Corruption Hinders Growth Of Kenyan Defense Sectors

Kenya spent an average of 5.1% of its allocated defense budget on capital expenditure (CAPEX) during 2015-2019. During the forecast period the country is expected to invest around 8.6% of its defense budget on CAPEX. On a cumulative basis, Kenya’s CAPEX during the historical period amounted to US$283.7 million and the country is forecasted to invest around US$540.4 million over the forecast period.

Kenya has one of the most powerful armed forces in East and Central African region. Kenya’s defense expenditure during the historical period has been mainly driven by the procurement of small arms, aircraft, artillery, and armored vehicles. The country’s defense budget increased at a CAGR of 5.71% from 2015 to 2019. Kenya’s defense expenditure amounted to US$0.9 billion in 2015, which increased to an investment of US$1.1 billion in 2018. Kenya’s defense budget is valued at US$1.2 billion in 2019 and is anticipated to grow at a CAGR of 2.76% during the forecast period to reach US$1.3 billion by 2024.

Kenyan homeland security (HLS) expenditure will grow at a CAGR of 0.64% over the forecast period, increasing from US$1.1 billion in 2020 to US$1.2 billion by 2024. Kenya’s HLS expenditure is primarily driven by its needs of prevention of internal ethnic conflicts, controlling narcotics trade to and from Kenya, eliminating human trafficking, and prevention of terrorist attacks on civilian targets.

Due to its lack of domestic industrial manufacturing capacity, Kenya will largely be dependent on imported military equipment to competently handle the challenges mentioned above. Although Kenya is capable of producing small arms such as pistols, shotguns and rifles, it has been largely dependent on external suppliers for most of its advanced weapon systems. Between 2014 and 2018, Serbia, China, and the US emerged as key suppliers for defense equipment to Kenya with small contribution from countries such as Germany and Jordan.

Corruption is endemic within most of the institutions in Kenyan Government, and the defense sector is also not immune to it. Corruption acts as a hindrance for foreign suppliers interested in entering the Kenyan market as it often leads to operational delays as well as increased cost of doing business. For example, in 2012-2013 serious irregularities were observed in a deal for the procurement of 181 APC vehicles amounting to around KES8 billion.

The Kenya defense industry market size and drivers: detailed analysis of the Kenyan defense industry during 2020-2024, including highlights of the demand drivers and growth stimulators for the industry. It also provides a snapshot of the country’s expenditure and modernization patterns.

Budget allocation and key challenges: insights into procurement schedules formulated within the country and a breakdown of the defense budget with respect to capital expenditure and revenue expenditure. It also details the key challenges faced by defense market participants within the country.

Ilicit Sugar Trade, Al Shabab Ties And Corruption

The report, published by the Kenyan watchdog group Journalists for Justice, accuses the Kenya Defense Forces of earning millions of dollars as its cut in an illegal trade network involving up to $400 million per year in sugar. The revenues are shared among local administrators, the army and the Islamist militants, known as the Shabab, the report says.

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It highlights recent growth in the illegal smuggling of up to 150,000 tons of sugar per year into Kenya from Somalia through the Somali port Kismayo, facilitated by the Kenyan forces. The accusations follow reports by United Nations investigators alleging similar cooperation in the illegal export of charcoal from the same port to the Persian Gulf.

The Journalists for Justice report follows revelations of dizzying corruption within Kenya. A parliamentary committee was given details this month on government spending for items like a $16,000 television and $85 ballpoint pens. On Thursday, a consortium of Western aid donors warned that graft was pulling down the country.

“Corruption is undermining Kenya’s future,” the American ambassador to Kenya, Robert F. Godec, said Thursday on Twitter. “Time to end it now!”

Donors, including the United States, said they would consider travel bans on those implicated in graft. But the Kenyan watchdog group asserts that the corrupt behavior crosses the border and that the illicit trafficking network was the reason for the Kenyan Army’s presence in Somalia.

“Rather than taking the fight to the Shabab,” the report said, the Kenyan forces were “in garrison mode, sitting in bases while senior commanders are engaged in corrupt business practices with the Jubaland administration and the Shabab.” Kismayo is the commercial capital of the Jubaland region.

In recent years, the United States has donated over $100 million toward the African Union peacekeeping mission in Somalia, which includes Kenyan troops.

When Kenya’s army and a proxy militia ousted the Shabab from Kismayo in 2012, it represented a significant shift. The Shabab — a militant group affiliated with Al Qaeda and believed to be responsible for the deadly 2013 attack on the Westgate mall in Nairobi, Kenya, among other violence — have long made their money in part by exporting illicit goods from Somalia.

Successive reports from United Nations investigators have found Kenya’s forces involved in an illicit charcoal trade from which the Shabab and local administrators shared revenues.

Now, the Journalists for Justice report says that when it comes to sugar, the Kenyan forces and the Shabab are virtually working side by side.

In the sugar trade, the report describes a network facilitated by the Kenyan forces and involving nearly 1,000 trucks per month: “K.D.F. and Jubaland officials levy a tax of $2 per bag on imported sugar, an income of around $250,000 a week, or $13 million a year. Al-Shabab taxes the trucks as they leave Kismayo at the rate of $1,050 each” — and that is before they are taxed again by Jubaland authorities.

It said that the illicit charcoal trade had dipped in volume recently but remained a linchpin of revenue for the Shabab, earning it roughly $100 million a year.

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