David Malingha Doya, Bloomberg

27 May 2015 11:45

As much as 30% of Kenya’s GDP is lost annually due to graft, but president's anti-corruption war seems to be backfiring as security gaps exposed.

 

KENYAN President Uhuru Kenyatta’s push to fight corruption, which forced five ministers to leave their posts pending a probe, may be backfiring.

Less than a month after he ordered the Ethics and Anti- Corruption Commission to investigate 170 officials for fraud, Kenyatta suspended the chairman of the agency and his deputy on April 23 on allegations of misconduct. The two officials resigned before testifying at a tribunal.

Instead of instilling confidence that Kenya is serious about tackling widespread bribery and fraud, Kenyatta’s actions have given his critics more ammunition to fault the government in the face of rising attacks by militants from neighbouring Somalia. 

The main opposition, led by former Prime Minister Raila Odinga, has called Kenyatta’s graft probe a whitewash that serves to protect his allies while avoiding the bribery of security officials that may be enabling the attackers.

“Corruption has created more holes in our security posture than Swiss cheese has holes,” Aly-Khan Satchu, chief executive officer of Rich Management, an adviser to wealthy investors, said by e-mail from the capital, Nairobi. “We need to address this nexus of corruption/insecurity because this remains the biggest risk to the Kenya rising story.”

The reputation of East Africa’s biggest economy as a relatively stable destination for tourists and investment has taken a knock since al-Shabaab militants began stepping up attacks in what the group says is retaliation for Kenya’s deployment of troops in Somalia. The country serves as a regional hub for global companies such as Google Inc. and Coca- Cola Inc. and is the world’s largest exporter of black tea.

Currency slump

On April 2, a pre-dawn raid by the al-Qaeda-linked group at a university campus in Garissa killed 147 people. That came less than two years after al-Shabaab fighters attacked an upscale shopping mall in Nairobi in a four-day siege that left at least 67 people dead.

Tourist arrivals fell 11% last year in a country where income from visitors is the biggest source of foreign exchange after tea exports. The shilling has slumped 7.7% against the dollar this year and was trading at 98.20 as of 11:20 a.m. in Nairobi on Wednesday.

Corruption in Kenya is deep-rooted. The country is ranked in the bottom quarter of the 177 nations on Transparency International’s 2014 Corruption Perception Index.

As much as a third of gross domestic product (GDP) is lost annually due to graft and at least 30% of the government’s budget is unaccounted for because of mismanagement, poor accounting practices and leakages, according to the state prosecutor’s office.

Blind eye

“We may have reached a juncture where corruption has permeated the entire fabric that now includes national security and safety,” Ahmed Salim, an analyst from Teneo Intelligence, said in an e-mailed response to questions. “Can national and personal safety be breached at a price? If the answer is yes, then clearly corruption is playing a role in the worsening insecurity throughout the country.”

Odinga said on April 25 that the government is turning a blind eye to the alleged smuggling of sugar into Kenya by people linked to al-Shabaab and the trading of charcoal in and around the Somali port city of Kismayu, where Kenyan soldiers are in charge. Top political, intelligence and security officials allegedly involved in the illegal trade aren’t named in Kenyatta’s corruption probe, he said.

Kenyatta’s spokesman, Manoah Esipisu, dismissed the comments, saying by phone on Tuesday that the president’s “fight on corruption is not measured by what the opposition says.”

Early election

Odinga is now calling for elections to be brought forward to “save our country from total collapse.” He has lost three attempts to become president of Kenya, the last time in March 2013, when he was defeated by Kenyatta. The next general elections are scheduled for 2017.

The son of Kenya’s first president, 53-year-old Kenyatta came to power two years ago with an election pledge to address the “festering problem” of corruption by giving the country’s anti-graft agency powers to prosecute cases and ban anyone convicted of graft from working for the government.

Kenyatta’s own credibility has been questioned. He is a member of one of Kenya’s wealthiest families, whose assets include land holdings across the country, along with controlling stakes in media company Mediamax, Commercial Bank of Africa Ltd. and Brookside Dairy Ltd., the country’s biggest milk producer, according to Forbes Magazine.

He has also fought off war crimes charges at The Hague- based International Criminal Court linked to ethnic attacks after disputed elections in 2007 that left at least 1,100 people dead. He denied the allegations of inciting the violence and the charges were dropped in December.

“Any effort the government takes to stamp out corruption is taken positively, like we are seeing in Nigeria,” Yvonne Mhango, an economist at Renaissance Capital in Johannesburg, said by phone. “However, if investors see a regression on those efforts, it will put Kenya in a negative position.”