Survey: Taxpayers lost Sh49b in inflated road construction costs
Lewis Njoka @LewisNjoka
Kenya lost Sh49 billion in unexplained cost escalation in road construction projects between 2013 and 2017, according to a report by Africa Centre for Open Governance (AfriCOG).
The report dubbed dubbed Highway Robbery: Budgeting for state capture, says this amount is enough to build 760 kilometres of trunk road at the standard average cost of Sh64 million per kilometre.
According to the report, corruption in the country is factored in during the budget making process resulting in inflated prices and loss of public funds.
Instead of governing how public money is raised, budgeted and spent, the public finance management system has been rigged to extract public resources for the benefit of a few individuals, it says.
“Is our budget really loaded with corruption where you know exactly at which exit point it is going to be taken?
This is where I am concerned - that we are in a situation where our budget is loaded with corruption,” the report poses.
In four years, financial year 2013/14 and 2016/2017, the government constructed 930 kilometres of trunk roads at an average cost of Sh80 million per kilometre.
This, according to the report is Sh16 million higher (20 per cent) than the Sh64 million per kilometre recommended by the construction cost index published by the Kenya National Bureau of Statistics.
The case is no different for water and electricity sectors which too had a fair share of overpriced or unnecessary projects with the initiators mostly motivated by kickbacks.
In the first four years, these three sectors absorbed Sh843 billion, equivalent to 43 per cent of government’s capital budget over the period, and 53 per cent excluding the Mombasa- Nairobi Standard Gauge railway, which accounts for 17 per cent on its own.
“Total infrastructure spending rose by 120 per cent in the four year period between 2013/14 and 2016/17 financial years compared to a similar period of the Government of National Unity,” AfriCOG says.
The report attributes this to intentionally inflating costs during budgeting and the government going for the more expensive urban projects as opposed to the less expensive rural ones.
Speaking during the launch of the report economist David Ndii said it seemed that the choice of projects were motivated by the sums involved with cartels pushing for projects where they could make a bigger cut as opposed to the viability of the project.
“What economic logic is there that you spend Sh3 billion on an urban road yet that could build you 50 kilometres in the rural areas?” he asked.