A recent report by Kenya’s Ethics and Anti-Corruption Commission (EACC) paints a rather grim picture of the extent of corruption in Kenya. In the top 10 counties by average bribe size, bribes range from KSH 80,000 (about $800 US) to about KSH 6,000 ($60 US) — in a country where the average monthly wage is just $76. Situations where bribes are most commonly solicited include obtaining basic services such as medical attention or a national identity card. Not surprisingly, Transparency International puts Kenya at 139th out of 168 countries in its latest corruption ranking.
Even a cursory review of Kenyan daily news coverage shows that corruption at all levels (from county to national) and in all its forms (from bribes to graft) is a major issue of concern for the country. Many commentators express frustration at the extent of the problem and the dearth of constructive solutions. Against that background, CIPE and its partner organization, the Kenya Association of Manufacturers (KAM), are working to help change Kenya’s corruption-tainted narrative and provide the private sector with tools to proactively build integrity into business operations.
At the same time, profound challenges persist. Within days of Obama’s visit, Kenya’s Office of the Auditor-General released a troubling report that brought to light some uncomfortable numbers. According to the report, only 26% of money spent and collected by the government has been fully approved in an audit for 2013-2014. The health department alone failed to account for 22 billion Kenyan shillings ($216 million) worth of spending. What is more, over 12,000 false names were discovered on the government payroll.
“There is no development that can be done if it’s not budgeted for.” These are the words of Edwin Kiprono, the president of Kerio Community Trust Fund, explaining the importance of citizen’s alternative budgets in Kenya.
In 2010, Kenya adopted a new constitution, establishing a system of devolution in which more control and responsibility was shifted from the national government to newly-created county-level governments. These governments, which began operating in 2013, now oversee certain aspects of local health care, infrastructure, and education. For the first time, the counties are now expected to raise their own revenue through taxes and fees and establish their own budgets for spending that revenue.
Such a move provides great opportunity for local development to be taken into the hands of local citizens – but it also requires citizens to be engaged and provide input and feedback to their local governments.
Throughout Kenya, CIPE has been working with local partners to develop citizen’s alternative budgets – a system of participatory budgeting made possible through the devolved government system. One of the counties CIPE has been working in is Elgeyo Marakwet – a diverse county in which citizens have various and competing concerns and opinions on what the priorities of their county should be when developing a budget and spending its resources.
Those wishing to send aid, remittances, and investment overseas face exchange rate manipulation and inflated fees when using traditional money transfer services. One emerging alternative to using these services is to transfer Bitcoin internationally. Bitcoin is alluring because financial institutions do not manage its online trade. The transfer of Bitcoin is therefore much less costly than transferring traditional currencies because it bypasses bank fees and regulation.
Several organizations are already beginning to trade and transfer Bitcoin across international borders, and profitable businesses have developed plans to facilitate these trades. Although hesitant investors remain wary of Bitcoin, optimists see the potential to make a big splash in the way $167 billion of foreign aid and $436 billion of global remittances are transferred to the developing world.
Bank-less money transfers are swiftly becoming the norm in the developing world, where less than fifty percent of adults own a bank account. Hassle-free mobile money services such as Kenya’s M-Pesa, Vodacom Tanzania and MTN Uganda are used in lieu of credit and debit cards in these areas. However, the benefits of convenience and low cost mobile transfers are largely limited to domestic transactions.
“The work of development is too important to be left in the hands of governments alone. It is the responsibility of everyone. Especially the business community… Business, like governments, will have to be at the forefront of this change. No one can do it alone.”
In the latest Economic Reform Feature Service article, CIPE partner and Chief Executive Officer of the Kenya Association of Manufacturers (KAM) Betty Maina highlights the crucial role of multi-stakeholder platforms in an enabling business environment.
“The work of development is too important to be left in the hands of governments alone. It is the responsibility of everyone. Especially the business community.” This was Betty Maina’s main point in her speech last week at the 8th Public-Private Dialogue (PPD) Workshop in Copenhagen, Denmark.
The workshop explored how the government, private sector, and civil society organizations can effectively use PPD platforms for collaborative governance and leadership in addressing difficult challenges. Through its collaborative process, PPD provides a structured, participatory, and inclusive approach to policymaking directed at reforming governance and the business climate.
As the CEO of CIPE partner the Kenya Association of Manufacturers (KAM), Maina spoke on the crucial role that multi-stakeholder PPD platforms can play in building a better enabling environment for business. Maina recognized the social, economic and environmental challenges that we face, and the important role the business community can play in tackling those challenges.
“Instinctively people recognize that [these] challenges demand a new kind of leadership, a new way of doing things,” she said. “Business, like governments, will have to be in the forefront of this change. No one can do it alone.”
One need to look no farther than Kenya as an example of the private sector’s role in solving societal problems. During the 2007 election crisis, the business community was crucial in supporting peace efforts and dialogue which helped prevent further violence. The business community was also instrumental in supporting the development of Kenya’s new constitution in 2010 and now plays a critical role in its implementation.
Transparency International’s Corruption Perceptions Index ranks Kenya in a distant 136th place. That low ranking confirms the sentiment often encountered in Nairobi: corruption is widespread in many aspects of life, from bribing a policeman to avoid charges for alleged traffic violations to graft at the highest levels of government, as poignantly described by a British journalist Michela Wrong in her book about Kenyan whistleblower John Githongo, It’s Our Turn to Eat.
Not surprisingly, many segments of the Kenyan society are fed up with the status quo and ready for change. That includes many companies in the private sector that see their growth potential and competitiveness stifled by the highly corrupt environment. Such companies are not waiting for the government to clean up its act and instead are taking the initiative to limit corruption through setting up or strengthening internal compliance procedures.
The CIPE Development Blog provides coverage of the Center for International Private Enterprise and its partner network at work -- highlighting successes, drawing out lessons from failure, and exploring the broader issues of political and economic development. For more information visit CIPE.org.