What you need to know:
- In Kenya, the main corruption loophole, according to audit reports, is manipulation of procurement system and other transactions that have increased the cost of doing business.
- Experts say the technology allows full traceability of transactions while building the roadmap to identify illicit activities or malfeasance.
The United Nations Office on Drugs and Crime (UNODC) has challenged Kenya to embrace use of technology if it is serious about fighting massive corruption in public and private sectors.
In Kenya, the main corruption loophole, according to audit reports, is manipulation of procurement system and other transactions that have increased the cost of doing business.
Mr David Robinson, UNODC East African region anti-corruption advisor, notes that any App that uses Blockchain solutions makes the purge on corruption and economic crimes easier to trace.
“When corruption represents a breach of trust, a technology that strengthens trust becomes an attractive solution in public projects. In the era of the 4th industrial revolution, online trust became a key asset for transactions between strangers and building confidence in government,” Mr Robinson says.
Experts say the technology allows full traceability of transactions while building the roadmap to identify illicit activities or malfeasance.
It also reduces illicit financial flows, strengthening the recovery and return of stolen assets, substantially reducing bribery and corruption, and developing effective, accountable and transparent institutions at all levels.
This provides a level of security, integrity and reliability eliminating the need for intermediaries and reducing the risk of arbitrary discretion. Transactions can also be tracked, traced and used by law enforcement and government auditors.
Mr Robinson notes that UNODC provides tail-end technical assistance to support the campaign against corruption, economic fraud and identity related crime.
This technical assistance includes legislative drafting national policy and strategy guidance and capacity building activities.
“To combat government corruption, Blockchain solutions focusses on automating and tracking high risk transactions such as public contracts, cash transfers and aid funds,” Mr Robinson says, noting that ICT access in rural Kenya remains an issue in the campaign.
The UN agency says the technology provides an unprecedented level of integrity, security and reliability to the information it manages, reducing the risks associated with having a single point of failure. It eliminates the need for intermediaries, cuts red tape and reduces the risk of arbitrary discretion.
It also makes it possible to track and trace transactions and that the immutable trail of transactions can be used by law enforcement and government auditors thereby neutering fraud.
The universality of Blockchain presents the potential for application for various fields-state administration, international economic relations, private enterprise, production, trade, the judicial system, medicine, education, science among others.
“Blockchain technology becomes attractive to the global community and international organizations because it is a tool that can be used to potentially prevent corruption and protect public registries from fraud and tampering,” he says.
Corruption poses significant threats to countries around the world as it weakens institutions, erodes trust and threatens the economy by undermining fair competition and discouraging investment and trade.
To check corruption, Blockchain technology, therefore, builds on traceability, transparency and accountability and protects data from interference.
Reports from the Office of Auditor-General indicate that taxpayers could be losing at least Sh1 trillion to corruption because of the failure by those in charge to account for the monies appropriated due to lack of data.
In 2016, then Ethics and Anti-Corruption Commission chairman Philip Kinisu, a retired auditor, said that a third of Kenya’s budget is lost to corruption every year with the lack of equipment, including technology a huge dent in the anti-graft war.
The Organisation for Economic Cooperation and Development (OECD), notes that each year, an estimated USD9.5 trillion is spent on public sector contracts and large public investment projects.
It is estimated that up to 10 percent of the total cost of doing business globally and up to 25 percent of the cost of procurement contracts in the developing countries is due to corruption.
“Now these are extraordinary figures and the imperative to tackle it is correct,” Mr Robinson says.
The World Bank further estimates that businesses and individuals pay up to $.5 trillion every year in bribes which corresponds to a staggering two percent of the global Gross Domestic Product (GDP).
To address this, Mr Robinson says that every step of the procurement chain is monitored, tracked and audited.