Nearly 99% of Kenya budget can't be properly accounted for: what about the rest of Africa

A good 98.8% of the money spent by Kenya’s ministries in the 2013/14 financial year could not clearly and lawfully be accounted for, a new audit report shows, a damning indictment on the state of public financial management in the country.

It comes just days after US President Barack Obama made a stirring speech at the African Union headquarters in Addis Ababa on Tuesday, where he called for strong action to tame graft, saying “Nothing will unlock Africa’s economic potential more than ending the cancer of corruption.”

Corruption is not unique to Africa, Obama said, but “here in Africa, corruption drains billions of dollars from economies that can’t afford to lose billions of dollars - that’s money that could be used to create jobs and build hospitals and schools.”

The report from the office of Kenya’s Auditor-General makes for chilling reading, detailing massive irregular payments, unauthorised expenditures, diversion of funds, and in some cases, blatant plunder of public resources by government officials.

Out of a total expenditure of Ksh1 trillion ($10 billion) by government ministries, only 1.2%, or Ksh12.5 billion ($125 million) “was incurred lawfully and in an effective way”, the report says.

The auditor-general put a question mark on 60% of the expenditure, owing to unsupported payments, misallocation of funds, or inadequate disclosure of necessary details.

And for a further 38.5%, the report gave a clear “fail” grade as there were clear discrepancies in the books, such as a difference between the closing balance in one financial year and the opening balance in the next.

Although government spin doctors have been quick to rush to defend President Uhuru Kenyatta’s administration, arguing that a negative audit report does not necessarily mean the money was stolen, the discrepancies still put a definite damper on perceptions of corruption in the country.

Kenya’s rankings on Transparency International (TI)  Corruption Perceptions Index has slipped nine places between 2013 and 2014; and the latest report has quickly dimmed the afterglow from US President Barack Obama’s visit over the weekend.

Corruption Overview (Transparency International)

The saving grace, however, is that Kenya’s government actually prepared an audit report in the first place, and released it to the public.

According to the  Open Budget Survey (OBS), an international assessment of the openness of public finances around the world, Kenya is placed fifth out of 30 African countries in the openness and comprehensiveness of its government audit report, after most-open South Africa, Ghana, Uganda and Botswana.

Fourteen countries are huddled at the bottom of the rankings; they do not release any audit report at all – Algeria, Angola, Benin, Burkina Faso, Chad, DR Congo, Egypt, Equatorial Guinea, Liberia, Niger, Nigeria, Sao Tomé and Principe, Senegal and Zimbabwe.

Botswana’s government audit institution is considered the strongest in Africa, followed by Ghana, Rwanda, Kenya and Mali.

When it comes to the overall openness ranking, which evaluates whether governments give the public access to budget information, opportunities to participate in the budget process at the national level, and the strength of formal oversight institutions, South Africa is again at the top of the list, followed by Uganda, Namibia, Malawi and Botswana.

You might think that having more open books, and clearer processes, would obviously make a country less corrupt. But when we compare the openness of public finances with the perceptions of corruption in a country, it gets a little more complicated.

Rwanda, for example, is often lauded for being one of Africa’s least corrupt countries, though its score on TI’s Corruption Perceptions Index over the past three years has slipped slightly.

But it is one of Africa’s most opaque countries in terms of the openness of its budget and public finance processes, the Open Budget Survey puts it at position 24 out of 30 of the overall rankings. Only Niger, Zambia, Chad, Benin and Equatorial Guinea are more impervious to scrutiny.

Not to take away from Rwanda’s real gains over the past few years, it suggests that Rwanda’s good reputation may also be a case of carefully managing the narrative coming out into the public domain.