Kenya losing Sh3 billion daily to corruption in state tenders — report

Kenya is now losing at least Sh3 billion daily to corruption in public procurement, even as the National Treasury accuses ‘evil corruption agents’ of frustrating the adoption of e-procurement.

This was revealed last week by The Institute for Social Accountability (TISA) when it launched a citizen watch manual, a new tool designed to help Kenyans track, question and report corruption in public contracts.

The new Sh3 billion figure cuts across national and county procurement up from Sh2 billion under the previous regime, according to TISA executive director Diana Gichengo.

Civil society groups have now joined the government to demand for the immediate rollout of the electronic government procurement system, e-GP.

There is a court order halting the implementation of the World Bank-supported system.

The Sh3 billion lost daily to corruption amounts to Sh1.1 trillion per year, enough to fill the country’s budget deficit for the current financial year, or to construct three standard gauge railways from Nairobi to Mombasa, or 34 Thika Superhighways.

The amount is also enough to ensure Kenyans, estimated at 56 million, receive at least Sh20,000 or eat a balanced diet for a whole month.

The report by TISA mirrors another one by Ernst &Young that indicates that at least one out of three companies bidding for government tenders has been asked for a bribe, with procurement now accounting for 70 per cent of total corruption in the country.

According to the global corruption index by Transparency International, Kenya obtained a score of 32 out of 100, from a score of 31 points in 2023, and is ranked in position 121 out of the 180 countries and territories assessed.

The country’s score fell below the Sub-Saharan average score of 33 and the global average score of 43, with a score below 50 indicating serious levels of public sector corruption.

Rwanda tops the East African region with 57 points compared to 53 points in 2023; Tanzania scores 41 from 40 in 2023. Kenya is only better than Uganda and Burundi, which scored 26 and 17 points, respectively.

The five-year trend analysis shows that Kenya has a change of only one score between 2020 (31 points) and 2024 (32 points).

This is despite growing public awareness and civic engagement on corruption-related issues—evident in widespread protests against financial mismanagement as experienced during anti-Finance Bill, 2024 nationwide protests, sustained public outcry to attempts to weaken anti-corruption laws such as the Conflict of Interest Bill in 2024 and scrutiny of controversial government deals.

The rampant corruption in the government has attracted both public and international ire. In April, the United States flagged rampant bribery requests and extortion of American investors by Kenyan government officials to secure tenders.

Washington pointed out the issue among its top trade barriers with Nairobi, saying US firms had had very limited success bidding on Kenyan government tenders, with corruption being a significant concern.

“Tenders are often not announced in a timely and transparent manner. Foreign firms, some without proven track records, have won government contracts when partnered with well-connected Kenyan firms or individuals,” the US Trade Representative, Jamieson Greer, said.

Despite Kenya’s procurement digitisation push to boost transparency, American said systems such as the Integrated Financial Management Information System (IFMIS) remain ineffective.

“Concerns about IFMIS include insufficient connectivity and technical capacity in county government offices, central control shutdowns and security gaps that render the system vulnerable to manipulation and hacking,” notes President Donald Trump’s trade advisor.

Early in the year, the International Monetary Fund (IMF) raised concerns about rampant corruption in the government, forcing Kenya to request a Governance Diagnostic Assessment, starting with a scoping mission and then a full assessment later in the year.

The vice is so rampant that corruption was a top concern for Kenyans, naming it as a top factor undermining development in the country. The poll conducted by TIFA in May shows that 42 per cent blame corruption for poor economic status, followed by poor leadership at 30 per cent. 

The tool is examining corruption vulnerabilities in six core areas: fiscal governance, central bank governance and operations, financial sector oversight, market regulation, rule of law and anti-money laundering and combating terrorism financing.

Governance expert Cyprian Nyamwamu warns that corruption sits deepest at the national government, especially in procurement, calling for a strong coordinated system to fight it.

“Fighting corruption demands political cost and courage. I urge Kenyans to create a nationwide movement that piles pressure on the government to act. A handful of organisations cannot defeat a network of corruption,’’ Nyamwamu said.

“Oversight only works when citizens step forward and refuse silence.”

The private sector has joined the calls to fight corruption in public procurement. The Kenya Private Sector Alliance (Kepsa) says improving governance and choking corruption could increase income per capita in the country by 400 per cent.

“That means Kenyans would become 400 times richer. The biggest hindrances to doing business in Kenya are corruption, tax rates and tax regulation, more so than it is the case with four comparator countries. These are also the key impediments to attracting FDI and growing tax revenue,” Kepsa CEO Carole Kariuki said.

According to the private sector lobby group, corruption and asset misappropriation top economic crimes likely to occur at 72 per cent.

“Procurement fraud comes third with 37 per cent. Although the country’s projected GDP is expected to hit 5.5 this year from 4.7 in 2017, these key barriers suffocating growth must be addressed.”

International law firm, MMC ASAFO, says that while Kenya is showing willingness to fight corruption in public procurement, most of the policies are opaque.

For instance, the firm pokes holes in Kenya’s Beneficial Ownership (BO) regulations enacted in 2020 to enhance corporate transparency and combat financial crimes like money laundering, terrorism financing and corruption.

According to the law firm, while the regulations require companies participating in public procurement or public-private partnerships to disclose their beneficial ownership information to the relevant procuring entities and make the data publicly available on government portals, this has yet to be implemented.

Data from the Business Registration Services shows that only 40 per cent of private companies have complied with the beneficial ownership requirements to table the list of owners.

President William Ruto has vowed to deal with corruption in the public procurement head-on, daring officers opposed to various reforms like e-procurement to quit.

“No one will steal or waste public resources under my watch. Going forward, I will talk less and act more.”

During his three-year tenure, Ruto has introduced various reforms to curb corruption in the public sector, including passing the Conflict-of-Interest law and directing all state agencies to use the unified e-Citizen platform for all government service payments, aiming to streamline revenue collection, enhance transparency and eliminate corruption loopholes.

However, some of these initiatives have been met by legal challenges from civil society, halting full implementation.

Kenya's e-Citizen platform is currently at the center of a major corruption scandal, with the Auditor General's report for the financial year ending June 30, 2024, flagging Sh44.8 billion as unaccounted for. This scandal has led to calls for a forensic audit.

Despite these challenges, Ruto’s government has insisted that digital innovations will play a major role in fighting corruption in the country, largely perpetuated through paperwork.

The National Treasury estimates that Kenya can easily save close to Sh150 billion every year if it adopts e-procurement, currently contested in court.

According to the Treasury boss John Mbadi, the system, which was to be rolled out in July this year, aims to automate and streamline procurement processes, enhancing transparency, efficiency and accountability while reducing opportunities for graft.

The system allows government entities and suppliers to manage the entire procurement process, registration, planning, tendering and contracting online.

Once a tender is placed in the system, it tracks all applications, merit them in line with eligibility criteria, including fair costing, aids quick evaluation, tracks awards and gives a nod for payment.

It addresses issues of pending bills and reduces costs for both the government and suppliers.

“The digital system allows citizens to access government budgets and procurement plans at the click of a button, submit bids digitally and track the evaluation process in real time,’’ Mbadi said.

“There is no going back. No amount of blackmail and intimidation by corrupt elements that have been exploiting the previous system will stop us. Most public finance managers have been trained, and more are graduating weekly through virtual trainings,’’ Mbadi said.

A Kenyan High Court has temporarily suspended the mandatory use of the system, ruling that both manual and electronic methods could be used, after the Council of Governors and others challenged its rushed implementation as lacking legal basis and consultation.