Kenya: Donors threatening to stop funding

Inter Press Service (Johannesburg)
April 13, 2005

The government of Kenya has once again come under fire over corruption which donors say is stifling efforts to implement reforms outlined in the country’s Economic Recovery Strategy.

To show their seriousness, the donors have demanded that the government urgently show commitment to fighting graft by plugging loopholes in the system that promote the vice. If corruptions are addressed, they say, donors will have no choice but to continue offering Kenya financial support.

“We wish to emphasise that the level of our support will ultimately depend on the government’s success in implementing the (Economic Recovery Strategy) ERS, and especially, in tackling corruption,” Makhtar Diop, the outgoing World Bank country director for Kenya, Eritrea and Somalia, said. He was speaking at the second Consultative Group (CG) meeting for Kenya, held in the capital Nairobi Apr.11-12.

The meeting reviewed progress made in implementing the recovery strategy with particular focus on constraints and challenges faced by the government. The gathering brought together donors, senior government officials, members of parliament, the private sector and civil society groups.

Kenya’s first consultative meeting was held in Nairobi in November 2003. Previously, annual consultative group, or informal donors, meetings were held in Paris or London.

When President Mwai Kibaki’ government came to office in December 2002, it set out a five-year (2003-2007) Economic Recovery Strategy.

The strategy, which serves as a roadmap for achieving development focuses on creating an environment for macro-economic stability through enhancing revenue collection, improving governance, rehabilitating and expanding physical infrastructure, and investing in the human capital of the poor.

Edward Clay, the British ambassador to Kenya, says corruption has cost the East African country over 187 million dollars since Kibaki came to office. Rejecting the claim, government officials pointed to Kenya’s economic performance, as a sign that the fight against graft was bearing fruit.

“It is gratifying to note that this sound management of macroeconomic policies has begun yielding positive results. In particular, real GDP (Gross Domestic product) has accelerated from an average of less than one percent over the previous decade to 2.6 percent in 2004, and is projected to move to about 3.5 percent in 2005,” David Mwiraria, Kenya’s finance minister, said.

But Diop argued that the figure presented by Mwiraria remained far too low for Kenya to meet the United Nations Millennium Development Goal (MDG) of cutting poverty by half by 2015.

Claims of widespread corruption in former president Daniel arap Moi’s regime (1978-2002) prompted the International Monetary Fund (IMF) to freeze funding from 2001.

But the 2003 consultative group meeting of donors and government saw IMF resume lending when it gave Kenya a 252.75-million-dollar loan to fight poverty.

In June 2004, the World Bank, one of Kenya’s largest donors, approved 263 million dollars for development projects in the transport, agriculture and water sectors.

Donors have now indicated that for financial assistance to continue flowing, the government must implement anti-corruption laws. “If the laws are enforced, Kenya will be able to set the standard in the fight against corruption, which was the ambition declared by the government when it was elected,” Diop said.

Kibaki used a zero-tolerance on corruption as his election campaign pledge before he came to power.

The European Union (EU), the country’s second largest donor, has also made its stand clear on corruption. At the Apr. 11 meeting in Nairobi, Derek Fee, head of EU delegation, told reporters that Kenya must show its commitment to wipe out graft before donors could release funding. The commitment must include taking action against key government officials implicated in corruption.

Names of senior government ministers close to Kibaki have featured in the scandals that have been a bone of contention between government and foreign envoys over the recent past.

One of the cases, the so called Anglo-Leasing scandal, which was unearthed last April, involved an irregular allocation of tenders and payments for making terrorist proof passports and the construction of a forensic laboratory for the criminal investigations department. Chris Murungaru’s former national security ministry, together with Mwiraria’s finance ministry, allegedly approved payments of about 93 million dollars to the Anglo-Leasing, a shadowy foreign firm.

The two ministers have exonerated themselves from blame through press statements. But their permanent secretaries were suspended and charged in court in February.

In his address Apr. 11, Kibaki reiterated that legislative measures were in place to deal with corruption. He singled out the Anti-Corruption and Economic Crimes Act 2003, which created the Kenya Anti-Corruption Commission (KACC) mandated to investigate officials implicated in graft.

The body, which critics have described as toothless, lacks power to persecute. But the government says the commission has already passed over 47 cases to the Attorney General’s office for action.

The government has also embarked on efforts to remove obstacles preventing economic growth. “We have to work on an enabling environment to promote private sector investment. This is going on but it is slow,” Mukhisa Kituyi, trade minister, told IPS.

These obstacles include crime, which is a big problem in Kenya. According to police statistics, crime figures for January and February this year and the same period last year show a 43.3 percent rise in murder cases.

Last month police Chief Maj-Gen. Mohammed Hussein Ali said his forces recovered 443 guns and 5,316 rounds of ammunition in 2004. By the end of January this year, police confiscated 27 illegal guns and 218 rounds of ammunition, he said.

At the end of the donors gathering Apr. 12, the government unveiled an action plan to reduce corruption within two years, starting April 2005.

“It is a government paper, we have prepared it ourselves. Corruption is our problem and we are going to fight it. What makes this action plan different is that it is time bound in the sense that every element has a specific time frame. Most of the activities will take place this year and next year,” Mwiraria told journalists at a news conference Tuesday.

Donors say the plan should be circulated to all Kenyans so that they own the process of fighting graft. “It is a very good starting point and a basis to assess what the government will be doing to address corruption. The government should take the action plan and make it available to every Kenyan,” Diop told the news conference.

He said donors will make commitments only after the government implemented the reforms in the action plan, whose execution will be scrutinised. “There will be a monitoring system on the action plan,” he said. The European Union has also welcomed the plan. “I think the action plan has set a good basis for the future in the area of governance. We are going to discuss it further with the government over the next couple of weeks,” Fee said.

Last year EU suspended 50 million Euro in budget support over allegations of corruption in government, after the British ambassador Clay blew the whistle.

Categories: Africa, Kenya, Odious Debts

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