What President Uhuru Kenyatta must do to save the taxpayer of huge wage bill

President Uhuru Kenyatta addressing the national dialogue on how to contain the public wage bill.

By MARK KAPCHANGA

NAIROBI, KENYA: President Uhuru Kenyatta’s, and his deputy William Ruto’s, options for managing the rising burden of public wages are running out fast. It now appears they are left with only two — salary cuts and staff retrenchments — both of them political time bombs and in conflict with the Jubilee government’s promise to create jobs for Kenyans. In opting to force pay cuts for civil servants and other State officers, even in the face of the rising cost of living and a weakening shilling, both the President and deputy have set the ball rolling by forfeiting 20 per cent of their monthly pay.

Cabinet members and principal secretaries too have been whipped to follow cue, with the President warning those against the pay slash, to go look for greener pastures.

But as the storm rages over the looming job losses and cuts in pay, questions are being asked on whether the Government has exhausted all opportunities to save jobs, create more where possible, and seal all areas of revenue losses, especially those yanked open by corruption, extravagance and lack of accountability by the authorized spenders.

Experts intimate that the Government can save enough money by eliminating waste and corruption without retrenching civil servants or reducing their pay.

President Kenyatta and his deputy Ruto have volunteered to take a 20 per cent pay cut each, while their Cabinet secretaries will give up 10 per cent of their salaries.

However, The Standard has established that reducing the huge public wage bill is not the magic bullet the Government is making it out to be.

Up to 30 per cent of the Government’s total budget in any financial year is wasted.

SEAL LEAKAGES

This means that in the current financial year, about Sh480 billion will go to waste. Were all leakages sealed, this amount would be enough to cater for the much-discussed public wage bill for a year.

Alternatively, Kenya would not have a budget deficit, and therefore not need to borrow funds or impose VAT on basic commodities. 

According to the Auditor General Edward Ouko, ministries continue to lose money through unsupported, illegal and excess expenditures and misallocation of public funds.

In the 2011/2012 financial year, a number of ministries and departments did not provide documents to support expenditures totaling Sh5 billion.

In the same year, an excess of Sh7 billion as compared to Sh362 million recorded in the previous year, were incurred without Parliament’s approval.

The ministries found guilty of this charge were Roads (Sh68 million), Justice, National Cohesion and Constitutional Affairs (Sh1 billion), Education (Sh5.5 billion), Teachers Service Commission (Sh404 million) and Forestry and Wildlife (Sh1.8 million).

The audit report further revealed majority of ministries’ failure to manage and account for imprests, with some lacking supporting documentation and evidence of imprest balances relating to previous years, but purported to have been cleared during the 2011/2012 financial period.

Long outstanding imprests were not cleared some, which were held by deceased staff and officers who had quit the public service or retired.

As at the end of the financial year in 2012, an imprest balances amounting to Sh2.1 billion had not been accounted for.

The Internal Security ministry had an outstanding imprest of Sh153 million, State House Sh1.2 million, Public Service Sh72 million, Vice President and Home Affairs Sh53 million, Finance Sh491 million, Agriculture Sh773 million, Livestock Development Sh111 million and Public Works Sh224 million.

Record keeping is either weak and inadequate or non-existent.

A number of financial statements, according to the Auditor General, differed materially with the Ledgers and Trial Balances from where ideally they ought to have been derived.

UNAPPROVED REALLOCATIONS

The audit report also unearthed expenditure of Sh741 million allocated to legal fees arbitration and compensation without Treasury’s authority. Interestingly, some of the cases were never even defended by the Attorney General.

The expenditure included Sh244 million incurred on meals, training, transport and procurement of goods and services that were reallocated without Treasury’s permission.

The report also noted of increased theft through varying of tender prices days after approval.

Former Central Bank of Kenya boss Dr Nzioki Kibua pegs the unfortunate scenario to greed in the public sector.

“We have an ill-bred society with a philosophy of stealing from itself,” said Dr Kibua.

“People are now used to doing illegal things within the law especially in the public procurement where prices are unreasonably inflated.”

For the country’s economy to move forward, analysts say the Jubilee regime must focus on cutting duplicative, stale and non-priority programmes.

In addition, it should strive to free the economy of the growing debts and deficits.

They cite the controversial standard gauge railway line, the laptop project and the school feeding programme, which formed the better part of this year’s budget, as some of the low-priority projects that could be shelved.

The Sh24-billion laptop tender for public primary schools awarded to India’s Olive Telecommunications is currently being contested after it was alleged that the education ministry only vetted one of the three bidders.

“Why would we hastily go for the laptops yet there are many primary schools in the country that are under-staffed, have no books and lack classrooms?” asked Consumer Federation of Kenya Secretary General Stephen Mutoro.

IMPROVE SERVICES

The resources available, he said, should primarily be used in improving health, education, security and housing and fighting corruption.

In a past interview with The Standard, Cabinet Secretary of the National Treasury Henry Rotich said new procurement rules were in the offing to cut on inflated pricing of supplies.

Indeed, the Institute of Certified Public Accountants of Kenya Chairman Benson Okundi last month called for a new mechanism to scrutinise procuring entities within ministries, departments and corporations to check on flawed procurement, irregular hiring of public officials and poor management of public funds, arguing that they have the risk of grinding Kenya’s economy to a halt.

“We recommend speedy amendment of public procurement and disposal of assets law to put in place punitive measures for non-compliance,” said Okundi.

Kenyatta University economics lecturer, Dr Emmanuel Manyasa says there is too much duplication of duties and programmes in the Government.

He cites the provincial administrators who he says add no value to taxpayers. 

 He said the pay-cut campaign cannot justify not hiring staff in anti-poverty sectors like education and health.

According to Dr Manyasa, focus should be in performance contracts and monitoring to ensure only those who work get paid, as well cleaning up the payroll to remove ghost workers.

“The pay gap among civil servants should also be closed and the money saved channeled to production,” he said.