There's nothing to write home about; State House photo op won't end graft

Scanning through the official dispatch from State House this past week in relation to alleged corruption on the judicial arm of government propagated by both the executive and the legislature, one cannot fail to feel sad for the nation.

The tone was not only distasteful of such a deep rooted and systemic evil in the nation, but also the accompanying photo evoked long lost memories of the Tokyo Embassy and NYS I heists. How can citizens of goodwill and sound mind find inspiration from such a dispatch? Coincidentally, the meeting seems to have achieved an unintended outcome of proffering insights into the collapse of high profile corruption cases over the recent several months.

It is irrelevant which arm of government is responsible for the collapse of what case. The fact is the vice is widespread across government complete with adequate collaborators in the private sector, at households and individual levels. The question I keep asking is: How many of us can point figures on matters corruption? Think of majority of voters who took bribes to cast their ballots in one way or the other? How about those who lined up for Christmas goodies from their political leaders?

In all fairness, who should ultimately bear the cost of these shenanigans that have been normalised as a mark of leadership and charity in our society? As I have consistently argued on this page, economic systems harbour no vacuums and offer no free lunches. Everything ultimately has a final resting place where the burden has to be borne.

Astronomical costs

The direct monetary cost of corruption to the economy is well acknowledged and documented within government, media, civil society, diplomatic circles and at households. We are daily witnesses of the vice when we seek government services at both the national and county government level. The police extort bribes from motorists and alcoholic dealers each day in the full glare of the publics.

Several surveys and opinion experts estimate that at least one third of government revenues is lost through corruption and waste. In actual numbers, this could be anything between Sh650 billion and Sh900 billion if not more, each year. For instance, the Ethic and Anti-Corruption Commission (EACC) 2021 National Ethics and Corruption Survey published in May 2022 lists the main concerns of Kenyans based on perceptions to be unemployment, poverty and corruption rated at 56.2, 48 and 43.7 per cents respectively.

Beyond these direct monetary costs to the public coffers, what is never discussed are the indirect costs of corruption to the economy in form of lost investment opportunities, misallocation of capital, suppression of human capital, dislocation of talents and disincentivising the desire to work and entrepreneurial spirit.

Those that plunder our public coffers seem to have this warped belief that the economy can be raped of her productive capacity in perpetuity. Yet history teaches us otherwise. Each society has its endurance limit beyond which the masses rise against the political and bureaucratic elites.

Leo Kemboi, in a blog for the Institute of Economic Affairs dated 7th July, 2021, argues that the reasons why corruption has evolved into a systemic problem is because the executive and Parliament are operating outside the Constitutional limits; there is widespread disregard of the requirements on financial disclosures and accountability principles; and popular narratives that influence fiscal policy.

For example, the ‘BIG 4’ agenda fueled debt-driven corruption-riddled infrastructure projects that have left the country in a debt hole. For KK administration, Bottom-up Economic Transformation Agenda is driving opaque subsidy schemes of fertiliser, edible oils, petroleum imports, the hustler fund and the affordable housing scheme.  

Perhaps a more compelling characterisation of the depth of the indirect consequences of corruption is profiled by Andreas Giallourakis in a White Paper article on Navigating Corruption in Kenya by Nordic companies published on Business-Sweden.com.

This position paper is based on interviews with 23 respondents from 36 Nordic companies with operations in the country conducted on November 2022.  The paper documents that an estimated US$6- 6.5 billion is lost to corruption annually. This would translate to at least Sh960 billion each year at the prevailing exchange rates.  Further, the paper estimates that Africa has suffered capital outflow losses estimated at Sh320 trillion (US$ 2 trillion) over the past five decades due to corruption.

Based on this survey, the most incidences of corruption were experienced while engaging public institutions at various stages. The more prevalent forms of corruption were on harassment by public institutions, procurement fraud, payment process, and permit and license approval processes. Given their strict anti-corruption policies from their home countries, these companies have had to establish varied mitigation measures to survive.

These include establishing routines (codes of conduct) and readiness for corruption; ensuring due process is followed, leaving no gaps in licensing, permits and processes; avoiding business in sectors that have high propensity to corruption; carefully selecting transport routes to bypass known risks; and dealing with the market through experienced partners.

While the overall sentiments from this interview was that the country’s business environment is still friendly and has high entrepreneurial spirit, there were specific cases where some companies have considered relocating to other countries in the region. In another incident, a company had to write off a huge contract as a bad debt for refusing to pay bribes for their invoice to be paid by a public institution.

One may argue that this documented experiences for Nordic companies are trivial or negligible for Sh17 trillion economy (US$110.5 billion) at current exchange rates, but it is a systemic axis of evil that pervades all sectors, and the socio-economic and political fabric of the country.

Dragon slayers

While the President was holding the unholy alliance in the house on the hill, one of the Asian tigers he has often touted us about was dealing perpendicularly with a suspected corrupt minister of government. S. Iswaran, Singapore’s former Transport minister, resigned from the Cabinet, Parliament and from the People’s Action Party this past week.

He was charged with accepting gifts estimated at US$119,000 (Sh19 million) in form of a ride in a private Jet, taking free tickets to ‘Hamilton’ air travel and soccer games in Britain. In addition to  resigning, he agreed to repay back all the salary he has earned as a minister from July 2023 when the investigations started. This is the first incident of a minister charged for corruption over the past 37 years in this City State, that was our economic peer back in the late 1960s.

In another case the same week, SAP – a German software company agreed to a fine of Sh35 billion to US regulators for bribing officials of the Kenya Revenue Authority for contracts and in  six other countries in the region. This is akin to the ‘Kitchen gate’ election procurement scandal where the suppliers of ‘the chickens’ were found guilty and jailed in the UK while the recipients of the chickens have been sanitised and promoted to higher echelons to serve the nation.

To sum it up, imagine the contradictions of Sh67 billion loosely disappearing from public coffers through pension payments, on the one hand, while the same government is violently draining dead pay-slips to raise Sh70 billion; or NHIF casually losing Sh20 billion when the government is glorifying a further 2.75 per cent raid on those dead pay-slips.