Since the 1970s, conservationists have repeated the claim: “We do not inherit the land from our ancestors, we borrow it from our children.” If we were to replace the word “land” with the word “economy”, the phrase would ring just as true.
With two-thirds of Kenya’s workforce under the age of 40, according to the Kenya National Bureau of Statistics Quarterly Workforce Report for the fourth quarter of 2019, Kenya’s economy must support a young population and substantial. Another 20 million Kenyans will join the workforce in the not too distant future, and all of these young people will also “borrow” the economy from future generations.
A sustainable and growing economy requires investments for the future, and Kenya continues to look to external sources of capital in the form of debt, grants and aid.
These funds play an important role in providing technical assistance and financing development programs, responding to and recovering from emergencies and disasters and generally improving the quality of life in Kenya.
In the 2021 fiscal policy statement, the National Treasury estimated that Kenya would borrow 426 billion shillings from foreign sources and receive grants of 49 billion shillings.
These figures do not include foreign aid channeled directly through line ministries or to county governments to support specific programs or funds that go directly to the programs of development partners or NGOs.
According to the NGO Sector Report 2018/19 of the NGO Coordinating Board, 3,028 NGOs reported receiving 166 billion shillings in 2018/19 and 88% of these funds came from sources outside Kenya.
Kenya’s ability to attract external finance and the cost of funds (i.e. interest charged on debt or administrative costs on donor funds) depend on two main factors – one of the capacity Kenya’s repayment rate, particularly in the case of debt; and second, the extent to which the country is seen to be able to allocate funds transparently and for the purposes intended.
Regarding the second factor, fraud and corruption are serious obstacles.
Unfortunately, fraud targeting donor funds and aid is rampant and takes many forms.
Procurement fraud occurs when implementing institutions buy non-existent supplies from non-existent suppliers at inflated costs. Abuse of per diems and daily subsistence allowances is also common, fake attendance lists and hotel receipts are used to support non-existent conferences or to overestimate the number of attendees. Capital projects using large development funds may be overstated and / or funds may be directed towards unwarranted variations from stated specifications.
Equally worrying are many examples of funds being reallocated from one project to another or from one budget line to another.
This practice not only creates a channel for the theft of funds, but it also results in the transfer of money from its intended use, such as funding development or humanitarian projects, to items that have a more direct personal benefit such as salaries. and staff allowances. .
From a human resource perspective, nepotism in the hiring process and payments to ghost workers are also common.
It is imperative to protect all of our resources against fraud, whether the source of those resources is external or internal. With respect to external resources, however, there is an increased imperative as in many cases these resources must be repaid with interest and their theft affects Kenya’s reputation internationally and our ability to raise additional funds. as well as the cost of future funds.
We all have a role to play in protecting these funds against fraud.
NGOs and donors, for example, can find their funding from individuals or from public funds. Either way, they promise to allocate funds to development and to making the world a better place.
Although implementing partners can track the results of their projects, many scammers are familiar with traditional project audits and monitoring and evaluation methodologies. Therefore, accountability needs to be monitored and enforced in innovative ways.
Fraud analysis can help identify anomalies and raise the alarm, even in cases where reports and supporting documents are submitted.
Problems such as merger of funds and double reporting could be partly solved by carrying out joint audits, especially when more than one party is funding a project.
The entities responsible for overseeing the funds, whether government agencies or donors, should also send a clear message that they will not tolerate the misuse of the funds.
If properly used and accounted for, foreign funds can support economic growth and development. Over time, Kenya could become less dependent on these funds and bequeath a more sustainable economy to future generations, with growth financed internally, in a responsible and transparent manner.
Now is the time to proactively anticipate the risks of fraud and put in place measures to mitigate these practices.