BBLOCKCHAIN FOR ANTI-CORRUPTION:

EVALUATING DECENTRALIZED LEDGER SYSTEMS IN

PUBLIC FINANACIAL MANAGEMENT IN KENYA

WAWERU EDWARD KINYUA

ADM NO. DIS/2009/14

A CONCEPT NOTE SUBMITTED TO GRADUATE SCHOOL IN

PARTIAL FULFILMENT OF THE REQUIREMENT FOR THE
AWARD OF DOCTOR OF PHILOSOPHY IN INFORMATION
SYSTEM IN THE SCHOOL OF INFORMATION SCIENCE AND
TECHNOLOGY OF KISII UNIVERSITY

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 NOVEMBER, 2023

TABLE OF CONTENTS
CHAPTER ONE............................................................................................1
Background of the Study..............................................................................1
1.0 Introduction............................................................................................1
1.1 Statement of the Problem.......................................................................4
1.2 Main Objective.......................................................................................5
1.2.1 Specific Objectives..........................................................................5
CHAPTER TWO...........................................................................................6
2.0 Theoretical Framework..........................................................................6
2.0.1 Institutional Theory.........................................................................6
2.0.2 Diffusion of Innovation Theory......................................................6
2.0.3 Technology Acceptance Model (TAM)..........................................7
2.1 Conceptual Framework..........................................................................8
CHAPTER THREE.......................................................................................9
Research Methodology..................................................................................9
3.0 Primary Data Collection.........................................................................9
3.1 Blockchain Application Systems Development.....................................9
3.3 Data analysis........................................................................................11
3.4 Expected Outcome...............................................................................11
References.....................................................................................................13
Budget...........................................................................................................17
Workplan......................................................................................................17

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CHAPTER ONE

Background of the Study

1.0 Introduction
Corruption is a global issue present in varying degrees across nations
(Rontos, Salvati & Vavouras, 2013; Albanese, 2022; Bowra et al., 2022).
Africa, a continent rich in cultural diversity and vast resources, grapples with
the impacts of corruption, affecting both the public and private sectors
(Aborisade & Aliyyu, 2018; d'Agostino, Dunne & Pieroni, 2016; Yeboah-
Assiamah, Asamoah & Osei-kojo, 2014). It manifests in various forms,
including bribery, embezzlement, nepotism, and patronage networks
(Masenya, 2017; Desta, 2019). These practices hinder economic
development and it slows down the democratic process and stability in a
political system (Mbaku, 2019).

In Kenya, corruption has been a persistent challenge since gaining

independence in 1963 (Hope, 2014). Despite efforts to curb malfeasance
through legislative measures and the establishment of anti-corruption bodies,
the issue has proven resilient. Corruption in the country manifests itself in
various forms including petty and grand corruption, embezzlement of public
funds and a system of political patronage which is well entrenched within the
fabric of the Kenyan society (Jarso, 2010; Yasmin, 2021; Onyango, 2012).
Some of the notable incidences of corruption in Kenya include the coffee
smuggling and poaching during the reign of the late President Jomo
Kenyatta, the infamous Goldenberg scandal during the late President Moi’s
era, the Anglo- Leasing scandal during President Kibaki’s reign, the
infamous National Youth Service (NYS) scandal, the infamous Arror and
Kimwarer Scandal and the latest being the Kenya Medical Supplies Agency
(KEMSA) scandal, the latest two being the largest corruption incidences in

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President Uhuru Kenyatta’s reign (Cheruiyot, 2021). In 2023, Kenya has
been ranked position 123 out of 180 countries globally in the latest
Corruption Perception Index (CPI) released by Transparency International
(Karuu, 2023). The corruption watchdog which is leading the fight against
corruption has said that most countries have made little or no progress in
tackling the vice in more than a decade.

In a bid to fight graft, Kenya has drafted, formulated, and implemented a

number of anti-corruption regulations and measures to combat the vice.
These measures include the Anti-Corruption and Economic Crimes Act of
2003 and the Penal Code, the Bribery Act of 2016, the Public Officers Ethics
Act of 2003, the Public Procurement and Disposal Act, the Finance Act of
2006, the Service Commissions Act, and the Access to Information Act of
2016 (Ochieng, 2021; Gachoka, 2016). However, there has been a rise in the
number of corruption cases, the frequency in which they happen, the
personalities involved, and the amount of money misappropriated.

In the pursuit of transparent and efficient financial management, Kenya has

implemented the Integrated Financial Management Information System
(IFMIS) as a pivotal tool to streamline public financial processes (Bosire,
2016; Timbwa, 2022). IFMIS is designed to enhance accountability, fiscal
responsibility, and overall governance by integrating financial information
across various government departments and agencies (Muriithi & Wamiori,
2020). However, the implementation of IFMIS has not been without
vulnerabilities, as the system may be susceptible to manipulation or
exploitation by corrupt actors (Safo, 2020). Blockchain technology presents
itself as a formidable solution to address the aforementioned challenges and
augment the capabilities of IFMIS in the anti-corruption pursuit.

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The origins of blockchain can be traced back to 1991, when Stuart Haber and
Wakefield Scott Stornetta introduced the idea of a chain of records secured
through cryptography. Over the subsequent two decades, the technology saw
increasing adoption. However, the pivotal moment for blockchain occurred
in 2008 when Satoshi Nakamoto provided a definitive model and
applications. The technology gained significant traction with the launch of
the first blockchain and cryptocurrency in 2009, marking the beginning of its
substantial impact on the tech sector (Habib et al., 2022).

Blockchain operates on a distributed ledger that records transactions across a

network of computers. Once a block of data is added to the chain, it becomes
virtually impossible to alter without altering all subsequent blocks. This
immutability ensures a transparent and unchangeable record of transactions,
making it challenging for malicious actors to manipulate or conceal
information (Sarmah, 2018). Smart contracts, self-executing contracts with
the terms directly written into code, are utilized to automate and enforce
compliance. By embedding rules and conditions within these contracts, the
need for intermediaries is reduced, minimizing opportunities for corruption
and ensuring that transactions adhere to predefined criteria (Habib et al.,
2022). Traditional systems often involve numerous intermediaries, creating
potential points of corruption. Blockchain's decentralized nature eliminates
the need for central authorities, reducing the risk of corruption by removing
single points of control. This is particularly relevant in sectors such as
finance, where decentralized cryptocurrencies challenge traditional financial
structures (Habib et al., 2022). Blockchain can enhance identity verification
processes by creating secure and immutable digital identities. This reduces
the risk of identity fraud, a common avenue for corruption (Wolfond, 2017).
Individuals and organizations can have their identities verified on the

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blockchain, and this information can be accessed securely and without
manipulation.

1.1 Statement of the Problem

Corruption remains the most pressing challenge to governance in Kenya
(Munywoki et al., 2023; Lugulu, 2023). It poses a major threat to sustainable
development, and economic growth manifested in inequality, poverty, loss of
revenue, as well as poor human capital (Omar, 2020). Kenya's experience
with corruption is not something new, however recently, corruption cases
involving members of the government make headlines in the Kenyan local
and national press on a daily basis. Over the past decade, Kenya has
witnessed a significant evolution in the application of ICT tools to tackle
corruption (Mutungi et al., 2019). These tools, ranging from digital platforms
to data analytics, have been integrated into various aspects of public
administration to create a more resilient and transparent system (Mutungi,
2023). However, the nation continues to grapple with the challenges posed
by corruption. In a pioneering move, blockchain technology has been
introduced at the pilot stage in the Judiciary and the Ministry of Lands. The
inherent features of blockchain, such as immutability and decentralization,
offer the potential to revolutionize processes, enhance transparency, and
significantly reduce corruption risks in these crucial sectors (Habib et al.,
2022). While blockchain technology has demonstrated its effectiveness in
enhancing transparency and accountability in private sectors in Kenya
(Aketch, Mwambia & Baimwera, 2021; Mohamud, 2020), its adoption
within the public sectors of Kenya remains very limited.

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1.2 Main Objective
To design, develop,implement and assess Blockchain Technology as Anti-
Corruption Measures in Selected Public Sectors in Kenya

1.2.1 Specific Objectives

i. Undertake technical feasibility to determine the technical
requirements and infrastructure needed to implement blockchain
technology in Kenya’s public financial management systems for
effective anti-corruption measures.
ii. Undertake economic feasibility to analyze the cost and benefits of
decentralized ledger systems in combating corruption within the
public financial management sector in Kenya.
iii. Undertake political feasibility to identify key stakeholders necessary
for implementation of decentralized ledger systems to combat anti-
corruption in Kenya public finance management systems
iv. 4. Undertake legal feasibility to identify the necessary legal and
regulatory frameworks that need to be established to support
implementation of blockchain technology in Kenya’s public financial
management systems for anti-corruption purposes.
v. 5. To undertake operational feasibility in order to assess the
organization preparedness in implementing blockchain technology in
public financial management system in Kenya to enhance
transparency and reduce corruption.
nvestigate the mediating effect of capacity building on blockchain
technology implementation as an anti-corruption measure in public
financial management system in Kenya.

7. Develop guidelines and recommendations for the adoption and

implementation of blockchain technology in Kenya’s public financial
management systems to combat corruption effectively.
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CHAPTER TWO

2.0 Theoretical Framework

2.0.1 Institutional Theory
Institutional theory was introduced in the late 1970s by John Meyer and
Brian Rowan as a means to explore further how organizations fit with, are
related to, and were shaped by their societal, state, national, and global
environments (Rowan, 2006). Institutional theory is particularly relevant
when examining how organizations and sectors respond to external pressures
and adopt new technologies. In the context of the study, it will help analyze
how the adoption of blockchain technology aligns with or challenges existing
institutional norms, regulations, and practices within the public sectors in
Kenya. This theory is valuable for understanding how the institutional
environment influences the decision-making process, responses to
challenges, and the successful integration of blockchain as an anti-corruption
measure.

2.0.2 Diffusion of Innovation Theory

The Diffusion of Innovation theory was introduced by Everett Rogers in
1962 (Rogers, Singhal & Quinlan, 2014). The theory focuses on how new
technologies are adopted, diffused, and assimilated within a social system. In
the context of the study, this theory will provide information into the factors
influencing the adoption of blockchain technology. It helps identify the key
determinants that facilitate or hinder the acceptance of blockchain as an anti-
corruption measure, including factors such as perceived benefits,
communication channels, and the characteristics of the innovation itself.
Understanding the diffusion process is crucial for anticipating challenges and
maximizing the benefits of blockchain implementation.

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2.0.3 Technology Acceptance Model (TAM)
This theory was postulated by Davis in 1989 as an information systems
theory modelling how individuals accept the use of a technology (Venkatesh
& Davis, 2000). This model by Davis suggests that when a new technology
is presented to the users, some factors influencing the decision of the users
on adopting the technology based on perceived use and perceived usefulness
(Chuttur, 2009). The level at how users believes that use of a specific system
will improve a work performance is regarded as the perceived usefulness
while the degree of believing that use made the work easier is known as the
ease-of-use. In this study, TAM will be applied to understand the attitudes
and intentions of stakeholders within public sectors in Kenya toward the
adoption of blockchain technology. By examining factors such as perceived
ease of use and perceived usefulness, TAM can provide information into the
behavioral aspects of technology adoption.

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 2.1 Conceptual Framework
Independent variables Mediating
variable
Technical
Requirements
 Technical
 IIT
knowhow
infrastructure
Capacity Building
Economic Individual
Conditions  Organization
 Cos Environment
 Benefits
t
 customer
Political
referrals
Requirements Corruption
 Key Reduction
 people
stakeholders
 data
management
Legalmanagement
Requirements Dependen
 Data t
variabl
 Data
Privacy
e security
Operational Requirements
 Governance
 structurecapital
Human
 Existing framework

CHAPTER THREE

Research Methodology

3.0 Primary Data Collection

The study will adopt positivism philosophical approach and employ
descriptive research design. The research will be conducted in Judiciary and
Ministry of Lands which have already implemented blockchain and two
other sectors which have not implemented blockchain technology. The target
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population will be all employees who are using Blockchain technology to
carry out their duties. The sample size determination, for this study will be
based on Taro Yamane (1973) formula for calculating the sample size. The
sample selection will be achieved using stratified random sampling
techniques. Stratified sampling involves ordering the sampling frame by one
or more characteristics and then selecting the same percentage of people
from each subgroup using random sampling (Somekh and Lewin, 2009).
Then the study will employ the Neyman allocation formula for the sample
size distribution. Pilot will be carried out to establish the reliability and
validity of research instruments. This study will use structured questionnaires
and interview schedules to collect primary data. Key Performance Indicators
will be developed to measure transparency and accountability, including the
accuracy of financial records, the reduction in transactional discrepancies,
and the efficiency of compliance enforcement through smart contracts.

3.1 Blockchain Application Systems Development

The chosen method for developing the application will be Rapid Application
Development (RAD) prototyping. This selection is based on its suitability for
emphasizing an iterative software development process, where the final
output is a prototype. This approach entails the researcher engaging in
multiple iterative steps, starting from gathering requirements, rapid designing
the system, constructing the prototype, reviewing the constructed prototype,
and ultimately refining the prototype through successive iterations until
achieving the overall research objectives.

During the Requirements Gathering phase, the researcher will identify the
project's scope and both the functional and non-functional requirements of
the application to facilitate the subsequent phases. The functional

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requirements, often synonymous with business processes, will be a focal
point.

In the System Design phase, the researcher will partition the business
processes from the requirements gathering phase into two categories: system
inputs and system outputs. Appropriate software modeling techniques will be
employed to model the system processes. This will include the utilization of
data flow diagrams, use case diagrams, and sequence diagrams to illustrate
how actors interact with the system.

Moving into the Rapid Prototype Construction phase, the researcher will
implement the actual system based on the identified logical and physical
designs. The initial prototype will be constructed using open source code.
Challenges may arise during this process, particularly concerning the
implementation environment. If the source code encounters compilation
issues, the researcher will adapt by transitioning to an alternative hosting
platform. After making necessary adjustments, the development will proceed
smoothly. The application will ultimately be built on a cloud-based virtual
server, utilizing Hyperledger Composer and Fabric for blockchain
application development.

During the prototype review stage, feedback on functionality and

performance will be collected. The system will undergo functional,
compatibility, and integration tests to ensure alignment with identified
requirements. Based on the feedback, the prototype will undergo further
modifications until a product aligning with the overarching objectives of the
study is achieved.

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3.3 Data analysis
Data gathered from the questionnaires administered will be analysed with the
help of SPSS and Microsoft Excel. Thematic analysis will be employed to
extract qualitative data from interviews. Quantitative data will be analysed
using descriptive analysis such as means and frequencies and inferential
analysis will involve multiple linear regression and correlation analysis to
show the relationship between the variables.

3.4 Expected Outcome

Ultimately, the final outcome of this research is to design, develop,
implement and assess Blockchain Technology as Anti-Corruption Measures
in Selected Public Sectors in Kenya

The implementation of blockchain technology is anticipated to lead to

increased transparency in public sector operations. Through the decentralized
and immutable nature of blockchain, transactions and processes can be
securely recorded and verified, fostering greater accountability in the
management of public resources.

The adoption of blockchain as an anti-corruption measure is expected to

contribute to a significant reduction in corruption risks and fraudulent
activities within selected public sectors in Kenya. The tamper-resistant
nature of blockchain can enhance the integrity of data, reducing
opportunities for corrupt practices and fraudulent schemes.

The implementation of blockchain is likely to result in more efficient and

streamlined processes within public sector operations. By leveraging the
decentralized ledger and smart contract capabilities, bureaucratic bottlenecks
can be minimized, leading to quicker and more transparent service delivery.

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A positive outcome is an anticipated increase in public trust and confidence
in the selected public sectors. The use of blockchain to ensure the integrity of
public records and transactions is expected to enhance the credibility of
government processes, fostering greater trust among citizens in the
institutions implementing these anti-corruption measures.

References
Aborisade, R. A., & Aliyyu, N. B. (2018). Corruption and Africa. The
Development of Africa: Issues, Diagnoses and Prognoses, 227-254.
Albanese, J. S. (2022). Why Corruption is the Largest Problem in the World:
Freda Adler Distinguished International Scholar Award Address.
International Criminology, 2(2), 103-110.

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Bosire, K. K. (2016). The impact of integrated financial management
information system (IFMIS) on financial probity in the public sector
in Kenya (Doctoral dissertation, University of Nairobi).
Bowra, A., Saeed, G., Gorodensky, A., & Kohler, J. C. (2022). An
exploration of anti-corruption and health in international
organizations. Plos one, 17(8), e0269203.
Cheruiyot, K. (2021). The Fight Against Corruption and Economic Crimes in
Kenya: The Plight of EACC and Its Lack of Prosecutorial Powers.
Available at SSRN 4120443.
d'Agostino, G., Dunne, J. P., & Pieroni, L. (2016). Corruption and growth in
Africa. European Journal of Political Economy, 43, 71-88.
Desta, Y. (2019). Manifestations and causes of civil service corruption in
developing countries. Journal of Public Administration and
Governance, 9(3), 23-35.
Gachoka, P. M. (2016). Public Procurement Oversight Authority: An
assessment of its effectiveness in fighting corruption and promoting
ethical practices in public procurement in Kenya (Doctoral
dissertation, Strathmore University).
Habib, G., Sharma, S., Ibrahim, S., Ahmad, I., Qureshi, S., & Ishfaq, M.
(2022). Blockchain technology: benefits, challenges, applications,
and integration of blockchain technology with cloud computing.
Future Internet, 14(11), 341.
Hope Sr, K. R. (2014). Kenya's corruption problem: causes and
consequences. Commonwealth & Comparative Politics, 52(4), 493-
512.
Karuu, R. N. (2023). Decentralisation, Corruption And Service Delivery In
Kenya: A Case Of Health, Education And Markets.

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Lugulu, J. (2023). Tackling Bribery In Accessing Kenyan Citizenship:
Towards Implementing And Enforcing Anti-Corruption Measures.
Journal of Anti-Corruption Law, 7.
Masenya, M. J. (2017). Neo-patrimonialism, corruption and governance in
South Africa. African Journal of Public Affairs, 9(9), 146-156.
Mbaku, J. M. (2019). Corruption and Economic Development☆. In African
economic development (pp. 331-345). Emerald Publishing Limited.
Munywoki, J., Nyawira, L., Musiega, A., Gathoni, R., Tsofa, B., Hanson, K.,
... & Barasa, E. (2023). How does corruption influence health system
efficiency? A case study of two counties in Kenya. medRxiv, 2023-
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Muriithi, J., & Wamiori, G. M. (2020). Effect Of Integrated Financial
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Of County Government In Kenya.
Mutungi, F. (2023). Digital Anti-Corruption Typology for Public Sector.
East African Journal of Information Technology, 6(1), 45-65.
Mutungi, F., Baguma, R., Janowski, T., & University Krems, Austria, D.
(2019, June). Towards digital anti-corruption typology for public
service delivery. In Proceedings of the 20th Annual International
Conference on Digital Government Research (pp. 484-494).
Nilsson, C. (2009). Corruption in Kenya-Individual Attitudes and Actions
Towards Corruption in Nakuru, Kenya.
Ochieng, W. K. (2021). Judicial Enforcement of Constitutionalised Anti-
Corruption Principles: The Case of Kenya. Africa Journal of
Comparative Constitutional Law, 2021(1), 1-22.
Omar, M. (2020). The implications of corruption on Kenya’s sustainable
development and economic growth (Doctoral dissertation, University
of Nairobi).

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Onyango, G. (2012). Administrative and political grassroots corruption in
rural Kenya: It takes two to tango (Master's thesis, The University of
Bergen).
Rogers, E. M., Singhal, A., & Quinlan, M. M. (2014). Diffusion of
innovations. In An integrated approach to communication theory and
research (pp. 432-448). Routledge.
Rontos, K., Salvati, L., & Vavouras, I. (2013). Corruption in the World: Its
Economic, Political and Geographic Determinants and Their
Interactions. Journal of Regional & Socio-Economic Issues, 3(2).
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institutionalism in education, 203-215.
Safo, C. K. (2020). The Effectiveness Of Integrated Financial Management
Information System (Ifmis) As Tool To Control Expenditure In
Metropolitan, Municipal And District Assemblies (Mmdas).
Sarmah, S. S. (2018). Understanding blockchain technology. Computer
Science and Engineering, 8(2), 23-29.
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System in enhancing governance in county governments in Kenya
(Doctoral dissertation, Strathmore University).
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technology acceptance model: Four longitudinal field studies.
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service delivery in Canada’s public and private sectors. Technology
Innovation Management Review, 7(10).
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Yeboah-Assiamah, E., Asamoah, K., & Osei-kojo, A. (2014). Corruption
here, corruption there, corruption everywhere: a framework for
understanding and addressing public sector corruption in developing
African democracies. Journal of Public Administration and
Governance, 4(3), 186-204.

Budget
Budget Items Cost (Ksh)
NACOSTI permit 10,000
Field Reconnaissance 30,000
Collection of Questionnaires 150,000

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Data analysis 30,000
Printing of thesis 10,000
Publications of 2 papers 20,000
Conferences (local) 15,000
Workshop/seminars 15,000
Grand total 280,000

Workplan
Activities Ja Fe Ma Apri Ma Ju Jul Augus
(2024) n b r l y n y t
Field
Reconnaissanc
e
Collection of
Questionnaires
Data analysis
Report writing
Publication
Conference/
workshop

NAME DESIGNATION SIGN DATE

1. Waweru Edward Student ………. ……….
2…………………. Supervisor ………… ………

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