by James Pod, Kenya, August 1997
THEME = DEBT
Earlier on, a number of observers and economic critics had argued that, if, in the first place, the International Monetary Fund had strictly followed its own rules and regulations regarding the granting of loans, it would never have agreed on a $220 million loan to Kenya in the first place.
Once the loan had been approved, the Managing Director of the International Monetary Fund, Michel Candessus, visited Kenya last April. During his stay, Mr.Candessus was quoted by the local Press as having praised Kenya's economic management. He is reported to have said: "We came, we checked and we are in a position to share the seriousness of the government". On leaving Kenya, he also said that he was leaving with a "high degree of optimism".
Following on the visit, the IMF bent over backwards to ensure that the government stuck to it's promises of reforms and good governance, so that the loan could actually be given. All these failed! Thus, the IMF came a cropper and finally suspended the loan arrangement, after ever-increasing anxiety about a range of issues mainly related to mismanagement and corruption.
The climax of what the critics described as the "IMF's "bending-over-backwards"", was characterised by one of it's final conditions before suspending the loan. This required the government to set up an independent anti-corruption authority. (There was actually no need for this as Kenya already has adequate laws governing corruption - for example, the Prevention of Corruption Act. Moreover, there is an anti-corruption unit already existing in the Kenya Police Force).
The IMF insisted on these conditions because there does not seem to be the political will within Kenya, to determine the root causes of corruption and finally stamp it out altogether.
What happened recently is but the latest in a string of broken promises, pretences of rooting out corruption and establishing accountable government. In 1993, the IMF's former vice-president for Africa, Kim Jaycox, arrived in Kenya and released $85 million in April of that year, amid a chorus of assurances from the government that the fiscal and monetary binge of previous months was being reined in, and that "missing money" could be accounted for.
Mr Jaycox had to acknowledge, a few months later, that the government was "off track" again. It was evident that the government was never even "on track" while he was in Kenya. It was busy adjusting the Central Bank's books to try to show that some of the missing billions were being returned. This was done in an operation involving the Central Bank and other banks.
In one week of April 1993, 12Ksh billion was moved backwards and forwards between these banks. Even during his visit, Mr.Jaycox's close aides were aware of what was happening, yet he still went ahead and dished out more money.
The IMF seems to have been impressed by promises made in 1996 to clean up the mess at the port of Mombasa and at the Customs. This included the appointment of the incorruptible Mr.Samuel Chebii as Commissioner of Customs.
Mr.Chebii has now been removed from his post, for insisting that goods such as sugar, imported under the pretence of being in transit, must be provided with tangible evidence that they are indeed in transit. This was to ensure that they were not dumped onto the local market, thus avoiding the appropriate excise duty.
The IMF and the World Bank have increasingly been championing the cause of good governance and transparency. Both have insisted that the government must actually "deliver the goods" relating to reforms, before loans will be granted.
Whether the IMF's decision to suspend its loan is right or wrong, long overdue or premature, it is important to note that the IMF's concern about corruption and mismanagement in Kenya, touches on one of the greatest obstacles to social, economic and political harmony in Kenya.
END