HOW CORRUPTION IS HOLDING BACK SUSTAINABLE DEVELOPMENT IN KENYA

Date: 16 November 2018

According to the United Nations Development Programme (UNDP), “Without peace, stability, human rights and effective governance, based on the rule of law- we cannot hope for sustainable development.” Consequently, the United Nations has adopted Peace, Justice, and Strong Institutions as one of its Sustainable Development Goals, which includes fighting corruption to ensure greater economic prosperity- a huge issue that plagues Kenya. Despite gains the country has made in terms of economic growth and poverty reduction in the last several years, rampant corruption continues to impede the full realization of an African success story.     

 

Kenya comes in at number 143 out of 180 countries on Transparency International’s corruption perception index. The only African countries that scored worse on the 2017 report were either in conflict or politically unstable- places such as Somalia, South Sudan, and Zimbabwe. In a 2016 report by the Ethics and Anti-Corruption Commission and National Treasury in Kenya, it was estimated that 1/3 of the national budget was lost through corrupt dealings annually. Throughout the developing world, bribery, theft, corruption, and tax evasion result in losses of US$1.26 trillion per year.

 

Negative consequences of corruption in Kenya

 

One of the most obvious consequences of such losses is that money which is earmarked towards development projects ends up in the pockets of a few individuals. An egregious example was the 2014 Eurobond, which, at the time, was the largest issuance of its kind in Africa. While the funds were supposed to be used for improving Kenya’s crumbling infrastructure, reports indicate that not all of the money was deposited into the National Treasury and instead was transferred outside the country.

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Corruption also leads the proliferation of tax evasion. First of all, when constituents lose trust in their government due to mishandling of tax revenue, they are less likely to want to pay those taxes. Furthermore, states with higher levels of corruption also tend to have a larger underground economy. In addition to not wanting to pay taxes to a corrupt system, employers also want to avoid all of the bribes that may pop up with each step of setting up a business. In fact, in Kenya, the vast majority of the population is employed in the informal sector- 83%.

 

On that note, corruption can inhibit entrepreneurship. According to the World Bank, the unpredictable nature of bribes means that a business owner has a tough time incorporating them into their cost structure, like they would be able to with a tax. This ends up complicating cost control, reducing profits, and “undermining the efficiency of those who must pay bribes to stay in business.” In Kenya, 1 out of 6 companies report having to give gifts and make informal payments in order to obtain an operating license, and 1/3 of companies have to pay bribes to attain construction permits. As a result, the bureaucratic obstacles, unexpected costs, and psychological headaches that come with corruption can dissuade entrepreneurs from starting businesses in Kenya. 

 

How do we fight corruption in Kenya?

 

Corruption is unfortunately a difficult beast to tackle, given that it acts as a system that perpetuates itself. While some anti-corruption legislation has been passed in Kenya- such as the Anti-Corruption and Economic Crimes Act of 2003 and the Bribery Act of 2016- actually enforcing these laws is another issue. This is because there exists a system of impunity in which people are oftentimes not charged for these types of crimes.

 

Thankfully, president Uhuru Kenyatta has recently made it a point to take a stand against corruption. In particular, he has been supporting the Ethics and Anti-Corruption Commission and has encouraged them to work together with the Directorate of Criminal Investigation (DCI) and the Office of the Director of Public Prosecutions (ODPP). In fact, in the last previous financial year, the EACC recovered Ksh488 million worth of illegally obtained cash and assets from individuals and institutions. This was done through both out-of-court settlements and court proceedings.

 

Fighting corruption is also an area in which the international community can exert influence. As Transparency International points out, “Without access to the international financial system, corrupt public officials throughout the world would not be able to launder and hide the proceeds of looted state assets.” If other countries can ensure that their banks and other financial institutions do not accept illegitimate flows of money, then this would cut off an important life source for corrupt officials.

CORRUPTION

 

 

 

On that note, governments that give international aid to developing countries can take extra steps to monitor the outcomes of the money donated and punish those recipient governments that do not comply with anticorruption measures.

 

Furthermore, it is of great importance to create a greater culture of transparency. Organizations such as Transparency International campaign for governments to increase access to information and promote freedom of the press. Citizens can also take a stance for their governments to be held more accountable for corruption. According to Transparency International, “Community monitoring initiatives have in some cases contributed to the detection of corruption, reduced leakages of funds, and improved the quantity and quality of public services.”

 

Finally, the culture of impunity must end, and stiffer punishments must be enacted for those who commit crimes of corruption and receive bribes.

 

If Kenya can reduce its vast problem with corruption, the country will see more of its taxpayer and aid money going into development projects instead of into the bank accounts of a few lucky individuals. It will also make starting a business an easier task, which will promote entrepreneurship and job growth. Creating more accountable public systems will ultimately lead to a Kenya with a more sustainable future; while corruption may benefit a few people in the short-run, continually taking from Kenyans is not a sustainable system in the long-term.