditure Review [PER] Volume 1 December 2014” raised a red flag on the rising public expenditure and increased public debt. “The reasons are varied and weighty: rising costs of rolling out devolution; costs of financing national security; huge infrastructure investments; funding of flagship projects to fulfill pre-election pledges; and, a hefty public wage bill, among others” (p. ii). The report further states that though Kenya has a robust tax system, the rising budgetary pressure undermines the revenue base whose sustainability is at risk, since the County governments have constrained capacity to generate adequate revenue.
“Kenya’s tax system is heavily dependent on income taxes which account for 50 percent of tax revenue (9 percent of GDP) as consumption taxes underperform at 5.7 percent of GDP generating 25.5 percent of revenues. VAT contributes about a quarter (4.6 percent of GDP) and the balance is from excise and import duty (Figure 4.2). In 2013/14, Kenya revenue/GDP ratio improved by one percentage points to about 19.2 percent. The growth was mainly from PAYE (0.3 percent), corporation tax (0.2 percent) and VAT (0.5 percent). Growth also emanated from non-tax agency revenue which grew by 0.4 percent mainly due to introduction of the railway development levy” (p. 43).
The above paragraph indicates that a high percentage of government revenue is generated from personal income tax, i.e. pay-as-you-earn (PAYE) squeezed from a workforce of some 22 million Kenyans, according to the PER. The Kenya Revenue Authority (KRA) met its revised revenue collection target of Sh963.7 billion at the end of the fiscal year in June 2015. Treasury’s set target for the taxman is KSh1.18 trillion for 2015-16, while the national budget is KSh1.7 trillion.
Where then, is the incentive to pay taxes if KSh450 billion has been suspiciously used to finance personal interest yet development is neglected? When Kenya turned to face East (read China) during Kibaki’s leadership, massive borrowing became the norm since his Government had escaped the scrutiny and conditionalities that come with borrowing from the West. Kenya’s debt burden is unsustainable at this rate, because recurrent expenditure almost surpasses the collected income. Continuous borrowing is thus the only solution. However, plundering State coffers to the tune of billions of Shillings, is the biggest factor leading to massive losses of revenue in Kenya. From time immemorial, sitting governments have never taken the Auditor General’s reports seriously. If such reports are that damning and reveal the deep rot in Government, why bother to have the incompetent, politically-influenced Ethics and Anti-Corruption Commission? The Auditor General’s reports should lead to prosecution.
Massive plunder and poor governance
Kenya’s macro-economic growth barely trickles to the micro level because the political class must keep the voters poor. This enables them to go back and manipulate them with goodies and bogus stories of how the national government has refused to provide money for development at the county and constituency levels. For many years during Kibaki’s presidency, Members of Parliament had full control of the Constituency Development Fund (CDF), yet very few managed to transform their constituents’ livelihoods.
The documentary film “Unfinished Business: What it means to be poor in the land of Presidents” by Maina Kiai, currently the UN Special Rapporteur on the Rights to Freedom, questions what the ordinary Kikuyu have gained from having three presidents from the Mount Kenya region since independence in 1963. Kibaki’s 10-year presidency did not leave any special impact economically in his home area of Nyeri, nor did the late Jomo Kenyatta, in Kiambu. The same can be said of Rift Valley, under Dictator Moi. The presidency wields a lot of power and money, and can be used by wise leaders to transform Kenya into a vibrant and inclusive economy, but that has never been the case. The PER by the World Bank shows that curative health budget allocation favors the rich, while the poor are left with a lower budget for preventive healthcare. Surely, how can a sick nation grow economically? There has to be an equitable budgetary allocation for healthcare to bring inclusive growth.
The presidency is led by two men whose tenure in Kibaki’s government for instance, was riddled with incompetence and suspicious misuse of public funds. Uhuru Kenyatta as Finance Minister encountered a “Computer Error” (discrepancies) amounting to Ksh10.7 billion in the revised Supplementary Budget in May 2009. Although he was let off the hook by Kibaki’s side of Government, this was a sign of incompetence since by the time a budget is being presented in public, it must have passed through serious scrutiny. Other questionable actions by Uhuru at that time include the single-sourced purchase of Passat vehicles for Ministers and top Government officials, in the name of cutting back on public expenditure. Ironically as President, his Cabinet Secretaries drive some of the biggest fuel guzzlers in the country. Is he a principled leader?
Deputy President Ruto is not new to big financial scandals which can be traced back to when he was Organizing Secretary of the infamous Youth for Kanu ’92 (YK92). According to a blog, “Before 1992, Ruto used to idle around the Hilton Hotel, jobless. The Youth for Kanu ‘92 gave him a lifeline. With Cyrus Jirongo, they devoured on millions of stolen money to campaign for Kanu. And when he got a chance to join the government, Ruto went on a looting spree, almost bankrupting the Kenya Pipeline.” (http://www.kenyanentrepreneur.com/is-william-ruto-a-dead-man-walking)
Ruto was later linked to the illegal acquisition of 100 acres of land during the post-election violence in 2007/08, belonging to Eldoret farmer Adrian Muteshi, In 2013, he was ordered by the High Court to vacate the land and pay Ksh5 million to compensate Mr. Muteshi for the loss of earnings during his illegal occupation. William Ruto claimed ignorance in the process of purchasing the land, yet he owns massive property worth billions of shillings, and is smart enough to search for ownership before signing a land deal.
Uhuru and Ruto’s followers have invested so much emotion in supporting them politically, they have become blind to their well-oiled machinery of looting the national Treasury. The two leaders have compressed so much hope into their sycophants by marketing and talking big about economic growth in the service sector and through information and communications technology (ICT), yet the massive plunder of KSH 66 billion indicates that the country is surviving on the basis of robbing the taxpayer to finance their rock star lifestyles. William Ruto does not occupy his official home though it is maintained by the poor taxpayer. Similarly, Kibaki does not occupy his official retirement home in Mweiga, yet it is fully funded by poor Kenyans. This is Kenya gone to the dogs under the leadership of Uhuru, the son of Jomo Kenyatta.