Kenya to launch Treasury Single Accounts in fight against graft

Hard hit by the loss of billions of dollars through questionable deals, Kenya has rekindled its plans to create Single Accounts to hold the cash for government ministries, departments and agencies to enhance transparency and accountability in the use of public resources.

National Treasury Cabinet Secretary Henry Rotich told The EastAfrican the government would start re-looking into ways of creating the account in the context of major technological changes that have taken place in government payment systems.

Kenya launched the Integrated Financial Management Information System(IFMIS) last year, terming it a solution to the procurement-related scandals, but the system has not saved the country losses.

The proposed Single Accounts — National Treasury and County Treasury Single Accounts — will be housed at the Central Bank of Kenya.

“Several IT changes have taken place within the government. So we want to reconfigure this concept of a Single Account in light of all these changes. These are just technical issues which we are now finalising,” said Mr Rotich.

President Uhuru Kenyatta last week replaced six cabinet secretaries who left office after being linked to corruption.

The President also mobilised the private sector and key arms of government including the Judiciary and Parliament in the new fight against graft, saying 70 per cent of corruption in the country is in the area of public procurement.

READ: Kenyatta forms committee to fight corruption

“Every company, from now henceforth seeking to work with  Government  both at the national and  county  level, will have to  sign  an approved Business Code of Ethics domiciled  in the Public Procurement Oversight Authority (PPOA),” he said.

As part of the new measures to fight corruption Kenya would hold accounting officers, authority to incur expenditure (AIE) holders and supply chain officers personally liable for doing government business with companies that fail to comply with the approved Code of Ethics.

These companies will be disqualified from doing business with government for a period not less than five years.

Severe penalties would be inflicted on government officers who delay in providing services to the people because such “delays” create a fertile ground for bribery.

The country will also be introducing Ethics and Integrity awareness as a subject in the school curriculum to be examinable in the next academic year.

The government on its part will introduce compulsory and continuous ethics and integrity training across all levels of the public service.

Kenya has also signed mutual legal aid agreements with several countries that have committed to identify and deal, in their jurisdictions, with illicit wealth acquired in Kenya.

Other measures include introduction of a Bribery Bill that will focus on the supply side of corruption — those who give bribes or induce public officials — and  withdrawal of the banking licences of lenders that break the anti-money laundering laws and regulations.

READ: Kenya banks risk losing licences for money laundering

A cross-section of professionals polled by The EastAfrican however said much more needs to be done to fight corruption particularly in strengthening of institutions and a change in peoples’ attitude.

“I think they are very good measures but they need to be followed up. We need to see action and feasible action particularly in transforming institutions to fight corruption. These institutions have not been as effective as they are supposed to be because of our legal formation,” said Engineer Patrick Obath, an energy consultant and former chairman of the Kenya Private Sector Alliance (Kepsa).

According to Engineer Obath a change in attitude of the people will also be critical in the fight against graft.

Increased corruption coupled with the fact that government entities operate several accounts have made it difficult for the government to have a clear picture of its consolidated financial position, resorting to borrowing from both the domestic and international markets.

The enforcement of laws to fight corruption in the country has however been met with resistance from some quarters.

Some of these legislations include the Ethics and Anti-corruption Commission Act, Public Finance Management Act, Leadership and Integrity Act, Public Procurement and Disposal Act and Proceeds of Crime and Anti-Money Laundering Act.

According to Dr Joy Kiiru, a lecturer at the University of Nairobi School of Economics, strengthening of institutions mandated to deal with corruption and the change of peoples’ attitude on corruption would help deal with the vice.

“These measures are something but we need much more in terms of fighting corruption. The institutions to fight corruption are weak. The President needs to strengthen the institutions, strengthen the judicial system and the Ethics and Anti-corruption Commission,” she said.

“What we need is a sustained fight against graft and a change in attitude by the people. It is worrying that anybody who is thought to be serious in fighting corruption eventually becomes a victim of the same. People use corruption to protect their jobs,” added Dr Kiiru.

According to Polycarp Igathe, chairman of the Petroleum Institute of East Africa, the new strategy to fight corruption involving both the private and public sector is a step in the right direction.

“The Government at least appears serious. They have the full support of all Kenyans of good will. The past two weeks we have seen turnkey action on corruption in terms of judicial, regulatory and policy measures,” said Mr Igathe.

The Creation of the Treasury Single Account is part of the Public Finance (Administration and Management) Regulations 2013 which were formulated to boost the effectiveness of the Public Finance Management Act (2012).

Kenya is hoping that operationalisation of a Single Account for public funds would help track cash flows within state organs, control wastage and lessen excessive borrowing by the government that is largely blamed for the country’s rising interest rates.

Mr Rotich said all public funds would be deposited into that account and all payments would be executed from the same account, putting the government in position to monitor its finances.

The implementation of the Treasury Single Account had been suspended two years ago in view of other Information Technology (IT)-powered   payment solutions   that have been adopted by the Government.

These include IFMIS and Internet banking embraced by the Central Bank.

The IFMIS system was launched in August 2014 to monitor how all ministries, departments and agencies utilize funds on a real-time basis in a bid to improve budget implementation.

Kenya is struggling to finance a budget of Ksh2 trillion ($19.22 billion) for the 20152016 fiscal year of which Ksh287 billion ($2.75 billion) was channelled to the devolved units.

The country plans to borrow Ksh229.7 billion ($2.2 billion) from the domestic market to fund part of the overall deficit estimated at Ksh426.3 billion ($4.09 billion).

It is, however, feared that commercial banks stand to lose billions of dollars of deposits in the new development that will see government entities close down multiple accounts in various banks.

Kenya’s banking industry deposit base for the nine months to September 30 stood at Ksh2.57 trillion ($24.7 billion).

The policy of Treasury Single Account is also under implementation by Nigeria to promote financial stability and to reduce explosion of bank accounts operated by MDAs. But it still faces a bit of resistance from MDAs.

It is estimated that commercial banks in Nigeria stand to lose over 2 trillion Naira ($9.9 billion) through the policy whose implementation began on September 15.

SOURCE: THE EAST AFRICAN