Financial Transparency Coalition

Kenya is holding its presidential elections on August 9^th, amid a surge in cost of living and a terrible drought.The elections will pit incumbent President Uhuru Kenyatta’s deputy William Ruto against his long-time rival and opposition leader, now turned ally, Raila Odinga.

 Amid the various crises hitting the country, the absurdity is not just the shifting alliances but also in the way the campaigns are being run, the people running for political office and – most of all – the amount of money being splashed across the political divide. By April 2022 as the campaign season peaked, the cash in circulation outside the formal banking system hit an all-time high of KES 252 billion (US$2.1 billion) fuelled by unbridled election spending, in a country where a third of the population live with less than US$1.90 a day.

 The campaigns for these elections have proven to be the most expensive campaigns in Kenya’s history. The two main contenders have been using convoys of helicopters in their campaigns  whilst spending on branding, digital and mainstream media and cash handouts have been commonplace across the country.

 Odinga who is running for the fifth time has mounted his most expensive campaign ever. But a major concern is also the source of the campaign funds being splurged by both major political campaigns. Just last week, for example, the anticorruption court ordered the forfeiture of KES 200 million (US$1.6 Million)  held in the accounts Mr Rigathi Gachagua who is William Ruto’s running mate. The funds were suspected to be proceeds of corruption and obtained from government agencies through fraudulent means.

 This election has a serious deficit of integrity among aspirants at all levels.  Across the two main political divides, there are serious concerns with the integrity of individuals running for different offices. Almost every high-ranking politician who has been taken to court for financial and economic crime is running for public office in these elections.

 The Ethics and Anticorruption commission had recommended that 241 candidates most of whom are under investigation or in court for financial and economic crime be barred from the elections. Sadly only six were barred. The former governor of Nairobi Mike Sonko managed to get clearance to run for governor of Kenya’s second biggest city Mombasa despite a trail of court cases related to corruption and being designated by the US department of state for being involved in significant corruption. He was only stopped from running by the supreme court a few weeks before the elections.

 Unsurprisingly, the major political coalitions have all paid lip service to corruption, economic crime, and the stashing of stolen assets in other jurisdictions. None of their manifestos mention anything on international tax policy, beneficial ownership transparency or the strengthening of financial transparency in the country. This is despite Kenya ranking the fourth highest African country in the Financial Secrecy Index (FSI) largely due to its growing importance as a financial centre with the recent launch of the Nairobi International Financial Centre (NIFC) with a host of tax breaks and benefits on offer.

 None of the main candidates though have offered clear propositions for reforms relating to the financial architecture. They all have outlined accountability and good governance as priorities but without really defining key steps to achieve this such as enhancing beneficial ownership transparency, the repatriation of assets of traced in other jurisdictions and barring individuals involved in significant corruption from public office.

 The first step towards accountability should have been to demand for integrity amongst contenders within their ranks, something absent on both sides. All main contenders have acknowledged the difficult path to post Covid-19 recovery including the high inflation and food and energy crisis driven by the Ukraine crisis.

 Amid this context, financial transparency reforms are crucial to generate enough funds for healthcare and social protection, and fund development. This is especially relevant since 92 percent of Covid-19 bailout funds in Kenya in 2020 went to big corporations instead of social protection and supporting informal workers and small businesses, according to the Financial Transparency Coalition, meaning that those most affected by the crisis have received the least support.

 Kenya holds an important role internationally and its stance on these crucial issues will directly influence what other countries do in the region. Political and economic stability in Kenya is also crucial because numerous other African states in fragile conditions including Somalia and South Sudan rely on Kenya for their stability.

 This is a high-stakes election. The new government will have a full plate of issues to deal with. Kenya’s stability and a functioning financial architecture have provided a gateway for cartels in the region involved in money laundering, gold smuggling and human trafficking. The government will need to work harder on strengthening the financial system to stop them.

 As numerous Kenyan elites, including the incumbent president, continue stashing their wealth abroad, the new government will need to prioritize the tracing and seizure of offshore wealth belonging to Kenyans. Otherwise, post covid recovery will remain a mirage for East Africa’s biggest economy.

Photo by Element5 Digital