Experts push for fresh foreign debt procurement rules

Devolution and Planning Cabinet Secretary Ann Waiguru addresses the media after a meeting called by parliamentary Public Accounts Committee at Safari Park Hotel in Nairobi on Monday. Ann Kamoni 

By GEOFFREY IRUNGU

In Summary

• Officials raise concerns projects funded by donors are not based on priorities

The Treasury was Tuesday criticised for failure to put in place an external resources policy, clearly delineating the relationship between the government and donors.

The absence of such a policy was blamed for the unpredictability of donor funds which slowed or stopped implementation of budgeted projects.

In a meeting called by the parliamentary Public Accounts Committee (PAC) at Safari Park Hotel in Nairobi, various participants urged the Treasury and its External Resources Department (ERD) to come up with the policy as quickly as possible.

The Treasury has traditionally been satisfied with assigning the ERD a largely clerical role, devoid of any policy formulation and management functions. This has seen the department serve merely as a bystander when major decisions are made on whether to borrow or not, and for what purpose.

Numerous government projects funded by donors have no relationship with the budgeted priorities and may have more to do with donors’ prejudices and vested interests.

“The External Resources Department should develop a policy and disseminate it to donors and other offices such as the Attorney General’s and Auditor-General’s offices,” said Auditor-General Edward Ouko.

Mr Ouko said the ERD lacked negotiating teams in its interactions with donors and did not have the capacity to carry out feasibility studies on projects for which it procured funds.

“The ERD is also not able to carry out continuous forecasts on cash flows. It needs to know about disbursements and milestones in relations to various projects funded by donors. This can be agreed upon within a policy framework,” he said.

The national auditor said some donors preferred to go directly to private auditors for funded projects, yet this carried the risk that the outcome would not be objective as such consultants may be eyeing future business.

Institute of Certified Public Accountants of Kenya (ICPAK) chairman Benson Okundi said that projects under implementation by ministries may not reflect priorities but the selfish interests of donors.

“Is it possible to think outside the debt trap? If we didn’t waste resources, we wouldn’t need to borrow. We know debt comes with risks, including pressure on the exchange and consequently the cost of living,” said Mr Okundi.

The ICPAK chairman argued that it would be preferable to develop the local debt market rather than rely on unpredictable donors.

Ministry of Devolution and Planning official Sabina Maganga said Vision 2030 projects such as resort cities in Isiolo and Lamu were finding it difficult to attract funding because there was no external resources policy in place.

Speaking in the same PAC conference, Ms Maganga said that there was no bridge between planning and budgeting because resources were highly unpredictable in terms of dates of disbursements, if at all.

Ms Maganga said that donors often had stringent conditions – some of which they changed midstream – and failure to meet them cause disruption in financing.