Missing files and Tender Entrepreneur Brokers

“The abuse of entrusted power for private gain is always fine for the one person doing it, but it becomes catastrophic if everybody starts doing it.” - David Pitt-Watson

Last night on the news, Kenyans got to witness Dorothy Angote, the Permanent Secretary in the Ministry of Lands leading what was a day-long graft busting raid on junior officials in her Ministry. The Ministry which handles nearly five million title deeds, has been continuously been named as being one of the top most corrupt public institutions in the country. For her efforts, the PS unearthed thousands of files that had been stashed, some of which had been “missing” since the 1990s.

Kenyans have long become used to the phantom menace called “missing” files. The ghost appears out of nowhere just when one needs to undertake a transaction with the government.

Anyway, Dorothy Angote’s impromptu raid at least saved some Kenyans from the cartel of rogue officers at the Lands ministry as well as what we shall politely call brokers, agents or tender entrepreneurs.

However, Ms. Angote’s prescription to the problem falls short of expectation when she announced that there would be a reshuffle and disciplinary actions for the errant officers. If the Lands Ministry was a private business, for sure at least there would have been mass summary dismissals, if not court prosecutions. To send a clear message, the punishment must be clear.

Kenya has not been alone in handling rogue brokers that encourage public sector corruption. South Africa has also been dealing with such brokers who because of their close connections to the political elite, seem to be amassing great wealth to the detriment of hard working entrepreneurs.

Bobby Godsell the chairman of Business Leadership South Africa was recently mentioned in the media calling for South Africans to stand up to tender entrepreneurs who benefited from state contracts.

He likened this business practice to "a form of economic terrorism" that imposes “a cost on state services and conferring no benefit”.

This came in the wake of allegations that the country’s ruling party ANC’s youth leader Julius Malema's who the BBC recently described “28, a little overweight, impeccably dressed, and rather fond of referring to himself with the royal ‘we’” had irregularly personally benefited from lucrative government contracts. However, Mr. Malema has denied accusations of unearned wealth by saying that he is merely the victim of a political conspiracy and a racist plot. 

Indeed Malema is just another example of South Africa’s “bling culture” which has for some compromised ethical business behaviour. Entrepreneurs have had to be linked to a politically connected personalities in order to effectively compete on the public sector market.

Back in Kenya, business cronyism in the tender sector has led to great resistance each time the government tries to institute measures that will even out the information asymmetry when it comes to public procurement. 

As we mentioned almost two years ago, the broker sector in Kenya has also become a culture where:

“You need a middle man to manoeuvre public processes. For instance, if one goes to the companies, lands or court registries, you have to more or less fight your way to the front of the queue. Brokers have taken precedence and because they have managed to become acquainted with the public officers, they tend to get their work done first … “

And it is this lack of transparent systems and promulgation of red-tape that have been a boon for the broker community. The cost imposed on not just entrepreneurs but every taxpayer in muddling through bureaucratic systems is what ensures that brokers shall always be in demand. After all, the opportunity cost of giving a broker a facilitation fee and lunch money to ensure that your application is submitted or your file is found, is much less than the cost of having to leave your business in order to chase up the matter yourself.

Then there is the issue of business competitiveness which has also had an impact on the need to fast-track (at whatever cost) government procedures. Bending the rules and paying the occasional bribe just to get a process fast tracked or even to be awarded a contract are common dilemmas faced by today’s entrepreneur. Moreover if one is doing it, then you can bet that others just to stay ahead of the competition will also do so.

It has now become recognised that an important catalyst to business growth is enabling entrepreneurs to compete on the public procurement market. And it is encouraging that young entrepreneurs are taking on the bottlenecks in the public sector, and developing new applications that equalize information asymmetries and promote transparency whilst combating public sector corruption. One such business is Tenders Unlimited, a new Kenyan business startup that provides databased access to tenders to business people.

Reducing the opportunity costs of red-tape frees up resources for more productive activities as well as spurring wider economic growth. Thus computerization of government documents should be implemented.

And finally to put rogue brokers out of business, procedures that require in-person attendance should be minimised. As seen by the influx of mobile phone money transfer systems onto the market, banks are now joining the fray and offering mobile payment systems that will eliminate the need for people to stand in long queues just to get their bank statements. Without ZAP and MPesa, chances are that the traditional banks would not have brought banking services closer to the people.

Now we are asking the government to bring it’s services closer to us taxpayers too.