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Thursday, March 11, 2010

It is time to kick IMF from Africa

Mr. Dominique Strauss-Kahn, Kenyans do not want IMF medicine. It is time to kick the IMF out of Kenya.

“ while corruption is a problem we all share, here in Kenya it is a crisis – a crisis that’s robbing an honest people of the opportunities they have fought for – the opportunity they deserve.” US President Barack Obama, speaking four years ago in Nairobi when he was he junior Senator for Illinois

It was the same room – the Taifa Hall – where Barack Obama spoke – the same kind of audience – invited guests of the Chancellor of the Nairobi University and the same lamentation – bad governance and corruption are defeating development objectives in Kenya. The guest of honour, Dominique Strauss-Kahn Managing Director of the International Monetary Fund made a keynote speech broadcast live at which he spoke to Africa – predicting economic growth. Perhaps to be polite he made little mention of Kenyan corruption scandals, which raged in the days before and even after his speech; but Raila Odinga Kenya’s Prime Minister was not so diffident at the same podium. He said that only the people of Africa will develop Africa. According to the Prime Minister, what has kept Africa where it is; is bad governance, corruption and dictatorships. The Prime minister was categorical that the problem in Kenya is corruption, saying that we must deal a blow to corruption in order to move forward.

In the papers the next day reportage was cheerful and optimistic but ironically the elephant in the room, which Strauss Kahn ignored, was the impunity and lack of accountability of the Kenyan Finance Ministry that the IMF works very closely with. The Minister of Finance presented a budget, which did not factor in reform agenda spending; and bizarrely failed to fund the constitutional referendum, which was identified as key to stability in Kenya that the IMF is pinning its growth hopes on.

For 65 years, the IMF has loaned billions of dollars to Third World governments without adequate public oversight and in the absence of market discipline. In Kenya, the Government started borrowing from the IMF in 1964. The loans from the IMF to Kenya have financed dictatorships, spawned corruption, harmed the environment, wrecked our economy, and then forced the Kenyan public hostage to pay the money back. In law, these debts are known as “odious”.

Today, Kenya owes 62.7% of its external public debt to the IMF and the World Bank. Poor Kenyans will spend over 24% of its entire budget paying back debt redemption and interest. Yet, this year not a single tax shilling will go to the development budget.

Kenya has very little to show for IMF and World Bank debts. Re-payments are in effect “shark fees” paid for funds that have long since vanished and the present value of the debt is even higher. Servicing huge unproductive debts drains the funds needed for education, health care and development. Kenyans have borrowed over 11 Billions for railway projects, but not a single inch of track has been built since Independence. Most of the debts owed by Kenyans are for services and goods that Kenyans have never received. Today 80% of Kenyans live on less than two dollars a day meanwhile the IMF and World Bank continue to loan billions of dollars to Kenyan corrupt leaders with nothing to show for it.

It was shocking to see the Managing Director of the IMF, Mr. Dominique Strauss-Kahn arrive in Nairobi with some more goodies. The IMF Chief says now the IMF wants to lend African Countries with Zero interest. Which Bank in the world lends without interest? And why? Is the IMF a charitable organization? In his high-powered speech Mr. Dominique Strauss-Kahn was able to tell Kenyans without batting an eyelid that in most African countries, one can lose a child because of poverty, unless of course, the IMF intervenes. Mr. Dominique Strauss-Kahn did not tell attentive Kenyans what role the IMF has played over the last 46 years to impoverish them to the extent that a Kenyan can lose a child over poverty.

The IMF is an organisation tasked with the mission of fostering free trade and global prosperity. The IMF has grown so that today with 155 countries it has the authority of being both regulator and overseer of the global economy. This power is so extensive that countries must join the IMF to be eligible for World Bank membership.

The IMF performs three main activities:

• monitoring national, global, and regional economic and financial developments and advising member countries on their economic policies;

• lending members hard currencies to support policy programs designed to correct balance of payments problems; and

• offering technical assistance in its areas of expertise, as well as training for government and central bank officials.

In Kenya, if the IMF actually performs these three activities, and if one were to honestly grade the performance of the IMF, it would be fair to award an F grade. Why? Because when Kenya joined the IMF, it agreed as required, to subject its economic and financial policies to the scrutiny of the IMF as well as the international community. Kenya made a commitment to pursue policies that are conducive to orderly economic growth and reasonable price stability as well as providing the IMF with data on its economy. The IMF’s regular monitoring of economies and associated provision of policy advice (surveillance) was intended to identify weaknesses that are causing or could lead to trouble in Kenya.

Has the IMF surveillance helped Kenya? Is grand corruption not now a terminal cancer that has become malignant spreading to institutions such as the treasury and the Ministry of Finance where the IMF sets up office? Is it not the IMF that gives budget technical & capacity building support to the same treasury that keeps writing bogus budgets? Is it not the IMF that keeps lending money to a corrupt Government that refuses to account to Parliament? Treasury and the Ministry of finance have to date refused to submit to an independent forensic audit into the National Budget for the last three years as ordered by Parliament. Treasury and the Ministry of Finance have refused to table in Parliament, the External Public debt register for Scrutiny. Is this the training being provided by the IMF, or is the IMF condoning corruption of those they purport to oversee?

Kenyan Citizens are now street smart and are very aware of the IMF bogus strategy for Kenya. The IMF should stop telling us what to do and what we should change. Instead, the IMF should start listening to Kenyan citizens when they tell the IMF what approach it should take to make the Kenya Government accountable and transparent to its citizenry. Kenyans do not want or need IMF money. IMF money will not lift poor Kenyans out of poverty. In truth the IMF is costing us dearly.

We reiterate the contents of our two letters to the IMF, managing Director Dominique Strauss-Kahn with an extra proviso, that its time for the IMF to leave Kenya.



Diplomacy is one thing, but economic reality is surely another. The Kenyan Treasury is in need of a big stick approach by international partners and the messaging of Mr. Strauss Kahn was totally off mark. The Kenyan Treasury’s claims that it wants to work with civil society and the private sector are platitudes meant to deceive – Treasury won’t even work with Parliament the representatives of the people.

By Mars Group Kenya

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