Why Kenya today is awash with dirty money

By JOSEPH NYAGA

The monetary value of corruption in Kenya is difficult to estimate. But procurement practitioners tell us that they estimate about Ksh30 billion ($428 million) is lost annually through corruption from our Ksh150 billion ($2.14 billion) public procurement.

This is a large amount, because if it were to go into development projects, we would definitely not be short of schools, health, water or other amenities. We could afford bursaries for our young people attending schools and colleges. We could pay our lecturers proper salaries.

Instead, these funds go into the pockets of a few corrupt individuals.

But once these huge amounts are accumulated, they must somehow find their way back into the regular economy. This dirty money affects our financial system, real estate and even our stockmarkets. If allowed to continue, IMF studies show, it can lead to a fall in “proper” foreign direct investment if a country’s commercial sector is perceived to be controlled by this type of investments. I say “proper” foreign direct investments because there is a feeling among some of us that quite a bit of the foreign direct investment we are seeing in Kenya today are from our own political elite’s money laundering activities.

In order to get a better understanding of how it works, let us look at a few examples. When an Anglo Leasing type, Goldenberg or even smaller tender is awarded, very often the government official receives his kickback in cash or kind abroad or locally. When a drug dealer sells his drugs and messes up our youth, he has to bank those funds. When a gang hijacks a vehicle and the car is sold in neighbouring countries, the proceeds of that criminal activity have to find their way back into the financial system. It is estimated that about 3,000 cows disappear per month, and are brought to Nairobi butcheries or are exported; this income has to find its way into our economic system.

It is this money that we often find being used for real estate development. It is some of this money that is probably finding its way into the Nairobi Stock Exchange. It is this money that is being used to bring in secondhand vehicles and then sell them at almost no profit. It is this kind of money that is used to buy large tracts of land for future speculative development. Finally, it is this money that will end up financing our 2007 general election. This kind of money penetrates into the police, intelligence, Kenya Revenue Authority, Parliament, anti-corruption fighting agencies and the Judiciary. It is difficult to fight it.

Money laundering cannot be fought by one country on its own. It requires regional and international co-operation because of the nature of the crime. It does not know national borders. Governments in our region are trying to co-ordinate their activities, and this has led to the creation of the Eastern and Southern African Anti-Money Laundering Group. Several protocols or agreements have been signed at the UN and at the international level in order to address this problem.

Money laundering experts are always ahead of anti-money laundering ones. They will always be looking for the country with the weakest anti-money laundering laws and which also has a fairly advanced financial system. Kenya is, therefore, a good target.

I have recently been working on such a law that I was about to bring to Parliament. The Minister for Finance rushed his Bill, thus blocking mine, although he did not even bother to forward it to the appropriate Parliamentary Committee. The parlia-mentary session ended without his Bill or mine ever being discussed.

Unless there is a lot of pressure from the public, the government will keep delaying this law for as long as is possible. This must not be allowed to happen, and we must resist it at all costs because it is earning our country a bad name. We are being perceived as the country that is encouraging money laundering activities.

If nothing is done, our country will join other Latin and South American countries in having an illegal parallel government that the real elected government will not be able to control.

Hon Joseph W N Nyagah is Member of Parliament for Gachoka in Kenya’s Eastern Province

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