This paper aims to provide an overview of private-sector stakeholders in the renewable-energy realm and examines possibilities for corruption at the interface between private climate interventions and international development in Kenya. We ask: Who are the new private actors in selected renewable electricity markets in each of these countries? To what degree do such actors face corruption risks? What efforts can be considered to help reduce corruption?
Based on original expert interviews, we then explore corruption risks:
The drivers behind corruption in Kenya are variegated. At the top of the list however are claims that the political system in Kenya is highly prone to corruption, and that this can spillover into private sector corruption. R01 framed this as “reverse corruption” as it is the state corrupting private actors, rather than the other way around:
What is interesting about Kenya is it reverses the usual relationship about corruption. Here [in Kenya], corruption is highly influenced by politicians. Normally, the narrative is the private sector corrupts public officials. In Kenya, public officials control the private sector, and then corrupt the private sector.
R06 picked up on this theme as well, commenting that in Kenya:
Corruption starts from the top, it’s not something starting at the bottom. Unfortunately, many of the practices are more systemic and engrained in trading patterns, politics and business.
This creates a blurred line between public and private actors, further driving corruption.
A third driver is monopoly like entities that control many aspects of solar energy financing or policy. R01 explained that some entities such as the KPLC are practically “made for corruption”:
One of the structural drivers is the fact that you can only sell your power, whether you generate it from solar or wind, to one company, Kenya Power and Light Company (KPLC). It is a monopoly, a publicly owned company. It is made for corruption. This is one of the main drivers. KPLC are the people who buy the energy and distribute it nationally. It has smaller parastate companies, regulation etc., but if a private sector company wants to bribe its way up, it is very easy… It can become a one-stop-shop for corruption. We have laws regulating interaction between KPLC and people, but these laws are not implemented, KPLC can do what they want to do, and get away with it. Everyone is in the pockets of KPLC.
A fourth driver relates to the sheer volumes of investment in energy access pouring into Kenya, but also unevenness in terms of who can access modern energy services, leading some providers to act “corruptly” with the intent of expanding access to the poor. R07 noted that:
Profit-oriented private investors have taken advantage of the electrification regime to provide electricity to households in the Kenyan periphery and have thus reduced spatial disparities in energy access. That said, these created new geographies of electricity sector corruption, uneven electricity tariffs (or energy expenditure) and sometimes sub-standard energy services.
However, R07 went on to explain how this can itself lead to corruption in the name of poverty reduction:
State neglect of territorially remote areas in electricity provision, and/or bureaucratic bottlenecks in grid connection applications and institutionalized corruption in centralized grid connections have created desperation on the part of rural residents and the emergence of opportunistic private investors in the provision of off-grid electrification alternatives. In fact, electricity customers in underprivileged locations in Kenya consider corruption as the norm and the most promising avenue to gaining expeditious energy access.
Small scale providers could be the “worst performers” in this regard, as they may flout (intentionally or unintentionally) existing solar energy regulations. As R07 explained:
Small-scale solar PV providers and solar energy technicians operating in rural areas have the penchant for flouting Solar Photovoltaic Systems Regulations 2012. They are almost everywhere in rural areas and their services are badly needed by the desperate rural folks. It is difficult subjecting these small-scale operators or their unscrupulous deals to state control.
A fifth driver is a norm against speaking out about corruption. R06 commented on how it would not be in their business interest (as a private sector solar company) to speak out against corruption, as this could hurt their market share relative to other competitors:
We’re not actively lobbying against corruption, that sort of speaking out wouldn’t get us anywhere.
R08 agreed, and admitted that in Kenya:
There is a culture of agreeing with your boss, doing what they said, not shaking the boat, not speaking out. We have a whistleblower site, where people can speak up, and nobody uses it! Can be corruption, or sexual harassment, or even bullying, but even then it’s not used.
A sixth and final driver could be confusion over or a lack of knowledge of the regulatory framework governing a highly technical sector. R06 suggested that at least some actors were prone to “accidental corruption,” noting that “people fall prey to misunderstanding the law and what actually needs to be done. It is the fear of the unknown that may drive companies to accidentally be corrupt.”
Overall, the Kenyan environment has “corruption everywhere,” driven by a suite of conditions that feature prominently in the solar energy market through an overreliance on the public sector’s role. R08 argued that “Africa is a bribe heavy environment, people tried to bribe us all the time, initially, when our business was starting.” (…)
R06 added that the entire area of taxes, duties, and tariffs was prone to corruption, corruption which affects multiple parts of the solar supply chain. It can occur at the import process, at the port, when containers coming in have solar technology, and must clear customs, therefore generating unexpected “non-tariff surcharges” and “hidden duties and surcharges.” Then there are corruption issues with logistics, where shipments of solar technology can get “stopped on the road for import documents” or requests for “vehicle inspections” where you “need money to grease the wheels, literally.” R06 lastly spoke about corruption risks with revenue authorities, where city auditors or officials come into the solar energy shop and “question our licenses and expect a payoff.”
Nevertheless, it is important to put these corruption risks in perspective. R08 commented that “Kenya is actually one of the best countries in terms of having the least amount of corruption in the region” and that:
We find corruption much, much higher in other markets. It is very big in Mozambique, and we also had a major issue in Uganda, corruption so deep, the whole organization was rotten. We had to fire more than 80 % of our staff, everybody was involved in fraud, fake selling to fake customers, hacking the units, out of control corruption, videos online about it, very bad for us, and our sales, and our brand.
R07 suggested that participating in corrupt practices or playing the game would eventually be counterproductive, given both potential loss of customers and loss of donor funding:
Corruption seems self-defeating given the potential loss of customers to new service providers following stories of exploitation or cheating via installment payment systems … solar energy companies that depend on external funding expressed fears of possible funding cuts due to negative publicity on exploitation of customers.
It could be reasons such as these that see corruption within the sector decline over the coming years.
Excerpt of: “Made for corruption?” Private sector actors, renewable energy, and corruption risks for wind power in Mexico and solar electricity in Kenya (Elsevier 2024)