Ideas & Debate

Insulate budgeting from mafias to end vicious corruption cycle

rotich

Treasury secretary Henry Rotich. Corruption in our public sector starts right from budgeting. PHOTO | FILE

Summary

  • Fraudulent and frivolous allocations normally precede the ‘eating’.

Never had I heard the words budget padding, said President Muhamadou Buhari of Nigeria last month following fraudulent exaggeration of the costs of budgeted items and wholesale injection of questionable line items between when he approved it and when he delivered it.

As Mr Buhari was busy poking past alleged looters of public funds out of their holes, a budget mafia was busy padding his budget with billions of naira, which he knew nothing about.

He later fired the Head of the Budget Office. Padding the budget means making the proposal larger than the actual estimates.

This is done by increasing expenses so as to be granted approval for an artificially high level of funding for the proposed projects. It is in essence some sort of irresponsible foresight where for example public officials will budget to buy biro pens at Sh7,000.

What Buhari faced in his first budget is the norm here in Kenya. Corruption in our public sector starts right from budgeting.

Both the Executive and Legislature blatantly allocate public money for themselves, brokers or preferred businesses through various machinations that they do with the budget.

The budgeting cycle generally has four key phases namely; formulation, adoption, execution and control. The first two are “ex-ante” (before approval of Parliament).

The last two are “ex-post” (after approval of parliament). Although the formulation and adoption stages do not deal with actual money flows, these stages are key parts of a corruption process that manifests itself only in the actual payments or transfer of money at the execution stage.

It all starts at these kutenga (allocation) stages although the ‘eating’ occurs at the ‘kutender’ stage. It is where fraudulent and frivolous allocations, many of which are clearly meant to be reaped in the later stages of the budgeting process, are sown.

Some of the allocations are either repeated several times, over-priced or are vendor-driven obvious misplacement of priorities. It is at these initial stages that corruption is planned and budgeted for.

Then comes the next stage or the adoption stage. The budget committee and Parliament in general comes on board after almost a year of deliberations between the budget mafia in the line ministries, brokers and vendors.

Using its oversight rights, Parliament is in theory expected to expose any corruption that took place at the formulation stage.

But in practice, the adoption stage is where Parliament becomes part of the problem rather than the solution in as far as fighting corruption in the process is concerned.

It is at this stage that the ‘hyenas’ park; ready to join the gravy train. The Constitution has given Parliament the ability to amend the national budget.

Unfortunately, our MPs have used this to influence public policy to provide themselves with private benefits, meaning more corruption is added at this stage than is detected.

As we speak, the House does not have a budget committee because last month it refused to approve the proposed members.

The committee was accused of allocating each of the 51 members millions of shillings to undertake various projects in their respective constituencies in the previous budgets.

In any modern democracy, the legislature, civil society and media are expected to play oversight functions in addition to the internal control system put in place by the executive.

Unfortunately these institutions and mechanisms for oversight of the budgetary process are themselves caught in the corruption web.

Outright looting

The execution stage, the first of the two ex-post stages, is merely where corruption gets transmogrified into outright looting of the public treasury.

It is at this stage that what has been cooking gets ‘eaten’ via the ‘kutender’ process. By this stage, corruption in the budget has been legalised and there is hardly anything one can do to stop the procurement of the pens for Sh7,000.

It is within the budget, they would say, even when the numbers seem uncouth!

In the last stage; the control stage, the deed is done. The Office of the Auditor- General merely reports what has happened.

We learn at this stage of the budget, like we are about to do for the Financial Year 2014/15, about the billions of shillings that have disappeared into the black hole of greed and corruption.

We accept and move on and planning for corruption for the following year begins. It is a vicious cycle.

President Uhuru Kenyatta recently acknowledged the problem of corruption in budgeting and proposed the formation of the Office of Management and Budget (OMB) at the Presidency.

The OMB is not yet in place even after the Mr Kenyatta announced the timelines. There are many problems affecting the budgetary process.

The administration should move quickly and set up OMB so that the President can personally take charge of a significant part of the budgeting process.

The government must also go beyond the formation of the OMB and implement a comprehensive budgetary reform.

If we want to deal with corruption and wastage of public funds, we must ensure all stages of our budgeting are insulated from corruption. The budget has become an instrument of corruption in this country.

If the Kenyatta administration and the anti-corruption watchdog do not succeed in stopping that process, then the anti-corruption war will be completely futile.

Mr Wehliye is senior vice-president, financial risk management at Riyad Bank, Saudi Arabia.