In a bold move to tackle the pervasive issue of corruption in government procurement and budgeting, Treasury Cabinet Secretary John Mbadi has outlined a strategic plan to reduce corruption by 50%, which could potentially save Kenya up to Sh365 billion annually. This ambitious initiative, according to Mbadi, will not only stem the leakage of state resources but will also help reduce Kenya’s reliance on external borrowing. Speaking at the State of the Economy address, Mbadi revealed that the government is investing heavily in digital solutions to tackle corruption, streamline public financial management, and ensure greater transparency in public procurement.
Digital Procurement to Combat Fraud
A significant part of Mbadi’s strategy involves the complete digitisation of the government’s procurement system. To this end, the National Treasury has set aside Sh560 million for the final stages of this digital transformation. The goal is to launch the e-procurement platform within this financial year, a system that is expected to revolutionise how the government handles procurement of goods and services.
Procurement has long been a fertile ground for corruption, with the latest findings from Emerald Insight revealing that a staggering 70% of corruption cases are linked to procurement fraud, particularly within government departments. This high level of procurement-related corruption underscores the urgent need for reform. Mbadi has emphasized that the e-procurement system will ensure transparency in the procurement process, which currently consumes about 50% of the government’s annual budget. By digitising this process, the government aims to reduce the chances of manipulation and fraudulent activities, ultimately saving billions of shillings in taxpayer money.
Enhancing Accountability and Efficiency
The introduction of e-procurement is part of a broader modernization agenda for public financial management. Mbadi pointed out that this reform would also be supported by the establishment of a Treasury Single Account (TSA). The TSA will centralise all government funds, enabling a more efficient and transparent way to manage and track government spending. Payments will be processed through a single online system, which will also be integrated with the Kenya Revenue Authority (KRA) to curb tax evasion and ensure that tax obligations are being met.
This shift to digital systems aligns with the reforms laid out in the Public Financial Management Act of 2012, which aims to streamline government expenditure, improve service delivery, and reduce wastage of public resources. With the Treasury Single Account and the e-procurement system, the government hopes to bring more accountability and oversight into the financial management process.
A Future Beyond External Borrowing
Mbadi’s comments also touched on the country’s heavy reliance on external loans to fund budget deficits. He stressed that by reducing corruption and improving public financial management, Kenya could wean itself off external borrowing. Instead, the government plans to increasingly rely on Public-Private Partnerships (PPPs) to fund large-scale infrastructure projects, which are critical to the country’s economic development.
The importance of cutting corruption cannot be overstated. According to the Ethics and Anti-Corruption Commission (EACC), Kenya loses approximately Sh608 billion annually to corruption, which represents 7.8% of the country’s GDP. The government’s digital initiatives, such as the e-procurement system and the TSA, are seen as key tools in reducing this massive loss. In turn, these efforts could contribute to lowering the national debt and building a more sustainable and transparent fiscal future.
A Call for Public Confidence
For Mbadi, instilling confidence among taxpayers is central to the success of these reforms. He stressed that a transparent procurement process would demonstrate to the public that their taxes are being used responsibly, providing value for money. This shift to digital platforms is not just about reducing corruption but also about fostering a culture of accountability and efficiency in government spending.
However, while the government’s commitment to digitisation is promising, it will require sustained effort, adequate funding, and rigorous monitoring to ensure its success. Additionally, the rollout of these reforms will need to be closely scrutinised to ensure they deliver the desired outcomes and do not fall prey to the same pitfalls of inefficiency and corruption they seek to eliminate.
Conclusion
As Kenya grapples with corruption, fiscal deficits, and external debt, Treasury CS John Mbadi’s commitment to digital solutions offers a promising path toward financial sustainability and greater transparency. By tackling procurement fraud, closing tax loopholes, and enhancing budgetary spending, the government aims to save billions of shillings and reduce the need for external loans. The proposed e-procurement system and Treasury Single Account represent critical steps in Kenya’s journey towards a more transparent and accountable public sector, with the ultimate goal of reducing corruption, boosting public trust, and fostering economic stability.
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