Treasury Secretary John Mbadi posits that Kenya can effectively manage its external debts by reducing corruption by half, which he states leads to significant financial leaks, especially in public procurement. If corruption losses are significantly curtailed, the savings could surpass debt obligations, suggesting a need for reform in both governmental structure and fiscal management.
Kenya could potentially address its external debt obligations through a significant reduction in corruption, according to Treasury Cabinet Secretary John Mbadi. He made this assertion while outlining President William Ruto’s fiscal consolidation strategy aimed at enhancing revenue and minimizing government expenditure. Mbadi highlighted public procurement as a notable area of concern, indicating it often results in substantial financial losses.
Mbadi discussed the importance of e-procurement in mitigating these losses, citing an alarming figure of approximately Sh2 billion lost daily to corruption. He humorously noted, “If we could just reduce our theft by 50 percent,” stressing that even a significant reduction would lead to considerable savings, potentially amounting to Sh365 billion annually, surpassing the Sh280 billion external debt due in 2025.
He emphasized that if Kenya could successfully decrease its daily losses from Sh2 billion to Sh1 billion, the resultant annual savings could adequately cover its debt servicing costs without the necessity for external loans. This, he clarified, would provide a sustainable financial pathway for the nation.
Beyond the issue of corruption, Mbadi critiqued the current devolved system of government, arguing that the 47 counties are financially unsustainable due to excessive payroll costs. He advocated for a reversion to a system of eight to fourteen regions, believing that a streamlined structure could enhance efficiency by reducing bureaucratic layers that currently deplete public resources.
Mbadi elaborated on the current inefficiencies within county governments, noting the presence of numerous personnel earning high salaries with overlapping roles. He argued for a leaner governmental structure that would optimize resource allocation while ensuring essential services are delivered effectively at local levels despite diminishing governance burdens.
Furthermore, Mbadi pointed out the considerable national wage bill, which stands at Sh80 billion monthly, leading to nearly Sh1 trillion in annual salaries. This financial strain, coupled with significant debt repayments, significantly restricts funds available for development initiatives, thereby perpetuating a cycle of fiscal challenges facing the nation.
His remarks have reignited discussions regarding the need to reassess Kenya’s governance framework to improve economic efficiency and cost management.
The article underscores the potential for Kenya to address and manage its external debts effectively by combating corruption and streamlining government structures. John Mbadi advocates for significant reforms, emphasizing that by reducing corruption costs and reassessing the divisional structure of the government, Kenya could achieve substantial financial savings. Furthermore, it stresses the urgent need for sustainable governance that aligns expenditures with available resources, thus fostering economic development without relying on external borrowing.
Original Source: www.capitalfm.co.ke
