THE GOVERNMENT OF KENYA IS BROKE: What Mwai Kibaki, Raila Odinga, and Parliament must do to deal with our current financial crisis
Mar 16th, 2009 by Mars Group Kenya
“Government can never get broke, its people like you and me who can get broke,” Joseph Kinyua, Permanent Secretary, Ministry of Finance, Republic of Kenya, March 10th 2009
When we were told that Mwai Kibaki and Raila Odinga (Principals to the Kenya National Accord) had settled on a Kenya Cabinet size of 43, Mars Group told Kenyans to prepare themselves to pay through their noses, unless Kenyans managed to convince these two men to see what was obvious: That Kenya could not afford such a large Cabinet and that Kenya did not need such a large Cabinet. This very bad start for the Grand Coalition has bust the bank less than 12 months after the Grand Coalition Cabinet was appointed. And for what?
The National Accord was meant to be our salvation
We remind the Principals of why they are where they are: “Mwai Kibaki and Raila Odinga our country went through a near death experience because of a botched election in which you were the main actors.” We accepted a hybrid form of Government (the so called Grand Coalition) because we feared for our lives, but that did not mean that we had taken leave of our senses and abandoned our rights. Among these rights is not to be abused as taxpayers who finance almost 95 percent of government expenditure. So it is sad that for a whole year the Ministry of Finance has led Kenyans to believe that there are no grounds for worry about the Government’s financial health. For example, when in November last year, the Nairobi Star reported that the Judiciary was bouncing cheques there was dismissive silence from the Treasury.
When we pointed out that there was exposure to Anglo Leasing type debts included in the National Budget by the Treasury, the response was to accuse Mars Group of being unpatriotic. Today, it is clear that there are serious grounds to call for immediate changes in the management of the Treasury itself as details emerge of recurrent expenditure of the most reckless and callous nature. When they appointed the cabinet in April 2008, the two Principals rejected the lean and clean wishes of the Kenyan people and now we have to pay the price of their folly. A year without development, even as the IDPS remain in camps, and ten million Kenyans face starvation by August. The National Accord Grand Coalition Cabinet has turned from the price for peace to the cause of economic ruin, which is staring us in the face. It has the deserved reputation as being person for person the most corrupt government we have ever had and the main reason why we will neither implement the National Accord Agendas 1,2 and 4 nor have a hope of achieving the Millennium Development Goals. It has consumed the resources for these noble goals for the personal comfort of its members and now surely it must go.
Cost of the Bloated Cabinet
It is costly to have a bloated Government. It is even more costly to have a corrupt Government. Each of these Ministers comes with institutional costs that run into the billions of shillings every year in the so-called recurrent costs of Government. The rational of having a bloated Cabinet is the blind ambitions of our Members of Parliament, many of whom we have not seen in the 1 year plus since they were elected. Are Kenyans prepared to continue forking out billions of shillings every year to accommodate your Member of Parliament’s desire to have a flag and to be called Waziri?
Let’s be clear, MPs were elected to represent us, not to agitate for wasteful government expenditure in the name of power sharing. Certainly, they were not meant to be inciting Government to spend billions of shillings more for no serious purpose beyond contriving to get Mwai Kibaki and Raila Odinga to give them sinecures at public expense. We cannot afford to continue spending billions on a bloated government. We have better things to do with our money, and we should tell the Principals so, loud and clear. The GOK has asked donors for Billions to resettle displaced Kenyans, to feed starving Kenyans and to cushion our now failing currency. How shameful that they would rather spend our tax money on pampering politicians than to ameliorate the pathetic living conditions of millions of Kenyans.
Kenya’s tax money should be used for the immediate care of the poorest and not the wealthiest Kenyans. Nearly twenty million Kenyans live on less than a dollar per day. That means they will make no more or have no more to spend than Ksh 25,000 in a whole year. And that is for families! These are the Kenyans we should be spending money on. We would prefer to spend the billions of Kenyan taxpayers shillings on poor Kenyans rather than continuing to fatten political sacred cows. We would prefer to spend our tax money on saving the lives of the 480 children who die every day from preventable disease and illnesses. We would wish that instead of importing T-72 tanks from Ukraine (second-hand) we had a government that would import drilling rigs so that the military could provide boreholes for Kenyans in the arid lands that cover most of the country. We want bursaries for free primary and secondary education prioritized over expense accounts for the Central Government’s Mandarins. We want the President to travel in a reasonable convoy and not to have 149 cars at his disposal. We want thrift not free-spending, but we have always been ignored and even accused when we point out the obvious.
People of conscience
People of conscience can’t afford to remain silent on this flagrant abuse of power. We must exercise our democratic options to protest this abuse of trust by Mwai Kibaki and Raila Odinga. We must not fear their teargas or truncheons, because we are the people who will pay for their largesse through our taxes, generated by sweat and toil. So we speak out loudly today and tell the two Principals who have betrayed the Kenyan taxpayer the truth.
The truth is the Government of Kenya has bust the bank and is now broke. Flat broke – unable to meet its obligations to its people or to its creditors. The truth is, the Government has no revenue to do so, and there are no windfalls expected. The truth is, since December 2007 economic activity among the population has been interrupted, the Kenya Revenue Authority is collecting less tax, and many former taxpayers are struggling to survive. They simply don’t have enough to support the Grand Coalition cabinet of 93 Ministers and Assistant Ministers. The truth is, to finance the new Ministries, the Government took the money from the only place it could find it: our development budget.
Once our Government dipped into our development kitty to pay its overheads, the Government triggered a downward spiral in which, as the Government started to fail, Kenyans continued to struggle to keep paying taxes on their day-to-day consumption not for our development but merely for the comfort of our servants. Underdevelopment is the obvious result of such a misplaced policy. With underdevelopment will come heightened social tensions and eventually insurrections against the conspicuous consumption of the servant class that calls itself the Government of Kenya.
After catering for Government’s running costs (salaries, equipment, expensive fuel guzzlers, hospitality, furniture both office and household etc ), there is now precious little for Development Expenditure available. At the end, little remains for spending on the people of Kenya – the majority of whom live below the poverty line.
Tragic
It is tragic that a 43 member Cabinet means that Kenyans will expect nothing from the national budget to be spent on developing the country. It appears as if the Government of Kenya has ceased to have a development function and exists only to tax Kenyans, and spend taxpayer’s money on Government of Kenya recurrent costs (salaries, loans and pensions).
What after all is the fundamental purpose of Government in Kenya? Can the National Accord have intended that Kenyans forego development for calm? How will this improve our situation?
Kenyans now want it made illegal for Mwai Kibaki and Raila Odinga to do what they have done done. The two Principals were able to appoint a bloated Cabinet, because despite the clear provisions of section 16 of the Constitution, Parliament has never made a law to establish and determine the number and portfolios of the Cabinet. Thus Ministerial positions remain the personal gift of two men, never mind what the Constitution of Kenya intended. And all this because Kenyans let Parliament get away with not passing an important law, we have all collectively condemned ourselves to pay for the largest corrupt, Cabinet in Kenya’s 45 year history.
On 4th April 2008, Mars Group Kenya wrote an Open Letter to all Members of Parliament. The letter was received and acknowledged for distribution to all members through Parliament’s Registry on 8th April 2008. In the letter we proposed that Parliament act immediately to cap the size of cabinet to immediately remove the absolute discretion that President claims to possess. We appealed to Members of Parliament to cap the number of ministries as per section 16 of the Constitution to 13. There is already a motion of Parliament approving such a legislative move by Ethuro Ekwe. It has gone nowhere!
The failure of all Parliaments
The failure of all Parliaments since 1964 to enact such a law (establishing the offices of Minister of the Government of Kenya) has allowed President Kibaki and his predecessors to inflate the size of Government at will, and has the illegal effect of allowing the President alone to cause massive drawings on the Consolidated Fund to run these ministries without Parliamentary authority in breach of the provisions of Section 99 of the Constitution. The Bill we are proposing will correct this anomaly and remove one of the President’s last vestigial powers to act without check. A Motion of the Kenya Parliament passed in 2005 already authorizes the Bill. The Bill will not cause any additional charges on the Consolidated Fund or increase the tax burden on Kenyans.
This Bill is timely and urgent. We propose that Parliament as the representative of the people now gets directly involved, now is the time for the Cabinet Crisis to go before Parliament for resolution once and for all. What is there to stop the President and Prime Minister from creating say 70, 80 or even 90 Ministries? This is too much power. It has to be taken away. Parliament has the power to take it away, let us demand this. In any case, with the construction of a 93-member voting bloc, the Government is without a substantive check from the Legislature. Such a voting bloc can be misused under the guise of collective responsibility to tax at will, without representation.
It is imperative that Kenyans now take control of this process from the greedy politicians. This Bill would ensure that Kenya will never face such a crisis in the future again, it will also save Kenyan tax payers over 200 Billion in the National Budget. Money that can be used for Development.
WHAT KENYANS WANT
1. It is time for a cabinet reshuffle – Kenyans want and deserve a lean, clean, efficient cabinet
Kenyans deserve a Lean, Clean and Efficient Cabinet. Kenyans are requesting that Mwai Kibaki and Raila Odinga to immediately reshuffle cabinet and appoint only 13 Cabinet Ministers – Clean and people of Integrity. Kenyans are requesting that Parliament moves to cap the number of ministries as per section 16 of the Constitution to 13, to remove future abuse by Appointing Authorities.
Kenyans are requesting that all corrupt individuals be removed from cabinet and public offices with immediate effect. Act now, without fear or favour. It now critical as the corrupt individuals by way of Governments own records registers that majority of Cabinet is corrupt and would not pass such a scrutiny test.
2. Members of Parliament have work to do in Parliament for Kenyans:
There is also a lot of work to be done in Parliament. Parliament is currently four (4) years behind in scrutiny of the reports on Government of Kenya Accounts. Most explanations for this disgraceful state of affairs center on the short supply of parliamentary time for scrutiny and the overburdened watchdog committees having to deal with a formidable amount of reports generated by the Executive. These reports are all about how the Executive has spent and proposes to spend billions of shillings from the Consolidated Fund. Kenyans have seen how the Executive has spent illegally and outside the budget. A functioning committee system would stop this.
The reasonable thing to do would be to raise the number of Members and quorum of the Parliamentary Accounts Committee (PAC) and the Parliamentary Investments Committee (PIC), the most important Watchdog Committees, to ensure that the Executive is fully accountable to Parliament, and that Parliament is able to scrutinize Government and State Corporation accounts. Checking the Executive is an MP’s job. Kenyans want our Members of Parliament should preoccupy themselves with working for us.
3. We want proper Management of Our Public Finances
The management of the public finance is the most important duty for every Member of Parliament. It is also the fiduciary duty of Government to ensure that there is proper management of our resources. The Government has not enhanced Budget transparency. The last three budgets in June 2006, June 2007 and June 2008 have seen aggregation of Ministerial allocations increase without breaking down respective budget components. We do not want to see this in June 2009.
We need to restore the system of checks-and-Balances and parliamentary oversight over the Kenya National Budget. There are not enough days provided in the current Standing Orders of Parliament to debate the budget votes and most of our Ministry’s budgets end up being passed un-debated through the so-called guillotine procedure. This year all but 11 Ministries had their budgets guillotined – including the Ministry of Finance which prepared the budget and shamelessly doubled its own recurrent expenditure allegedly for and on behalf of the Kenya Revenue Authority to whom we pay tax.
We need to clean the Kenya National Budget and to remove unnecessary or wasteful expenditure from the Recurrent Budget. For example how much sense is there in State House having an annual expenditure on fuel of over 1 million dollars for 149 cars. There is something wrong with this budget line item and Kenyans can point out dozens of other examples. The Government should adopt austerity measures as most Kenyans have already done. Trim the fat, and more becomes available for development expenditure.
We need to reverse the recurrent to development expenditure ratio in the Kenya National Budget. Kenyans want it to be 60:40 (Development: Recurrent) from June this year 2009. It’s doable if there was the will.
We need to immediately retire the heads of department at the Treasury who prepared the 2008-9 National Budget and administer public funds so badly that at the end of the first school term 8 billion shillings of student support has disappeared, been diverted, or not reached the schools provoking the sending home of children. This team, which has failed to deliver so tragically, must not be left in place to bungle any further. At the moment it is applying for a credit from the International Monetary Fund for 8 billion shillings just about the same amount as the massing school funds or the Anglo Leasing debts it is currently negotiating with fictitious creditors in Europe. Has it disclosed all this to the IMF board? At any rate the first to go should be long-serving Permanent Secretary Joseph Kinyua whose obstinate refusal to address issues has contributed greatly to our economic woes.
4. Follow The Looted Money
During the 2003-2007 Parliament, revelations of Grand Corruption and misappropriation of Public funds continued unabated, and Parliament took no action to prevent illegal charges on the Consolidated Fund. The epitome of this state of affairs was the Anglo Leasing Scandal in which the Controller & Auditor General informed the 9th Parliament that close to 40 Billion shillings was paid out by the treasury on 18 bogus Security related contracts without Parliamentary approval between 1997 and 2004. We want Government to seek Mutual assistance from the International Community to follow our tens of billions of shillings of looted money. To date none of the Public Officers and Companies involved have faced the law for the manipulation of Kenya’s External Public Debt Register in breach of the Constitution of Kenya.
Although the PAC made two reports in the Anglo Leasing Scandal (2004 & 2006), no further action was taken on them and it appears they were abandoned by the 9th Parliament. The 10TH Parliament has done nothing to rectify this position, instead authorizing illegal Anglo Leasing payments in the current 2008/2009 Budget. A second example of an illegal charge on the Consolidated Fund and Parliamentary laxity involves an alleged loan of over Kshs 4 Billion owed to an Austrian Bank for the KENREN fertilizer factory which has not been built since first conception in the 1970’s. Despite our statements of objections of this fraud, Parliament took no action to establish why loan repayments to this phantom project were being made in 2008/2009 and instead authorized the payments in the Budget.
5. Clean our External Public Debt Register
We need to have corrupt loans on the Kenya External Public Debt Register purged immediately so that Kenya tax money is not being paid for bogus debts abroad. Such corrupt loans are easy to spot we could start with all the Anglo Leasing debts and the Ken Ren Fertilizer Factory loans. The money saved would then be committed to development expenditure. A practical example: the amount of money provided for in this year’s budget (2008/9) as repayment for a bogus fertilizer factory which does not exist is enough to buy and distribute for free almost 150,000 bags of DAP fertilizer. And Kenyans allegedly still owe Ksh 4 billion on this loan to Austrian and Belgian banks. Clean the debt register to free up money for feeding the poor and developing Kenya is a policy we should adopt now.
6. Seek Comprehensive debt relief
In our opinion more money could be mobilized for development, if the international community were to adopt a policy to immediately forgive proven corruption related debt. We need to petition the international community for 100% cancellation of all external debt that we can prove to be corrupt, and which are owed to entities in their jurisdictions. They can assist us by supporting the immediate cessation of repayment of corrupt external debt and the enforcement of law towards this end in their countries. The Government of Kenya would undertake to redirect money saved towards development. This policy would be consistent with commitments to Kenya under the Millennium Development Goals and other commitments to achieving a fair shake for Kenya and Africa generally. Two years ago, the Kenya National Commission on Human Rights and faith-based groups obtained almost 100,000 signatures for this cause. The Government of Kenya has categorically refused to admit its indebtedness because elements within it benefit from the country’s credit rating as they represent, or are indeed, vested interests in commercial credits to Kenya.
Truth Be Told – Quite apart from who is in it, this Grand Coalition Government is bad news for Kenya.
Today the people of Kenya have 93 Members of Parliament as Ministers and Assistant Ministers in the Grand Coalition Government of Kenya. The new catchword is public service never mind the obvious personal benefits. As the flags went up on the limousines, the masters, tens of millions of Kenyans, continue to spend yet another day eking out a miserable living to earn their daily bread and to pay for their servants extravagant life styles.
Tomorrow and the day after that if they are lucky, tens of millions of Kenyans will wake again and work to pay for the billions of shillings needed to support their new Cabinet’s recurrent costs. Such costs as fuel, domestic & foreign Travel, official limousines, utilities, hospitality, household and office furniture etc (the budget lines are the same for every Ministry). Unless there is a radical change in government policy, over the next twelve months millions of Kenyans will spend over Ksh 700 billion (over 10 billion USD) to support their servants, and not a shilling of this money will actually be spent on the average poor Kenyan. Something is not right with this equation.
This is a sad situation. Despite public protest, and in the absence of any official Government explanation of how it will continue to finance the bloated Government, Government expenditure is henceforth to be skewed towards maintaining a bloated bureaucracy and away from feeding the people and providing them with the infrastructure to grow economically.
The likely result of this intransigence is heightening of tension around Kenya and the real possibility of a return to violence, and a new national crisis with undeterminable but certainly catastrophic consequences. We are sure that the Kenya National Accord was not intended to facilitate the underdevelopment of Kenyans in order to accommodate the two Principals and greedy Members of Parliament.
Don’t be fooled
Warning to the wise. Don’t be fooled by the Treasury’s announcements that it will reduce such and such expenditure by ten percent. For example cutting the foreign travel bill by 10% will raise about Kenya Shillings 300 million, less than half what MP’s taxed allowances would contribute to our welfare, and only 40 million shillings more than the Kenyatta International Conference Center generates from rent of its down-town skyscraper – built in the 1970s by Kenya’s Finance Minister, Uhuru Kenyatta’s father, Mzee Jomo Kenyatta.
[...] and the Ministry of Special Programmes admits it doesn’t have the resources to resettle the IDPs.The National Accord Grand Coalition Government has turned from the price for peace to the cause of e…, which is staring us in the face. It has the deserved reputation as being person for person the [...]