By David Wanjala
Africa loses more to illicit financial flows than the annual Official Development Assistance (ODA) that the continent receives. According to the Economic Development in Africa Report 2020 by the UN Conference on Trade and Development (UNCTAD), Africa is estimated to lose about $88.6 billion, or 3.7% of its GDP, annually in illicit financial flows, with corruption being one of the four key contributors.
This was revealed recently by the Auditor-General, Ms. Nancy Gathungu, while addressing partners in the anti-corruption fight and the media at the launch of the Ethics and Anti-Corruption Commission (EACC) Strategic Plan (2023 – 2023) at KICC, Nairobi.
Ms. Githungu said that although corruption is a problem that all countries have to confront, developing countries, particularly Africa, continue to bear its brunt. Quoting Transparency International (TI), the Auditor-General said developing countries lose about $1,26 trillion annually through corruption, bribery, theft, tax evasion, and other illicit financial flows.
This has been made worse recently by disasters and pandemics whose interventions have been exploited by those in charge to siphon public money.
“The responses to COVID-19 and other disasters such as drought and famine that we have been experiencing have brought with them the challenges of misuse, theft, fraud, and wastage of public resources meant to manage and recover from the disasters as a result of relaxed safeguards and controls,” she said adding that her office’s Special Audit Reports on Utilization of Covid-19 Funds highlighted the vulnerabilities brought about by such disasters.
For instance, in 2021/2022, the Auditor-General’s Report flagged unsupported expenditures worth Sh5.8 billion, Sh3.2 billion by government Ministries, Departments, and Agencies, and Sh2.58 billion on donor-funded projects. The report also flagged pending bills amounting to Sh504.7 billion and identified stalled projects worth Sh150.6 billion, of which Sh77.4 billion had already been paid. All these, Mrs Gathungu said, arise mainly due to corruption.
The Auditor-General decried public procurement as one of the most vulnerable to corruption. The malpractices in public procurement including uncompetitive practices, irregular variations, and terminations of contracts lead to legal suits and penalties, which in turn occasion losses to the government, she said.
Corruption denies countries the much-needed revenues for growth and development, leading to increased costs and reduced access to much-needed quality public services, including health, education, and justice. According to TI’s 2019 Global Corruption Barometer, 41 percent of Kenyans paid a bribe to access services. On the other hand, EACC’s National Ethics and Corruption Survey of 2021 shows that 23.2 percent of Kenyans who sought government services encountered corrupt and unethical conduct in government offices. Sadly, medical services are the most prone (27.8 percent) to corruption.
Corruption, Mrs. Gathungu added, weakens financial systems and impedes investments, thereby affecting economic growth, the creation of jobs, and other forms of gainful employment. Increasing the cost of doing business denies affected countries a competitive edge as it stunts development and discourages foreign direct investment.
“The World Economic Forum, Global Competitiveness Index, has consistently identified corruption as the leading problematic factor for doing business in Kenya,” she said, even as she added that corruption also damages the already low trust in governments, undermining governance and democracy, which triggers the risk of political instability.
It has, as such, the potential and has indeed contributed to the slow progress towards attainment of the country’s national development plans, Vision 2030 and the Medium Term Plans, and, ultimately, the Sustainable Development Goals.
The Auditor-General emphasized her office’s role in the National Integrity System. She said the office plays a critical role in combating and preventing corruption as its work helps promote sound financial management and, thus, accountable and transparent government. The Office of the Auditor-General is, as such, a key partner in the war against corruption.
Its mandate complements that of the EACC and other institutions with similar mandates. Section 21(4) and 64(1) of the Public Audit Act 2015 require that where the Office of the Auditor-General suspects or establishes that fraud or corruption has taken place, it may invite or report its findings to the EACC, the police, or the Public Procurement Regulatory Authority.
“This engagement is yielding results as we can mutually share information and carry out joint investigations,” she said and, at the same time, lauded the EACC’s Strategic Plan as having come at a reasonable time when there is political will to combat and prevent corruption, which is one of the critical pillars of the National Integrity System.