Putting lipstick on a pig-–

The 2009/10 Budget of the Government of Kenya

Mars Group Kenya / Partnership for Change Report:
                                            Nairobi 29th June 2009

 

On June 11th 2009, the Kenyan Minister of Finance, Uhuru Kenyatta, read the National Budget Speech outlining his proposals for expenditure by the Grand Coalition Government for the financial year 2009 – 2010.  According to the Minister the budget “marks the first and bold step towards progressively building a better future for our people consistent with our Vision 2030. In this regard, the measures I will be proposing throughout my Speech are anchored on the theme of Overcoming Today’s Challenges for a Better Kenya Tomorrow.”

More than a year earlier, the Grand Coalition Government was established by constitutional amendments with the sole mandate of delivering outcomes based on the National Accord of February 28th 2008 – including taking measures to implement agreed Agenda items according to an implementation matrix for the purpose of:

• Immediately ending violence, enhancing the security and protection of the population and their property; restoring respect for the sanctity of human life and restoring fundamental rights and liberties, including the right to freedom of expression, press freedom and the right to peaceful assembly
• Addressing the humanitarian crisis, promoting reconciliation, healing and national restoration, by ensuring assistance to communities affected by the post election violence; and by ensuring the impartial, effective and expeditious investigation and punishment of gross and systematic violations and violators of human rights
• Overcoming the political crisis resulting from the fraudulent Presidential election of December 27th 2007, by crafting a unity government
• Finding and implementing solutions for long standing national issues including
• Undertaking constitutional, legal and institutional reform
• Tackling poverty and inequity as well as combating regional development imbalances
• Tackling unemployment particularly among the youth
• Consolidating national cohesion and unity
• Undertaking a Land Reform
• Addressing transparency, accountability and impunity.

This is the second Budget presented by the Grand Coalition Government and the trend has become a matter of urgent national concern.  Concern about the Ministry of the Finance which prepares the National Budget resulted on May 13th 2009 in a unanimous resolution of Parliament to require an independent forensic audit of the National Budget over the past three years – i.e. from 2006 to date. That there has been no movement to procure the independent forensic audit is worrying, even as the errors identified by the Joint Committee Enquiry into the supplementary budget have now been carried over into the 2009-10 National Budget.  The independent forensic audit into the past 3 National Budgets has never been more critical. 

Nevertheless it is possible to state categorically that in common with the 2008 National Budget, the 2009 Budget is largely unresponsive to the challenges of implementing the National Accord by financing its essential aspects, while ensuring public finances are conserved through real austerity and prudential management.  For example in this budget the Minister of Finance has proposed to spend Ksh 606 billion on Government recurrent Expenditure even though he estimates that all tax collected by the Kenya Revenue Authority will not be more than Ksh 569 billion.  This is incredible deficit budgeting aggravated by his ambitious illogical plan to borrow the rest of the money needed to meet his total budget of Ksh 865.6 billion.

The Uhuru Kenyatta Budget attempts to give the impression that it is a developmental budget when in fact it is maintaining the same trend of consuming all tax revenue on recurrent expenditure of government.  It is lipstick on a pig.

Role of Members of Parliament:  During the debate on the budget speech, most MPs hailed the budget in glowing terms such as – ‘historic’, ‘people’s budget’,  - motivated largely it seems by the claim that the budget has increased devolved fund allocation at constituency level and by Mr. Kenyatta’s presidential ambitions.  It is shocking that our representatives could have such a response to a budget that has nothing to do with the National Accord – the sole mandate of the Grand Coalition Government. More shocking is the blatant incompetence of our Members of Parliament who are totally clueless about Mr. Uhuru Kenyatta’s proposals for expenditure for the year 2009 -2010. Ask the Members of Parliament if they know or indeed if they care. Ask the Minister for Finance if he knows what is in the estimates he has asked Parliament to approve. We hazard a guess… Reading a budget speech is not the same as understanding what the speech or estimates contain. Members of Parliament are in recess until July 21st 2009.  Ideally MPs would spend their recess talking to constituents and studying the estimates in order to be informed when it comes to the Appropriation stage of debate of the Budget during which each department/Ministry’s budget is deliberated upon.

It is important that MPs and their constituents understand what is in the budget.  It is important that you understand what is in the Budget.  We devised a quiz which may help you know the details of the National Budget – take it and test whether you could be the next Minister of Finance!

DOES YOUR MEMBER OF PARLIAMENT KNOW THE ANSWERS TO THESE SIMPLE TWENTY ONE QUESTIONS?

IF THEY DON’T YOU SHOULD BE WORRIED AND DISTURBED!

 

‘ Imagine lying on an operating table awaiting surgery then you discover the person about to operate on you is your neighbour next door, or the mechanic or your watchman would you let him perform the surgery? Now imagine MPs who are clueless on the contents of the budget, would you trust them with your money?’

INTRODUCTION:  BUDGET FOR WHAT

1. What is the Mandate of the Grand Coalition Government?

2. Does the Budget 2009-2010 plan resources for the Grand Coalition Government mandate?

OVERVIEW OF THE BUDGET

1. How much in (kshs) does the Budget 2009-2010 provide for

• Recurrent expenditure
• Development  expenditure

2. What percentage of the Budget 2009-2010 is

• Recurrent expenditure
• Development  expenditure
• Debt

3. How much in (kshs) does the Budget 2009-2010 provide for

• Debt Redemption
• Interest on Debt Redemption

4. How much tax money in (kshs) will pay for the 2009-2010 budget?

5. How much borrowed money in (kshs) will pay for the 2009-2010 budget?

6. How much donor money (loans and grants) in (kshs) will pay for the 2009-2010 budget?

7. What percentage of tax money will go to recurrent expenditure?

8. What percentage of tax money will go to development expenditure?

9. How much in (kshs) has Mr. Kenyatta provided for each of the following recurrent budget line items for the recurrent expenditure of the Government of Kenya for the year 2009-2010?

• Current Grants to Government Agencies & Other Levels Government
• Basic Salaries - Permanent Employees
• Personal Allowance Paid as Part of Salary
• Routine Maintenance - Other Assets
• Specialized Materials and Supplies
• Other Operating Expenses
• Basic Wages -Temporary Employees
• Domestic Travel and Subsistence and Other Transport Costs
• Rentals of Produced Assets
• Training Expenses
• Subsidies to Non-Financial Public Enterprises
• Utilities Supplies & Services
• Foreign Travel and Subsistence and other Transportation Costs
• Fuel Oil and Lubricants
• Printing, Advertising and Information Supplies & Services
• Office and General Supplies and Services
• Communication, Supplies & Services
• Purchase of Specialized Plant Equipment and Machinery
• Hospitality Supplies and Services
• Budget Reserves
• Acquisition of Strategic Stocks
• Scholarships and Other Educational Benefits
• Purchase of Office Furniture and General Equipment
• Purchase of Vehicles and Other Transport Equipment
• Membership Fees, Dues & Subscriptions to International Organizations
• Routine Maintenance - Vehicles and Other Transport Equipment
• Domestic Loans to Non Financial Public Enterprises
• Interest Payments on Guaranteed Debt taken over by Government
• Civil Contingency Reserves
• Government Pension and Retirement Benefits
• Domestic Loans to Individuals and Households
• Overhaul of Vehicles and other Transport Equipment
• Capital Grants to Government Agencies & Other Levels of Government
• Personal Allowances Paid as Reimbursements
• Other Capital Grants and Transfers
• Emergency Relief and Refugee Assistance
• Personal Allowances Provided in Kind
• Insurance Costs
• Employer Contributions to Compulsory National Social Security Schemes
• Refurbishment of Buildings
• Acquisition of Land
• Other Current Transfers, Grants and Subsidies
• Research, Feasibility Studies, Project Preparation, Design & Supervision
• Employer Contributions to Compulsory Health Insurance Schemes
• Rehabilitation of Civil Works
• Purchase of Household Furniture and Institutional Equipment
• Exchange Rates Losses
• Rehabilitation and Renovation of Plant, Machinery and Equipment
• Membership Fees and Dues and Subscriptions to International Organizations
• Construction and Civil Works
• Purchase of Certified Seeds, Breeding Stock and Live animals
• Construction of Buildings
• Overhaul and Refurbishment of Construction and Civil Works
• Employer Social Benefits
• Research, Feasibility Studies, Project Preparation and Design, Project Supervision
• Purchase of Buildings
• Other Domestic Lending and On - Lending

 

10. How much revenue in (kshs) has Mr. Kenyatta stated for each of the following recurrent budget line items as Appropriations in Aid to be applied in the recurrent expenditure of the Government of Kenya for the year 2009-2010?

• Grants received by Other General Government Units from Fund Accounts
• Income Tax Share of LATF
• Receipts from Administrative Fees and Charges collected as AIA
• Receipts from Sales by Non Markets Establishments
• Receipts from the Sale of Inventories Stocks and Commodities
• Receipts from the Sale of Buildings
• Receipts of Taxes on Goods & Services
• Other Property Income
• Receipts from the Sale of Intangible Non Produced Assets
• Receipts from Sale Plant Machinery and Equipment
• Reimbursements and Refunds
• Grants from Foreign Governments - Direct Payments
• Receipts from Permission to Use the Goods or to Perform Services and Activities
• Rents
• Receipts from the Sale of Vehicles and Transport Equipment
• Receipts no Classified elsewhere
• Repayments from Domestic Loans to Individuals and Households
• Receipts from VAT on Domestic Goods and Services
• Receipts from Sale of Incidental Goods
• Receipts from Sale of Certified Seeds and Breeding Stock
• Receipts from the sale of inventories, stock and commodities
• Receipts from the sale of Vehicles and Transport Equipment - Paid as Exchequer
• Receipts from Incidental Sale by Non-Market Establishments
• Receipts from Sale Plant Machinery and Equipment - Paid to Exchequer
• Receipts from Administrative Fees and Charges
• Receipts from the Sale of Non-Produced Assets

 

OF MR KENYATTA’S BUDGET SPEECH

1. By how much in (kshs) in the Supplementary Budget for 2008/09, did the minister actually streamline government expenditures to generate savings as stated in Mr. Kenyatta‘s budget speech?

2. Mr. Kenyatta in his budget speech says he has reduced from the ceilings of all ministries, non-priority expenditures. How much in (Kshs) is he saving on

• 80 percent on furniture and fittings;
• 60 percent on advertisement and publicity;
• 40 percent on telephone expenses;
• 20 percent on hospitality supplies and services,
• 10 percent on domestic and foreign travel and subsistence.

3. How much money in Kenya shillings would Mr. Kenyatta save, had he scrapped 30 Ministries (VOTES) which form the most bloated and expensive Government and the real reason why recurrent expenditure is at an all time high?

4. Mr. Kenyatta put a moratorium on purchase of new motor vehicles, except for security purposes. Are there any provisions in 2009-2010 budget for purchase of new vehicles that are not security related?

5. Mr. Kenyatta will introduce use of fuel cards for the purchase of fuel for government vehicles because he believes this measure will significantly reduce the amount of money the government is spending on fuel. How many cars does the Government of Kenya own?

6. Mr. Kenyatta directed that all Cabinet Ministers, Permanent Secretaries, Provincial Commissioners and other senior public officials who are entitled to official vehicles, be allowed only one vehicle whose engine capacity should not exceed 1,800 cc. How many ministries have complied?

7. Mr. Kenyatta directed all Accounting Officers to ensure that vehicles at the disposal of public officials that exceed the engine capacity be withdrawn and surrendered to the Chief Mechanical and Transport Engineer who will arrange for their sale by end of September 2009. Proceeds thereof will be used to finance priority areas such as resettlement of Internally Displaced Persons. Similar sales have been on going from the last budget.

• How much were the cars sold for in December 2008?

• How much were the cars sold for on January 2009?

• How much money in total was received by the exchequer for sale of motor vehicles for the year ending June 2009?

8. Is the Money declared as received by the exchequer according to the Financial Secretary declared in the Printed Estimates for the Year ending June 2009?

9. How much has been reported on by Mr., Kenyatta as AIA expected from sales of motor vehicles as he has directed for the year ending June 2010? Does this amount reflect his directive to sell all cars over 1800cc?

10. Mr. Kenyatta has instructed the Permanent Secretary to the Treasury to launch a comprehensive audit of the payrolls of all organization paid through the Exchequer. He expects the report of this audit to be ready by the end of October 2009.  How does treasury identify who works for Government and who it pays between now and October 2009?

11. Who has the Government being paying, and who has been receiving allowances from the Government if Government does not know how many people work for it?

12. How many staff members has Mr. Kenyatta provided for in the 2009-2010 Budget?

13. How many people work for the Government of Kenya according to the Economic Survey 2009 recently adopted by Parliament?

14. On enhancing revenue collection, Mr. Kenyatta speaks of enhancing the operational efficiency of the Kenya Revenue Authority. How much does he allocate in current Grants to the Kenya Revenue Authority in the 2009-2010 Budget?

15. Does the Kenya Revenue Authority charge a fee to collect revenue? If so, what percentage and why would it further require a current grant?

 

16. Through the 2009-2010 Budget speech, Mr. Kenyatta provides the Judiciary Kshs.3.1 billion, of which Ksh 250 million will be used to fund the pilot phase of the automation and modernization of our courts and employ 20 additional Commissioners of Assize. 

• How many judges are there in the Republic of Kenya
• How many Magistrates are there in the Republic of Kenya?
• How many people spend the night in remand daily?
• How many convicted Criminals in Kenya?
• What is the capacity of the jails?
• What is the capacity of Police Cells?
• How many cases are pending before the courts for justice?

17. What is Vision 2030, how does it relate to the National Accord and can it be realized by the Grand Coalition Government that cannot meet timelines on the National Accord?

18. Mr. Kenyatta thanks development partners, particularly the EU, the World Bank, the AfDB and China for the valuable support in the road and energy sector.

• How much in Kenya Shillings have we borrowed since independence?
• What projects have we borrowed for since independence?
• How much have we paid back in debt redemption and interest since independence?
• Have we received the goods and services that we have borrowed and paid for since independence?
• How much in (kshs) are development partners contributing in the 2009-2010 Budget?
• Is the contribution a loan or a grant?

19. The Government of Kenya, working jointly with the Government of Uganda, has made decision to construct a new standard gauge railway line from Mombasa to Western Kenya and to Kampala in Uganda. The new railway line will not only reduce the cost of transport but also facilitate faster movement of freight and passengers.

• How much in (kshs) have we borrowed to build Railways in Kenya?
• How many Railways have we borrowed for to date?
• How many Railways have Been Built?

20. Did Parliament unanimously order an Independent forensic Audit into the National Budget going back three years, following revelations of errors in the supplementary budget?

21. Were there any errors in the resubmitted Supplementary budget approved by Parliament that now forms the approved printed estimates column in the new 2009-2010 budget? 

THE QUESTION FOR THE CITIZEN IS WILL YOU BE TAKING ACTION TO SAVE THE NATIONAL ACCORD BY DEMANDING A VOTE BY VOTE LINE BY LINE SCRUTINY INTO THE 2009-2010 NATIONAL BUDGET? 

 

 

The Partnership for Change says the budget should have been about the urgent national priorities described in the National Accord – the only mandate the unelected Grand Coalition Government actually has.  The National Accord is what we will pay for in 2009-2010. If there is no money for the National Accord, there can be no delivery of the National Accord. Kenyans cannot afford to ignore the urgency for implementation of the National Accord Reforms and in particular Agenda 4.

NOTICE TO PARLIAMENT: APPROPRIATE THE NATIONAL BUDGET TO CATER FOR THE FOLLOWING DURING DEBATE OF THE NATIONAL BUDGET!

 

Priority issue 1: TAKING CARE OF THE CITIZENS OF THE REPUBLIC OF KENYA
Description: Immediate measures to address the food, security, health, shelter and human rights problems of the citizens of Kenya
Time lines: in need of immediate attention

What the Partnership for change wanted from Mr. Kenyatta

1. Provisions in the budget for immediate food relief for millions of Starving Kenyan Citizens.

• According to the Government of Kenya 10 million citizens face starvation by August 2009 unless they are supplied with free food. How much does the 2009-2010 budget provide for free food?

2. Provisions in the budget for immediate Medicines for millions of dying Kenyan Citizens

• According to the United Nations Childrens Fund 3,000 children die each week for lack of access to medical care for preventable diseases. How much does the 2009-2010 budget provide for medical care for preventable diseases?

3. Provisions in the budget for immediate shelter for millions of Kenyan Citizens living without shelter

• How much does the 2009-2010 budget provide for slums and shelter for the homeless?

4. Provisions in the budget for immediate consumption tax relief for millions of poor Kenyan Citizens who cannot make ends meet.

• 50% or 15 million Kenyans live on less than 1 US Dollar a day – limiting their purchasing power even as price inflation is at the high 20% level. What relief does the 2009-2010 budget provide over half the population in this category

5. Provisions in the budget that plans and caters for the all human, social and economic rights, including the right to development of the Citizens of Kenya as provided for under the Constitution of Kenya.

• How much does the 2009-2010 budget provide for the development of the Citizens of Kenya as provided for under the Constitution of Kenya?

 

Priority issue 2
AUSTERITY MEASURES
Immediate measures to address the Bloated size of Government
Time lines: IMMEDIATE

What the Partnership for change wanted from Mr. Kenyatta

1. Provision in the budget for IMMEDIATE rationalization of the Size of Government
2. Provision in the budget for IMMEDIATE tightening of Government spending
3. Provision in the budget for IMMEDIATE freeze on ALL non essential Government expenditure
4. Provision in the budget for IMMEDIATE shift of expenditure to reflect 60% Development and 40% Recurrent Expenditure
5. Head counts

 

Priority issue 3
DEBT FREE
Immediate measures to address  Debt
Time lines: IMMEDIATE

What the Partnership for change wanted from Mr. Kenyatta

1. Provision in the budget for IMMEDIATE debt relief for millions of poor Kenyan Citizens
2. Provision in the budget for the IMMEDIATE removal of odious debt

• The Budget contains principal and interest redemption in the hundreds of millions of shillings for a non-existent fertilizer factory
• The Government plans to borrow to build a cross-country railway and yet is cannot account for over 11 billion shillings worth of repaid debt related to 30 years of fictitious railway projects

3. Provision in the budget for expenditure we can afford
4. Provision in the budget for IMMEDIATE cessation on Borrowing.

• The Minister did not state that he is willing to subject foreign borrowing to a priori approval by Parliament

5. Provision in the budget for IMMEDIATE lustration and recovery of Stolen Assets

Priority issue 4
THE NATIONAL ACCORD BLUEPRINT
Time lines: IMMEDIATE

What the Partnership for change wanted from Mr. Kenyatta

THE budget 20009/2010 be the budget for the NATIONAL ACCORD BLUE PRINT.

 

Priority issue 5
Agenda Item 2
Immediate measures to address the humanitarian crisis, Promote Reconciliation, healing and Restoration.
Time lines: 7 – 15 Days from date of commencement of dialogue on January 28th 2008

What the Partnership for change wanted from Mr. Kenyatta

1. Provisions in the budget for displaced persons to go back to their homes or other areas and to have safe passage and security throughout and  provide adequate security and protection, particularly for vulnerable groups, including women and children in the camps

2. Provision in the budget for the basic services for people in displaced camps: adequate food, water, sanitation, medical assistance, access to education, and shelter within the affected communities both those in displaced camps and those remaining in their communities with a special focus for women, children, people living with HIV and AIDS and the disabled, currently in displaced camps.

3. Provision in the budget to operationalise and boost a Humanitarian Fund for Mitigation of Effects and  Resettlement of Victims of Post 2007 Election Violence expeditiously by establishing a bi partisan, multi-sectoral Board with streamlined procedures to disburse funds rapidly.

4. Provisions in the Budget for all-inclusive Reconciliation and Peace building Committees at the grassroots level,

5. Provisions in the Budget for the  Truth, Justice and Reconciliation Commission

6. Provisions in the Budget  to implement the recommendations of the United Nations High Commissioner for Human Rights

7. Provisions in budget the for a national resettlement programme

Priority issue 3
Agenda Item 4
Long-term issues and solutions
Time lines: 1 year after commencement of dialogue launched January 28th 2008

Constitutional Reforms
What the Partnership for change wanted from Mr. Kenyatta

1. Provisions in the budget for constitutional reforms and a New Constitution 

2. Provisions in the budget for a referendum and a General Election

Judicial Reforms

What the Partnership for change wanted from Mr. Kenyatta

1. Provisions in the budget that create financial independence for the Judiciary to anchor judicial reform measures.

2. Provisions in the budget for hiring and transparent and merit- based appointments of Judges and Magistrates

3. Provisions in the Budget for  judicial institutions to increase recruitment, training, planning, management and implementation of programmes and activities in the justice sector.

4. Provisions in the Budget to address the immediate need to avail justice to the 45,000 Kenyan Citizens in remand awaiting justice daily

Police Reforms

What the Partnership for change wanted from Mr. Kenyatta

1. Provisions in the budget for an independent Police Commission.

2. Provisions in the budget for the independent complaints commission.

3. Provisions in the budget for recruitment and training of more police officers to raise the police-to-population ratio to the UN standard.

4. Provisions in the budget for the implementation of the Waki Commission, and UN Special Rapporteur  recommendations

 

Civil Service Reforms

What the Partnership for change wanted from Mr. Kenyatta

1. Provisions in the budget for on-going administrative and financial reforms.

2. Provisions in the budget for a Results-Based Management (REM) and Performance Contracting to cover all persons paid from public funds.

3. Provisions in the budget the legal framework for declaration of incomes, assets and liabilities with a view to establishing an efficient and devolved administrative, compliance and analysis institutional framework

4. Provisions in the budget for whistleblower protection,

5. Provisions in the budget for freedom of information

6. Provisions in the budget for the operationalisation of the Witness Protection Act 2006

 

Parliamentary  Reforms

What the Partnership for change wanted from Mr. Kenyatta

1. Provisions in the budget for Parliament’s Research Centre to be strengthened.

2. Provisions in the budget for entire Live coverage of Parliamentary proceedings

3. Provisions in the budget for electronic voting in Parliament

4. Provisions in the budget for to enhance capacity for oversight role of Parliament over the national budget.

5. Provisions in the budget for a Monitoring and Implementation Committee

6. Provisions in the budget for stricter and timelier deliberations on reports by institutions such as the Kenya Anti-Corruption Commission, Kenya National Audit Office, State Law Office, and Kenya National Commission on Human Rights by Committees of Parliament

7. Provisions in the budget to Strengthen organs of Parliament such as Parliamentary Accounts Committee and Parliamentary Investments Committee to promote transparency and accountability in the utilization of public resources.

8. Provisions in the budget to Improve transparency of MPs by creating a register of interests and opening up parliamentary committee work to the public.

 

Tackling poverty and inequality as well as combating regional development imbalances

What the Partnership for change wanted from Mr. Kenyatta

1. Provisions in the Budget for attainment of equity and balance in development across all regions including in job creation, poverty reduction, improved income distribution and gender equity.

2. Provisions in the Budget for increased community empowerment through devolved public funds for both social and income programmes, and  for developing local capacity to manage devolved funds.

3. Provisions in the Budget for the Implementation of policies and programmes that minimize the differences in income opportunities and access to social services across Kenya, with special attention to the most disadvantaged communities in the Arid and Semi-Arid Districts, urban informal settlements and pockets of poverty in high potential areas.

4. Provisions in the Budget to Improve wealth creating opportunities for disadvantaged groups and regions through increased infrastructure spending in roads, water, sewerage, communications, electricity targeting poor communities and regions.

5. Provisions in the Budget to Increase availability of affordable and accessible credit, savings programmes and appropriate technologies to create an enabling environment for poor communities to take part in wealth creation.

6. Provisions in the Budget for the Development of an Affirmative Action policy 

7. Provisions in the Budget to enhance the Women’s Enterprise Fund.

8. Provisions in the Budget for Improve health, infrastructure in underserved areas of the country through construction or rehabilitation of community health centres.

 

Tackling unemployment particularly among the Youth

What the Partnership for change wanted from Mr. Kenyatta

1. Provisions in the Budget to generate an average of 740,000 new jobs each year from 2008-2012

2. Provisions in the Budget for Youth polytechnics to be revitalized and expanded in all districts to facilitate the training of young people in technical, vocational and entrepreneurial skills.

3. Provisions in the Budget for Youth Empowerment Centres to be rehabilitated and established in all constituencies.

4. Provisions in the Budget for the Upgrade of the existing National Youth Service institutions and establishment of  three new ones

5. Provisions in the Budget for Development  of a National Youth Council

6. Provisions in the Budget  for a  Youth Enterprise and Employment Programme to promote SMEs and self employment among the youth

7. Provisions in the Budget  for  the Youth Enterprise Development Fund to be increased and mechanisms put in place for easier access to credit and collateral.

8. Provisions in the Budget for  5,000 youth to be recruited to National Youth Service to be employed in labour intensive road projects, tree planting programmes and other productive activities.

Consolidating national cohesion and unity
What the Partnership for change wanted from Mr. Kenyatta 

1. Provisions in the Budget  for the Ethnic and Race Relations Commission.

2. Provisions in the Budget  for the operationalisation of a policy and institutional framework for a Peace-Building and Conflict Resolution Programme (PBCR)

3. Provisions in the Budget  for the Extension of District Peace Committee framework to cover the entire country and link it to District Security Committees

4. Provisions in the Budget  to undertake civic education on ethnic relations

5. Provisions in the Budget  for the operationalisation of the Truth, Justice and Reconciliation Commission.

Land reform
What the Partnership for change wanted from Mr. Kenyatta

1. Provisions in the Budget  for the  development and implementation of land policies taking into account the linkages between land use, environmental conservation, forestry and water resources.

2. Provisions in the Budget for the draft National Land Use policy

3. Provisions in the Budget for a transparent, decentralized, affordable and efficient GIS based Land Information Management System and a GIS-based Land Registry at the Ministry of Lands including all local authorities.

4. Provisions in the Budget  for Land Ownership Document Replacement for owners affected by post-election violence

5. Provisions in the Budget   for the Development of a National Land Use Master Plan, taking
6. into account environmental considerations.

7. Provisions in the Budget  for Land Reform Transformation Unit in the Ministry of Lands to facilitate the implementation of the land reform programme as outlined in the National Land Use policy

8. Provisions in the Budget  for the Strengthening of  local-level mechanisms for sustainable land rights administration and management.

Addressing transparency, accountability and impunity
What the Partnership for change wanted from Mr. Kenyatta

1. Provisions in the Budget to Strengthen the policy, legal and institutional framework for increased public transparency and accountability, anti- corruption, ethics and integrity,.

2. Provisions in the Budget for the development of a national anti-corruption policy, systems and capacity enhancements to strengthen the National Audit Office.

3. Provisions in the Budget  for  programmes to support improved prosecution and adjudication of corruption and economic crimes, and improved oversight and consideration of anti-corruption and audit reports by Parliament.

4. Provisions in the Budget  for enhancing capacity and performance in the Investigation and Asset Tracing Programme, the Civil Litigation and Asset Recovery Programme, the National Anti-Corruption Awareness Campaign and District Anti-Corruption Civilian Oversight Committees

5. Provisions in the Budget for continuous monitoring of the Public Officer Ethics Act.

6. Provisions in the Budget  to revitalize Public Financial Management including the  management of devolved funds such as the CDF, LGTF and Road Maintenance Levy.

7. Provisions in the Budget  to  expand the capacity of District Anti-Corruption Civilian Oversight Committees to monitor management of devolved funds and stigmatize corruption.

8. Provisions in the Budget  for monitoring the effectiveness of the Public Procurement Authority.

9. Provisions in the Budget  to undertake structural reforms focusing on prevention, investigation and recovery of corruptly acquired assets.

10. Provisions in the Budget  for monitoring the effectiveness of the Privatization Commission.

11. Provisions in the Budget  for  the full operationalisation and capacity-building of the Public Complaints Standing Committee (the Ombudsman).

12. Provisions in the Budget  to sustain the APRM process by ensuring assessment of government (executive, legislative and judiciary) performance and accountability

Download Full Report Here: Putting lipstick on a pig- The 2009/10 Budget of the Government of Kenya

Mars Group Kenya

 

 

 

 

 

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“A fish rots from the head … down”

Crony Capitalism at the Kenya Youth Enterprise Development Fund

A Mars Group Kenya / Youth Interactive Portal for Enterprise Report for

The Partnership for Change

From Dictatorial Impunity to Democratic Accountability in Kenya

June 27th 2009.

Background to the Youth Enterprise Development Fund (YEDF)

The Youth Enterprise Development fund was launched in 2007 by President Mwai Kibaki of Kenya with a starting disbursement of KShs1 billion for the kitty. The fund was also established by a legal notice under the State Corporations Act 2007 in the name of the “Youth Enterprise Development Fund Order 2007. The initiative was founded as a vehicle to address the rising youth unemployment in the country, as well as provide youth entrepreneurs with capital for business startup and growth. The Fund became a state corporation later in 2007, autonomous from its parent ministry of Youth & Sports Affairs (MOYA).

Today the Youth Enterprise Development Fund is mired in controversy, driven partly by its politically tinged history; having been created three years into Kibaki’s first term, and two years before the December 2007 election which he won in even more controversial circumstances.

2. Breaking the story

On June 23rd 2009, the East African Standard published an article by Kenneth Kwama outlining a litany of accusations of financial mismanagement and impropriety at the Youth Fund. The Fund in turn through its Chairperson, Ms. Hellen Tombo accused the Standard of being used in political machinations, and looking for corruption where none exists.

The basis of the East African Standard story was a management letter by the Kenya National Audit Office (KNAO) dated 28th November 2008 to the Chief Executive Officer of the Youth Enterprise Development Fund. It is not known what was the response if any there has been to this letter but the letter contains detailed audit queries which indicate significant managerial problems at this important national fund. This matter is one of urgent national importance bearing in mind Agenda 4 of the National Accord.

Though the MOYA confirmed it received an investigation report from the Inspectorate of State Corporations they denied having lost any money. Minister Hellen Sambili said the Inspectorate’s report makes several recommendations to strengthen the governance structures of the Youth Enterprise Fund but makes no mention of “anything about the disappearance of money”.

On June 26th 2009, the MOYA published a paid advertisement in the Daily Nation reiterating the same. Since the Youth Fund’s press briefing, no other media mentions have emerged regarding their response on the discrepancies outlined in the Kenya National Audit Office management letter to the Youth Fund.

3. Questions regarding the findings of the Kenya National Audit dated 28th November 2008 to the Youth Enterprise Development Fund as well as various corporate governance matters arising from the conduct of the Youth Fund from its inception to date.

3.1. Locus standi of the Partnership for Change (P4C)

The Partnership for Change (P4C) is an open initiative of the Mars Group and other like-minded organisations, civil society agencies, NGO’s, youth groups, faith based organisations, social movements and grass-roots organisations and networks from all eight provinces in Kenya.

The P4C’s mission is to advance the strategic use of non-violent action in calling upon the Kenyan Citizen to demand an End to Impunity, Restoration of Democratic Accountability and an end to Dictatorship in Kenya.

The Partnership currently has an established network of 179,000 change agents spread out throughout the country’s 210 electoral constituencies. The network is also composed of by a significant proportion of youth members, many of whom engage in income generating activities, either as individual entrepreneurs or in groups.

Thus the Partnership for Change is invoking its right as a representative of its youth

membership to through this report pose questions to the Youth Enterprise Development Fund (YEDF) as well as its parent Ministry of Youth Affairs and Sports. This is what accountability is about.

3.2 Why this issue is important

When the Youth Fund management was confronted with questions regarding the financial letter from the Kenya National Audit Office, instead of answering the queries they only politicised the issue. Further to that the public statement carried in the Daily Nation of Friday 26th 2009, do not in anyway answer the auditors question regarding its financial management.

The Youth Fund in this year’s Budget is set to receive a substantial amount of money from the Exchequer. Therefore, before they receive the Funds, it is imperative that they satisfy the Kenyan public and in particular its youth who form the majority of Kenya’s citizenry that it has rectified these discrepancies, and addressed all the management issues raised in the letter by the KNAO.

Principles of accountability and transparency demand that it is the role of the Government of Kenya and its public officers to answer questions posed by the citizenry they serve. To politicize issues is an act of the impunity that has allowed scandals of loss of billions of Kenya shillings to occur. Kenyan’s will remember cases such as scandals of financial impropriety that cost the Exchequer huge losses, for instance the country’s National Social Security Fund. Though the figures listed below may well be small as opposed to other scandals such as Anglo-leasing and Goldenberg, which almost crippled Kenya’s economic security, the Partnership for Change contends that it is impropriety regarding trusteeship of small sums of money that ultimately end up exploding into scandals in the range of billions.

Furthermore, when the media raises issues in the public interest, duty bearers in public office are best advised to RESPOND to the issues being raised; not just to dismiss every question on  accountability to mere politics. This is the era of accountability and the Partnership for Change will demand nothing short of answers when such queries are raised by the media and citizenry.

To avert this, the Partnership for Change on behalf of its membership is thus posing 10 questions with the ultimate objective of not having to witness another scandal later on, if it emerges that the Youth Fund was indeed losing much needed money.

The Partnership for Change is grateful to the media when it acts in the public interest by playing its role as a public watchdog.

Question # 1: What are the circumstances surrounding the Kenya Pipeline Corporation’s Kshs. 50 million shillings grant to the Youth Enterprise Development Fund?

From media reports, the Partnership for Change understands that the Kenya Pipeline Corporation donated Kshs. 50 million as its contribution to the Youth Fund’s startup kitty of Kshs. 1 billion. It has been alleged that these Funds were for the Chora Bizna Business Plan Competition. The Partnership for Change is asking for what purpose was this?

Figure 1: Media report on YEDF Launch containing information on Kenya Pipeline’s shs. 50 million  Contribution

Question #2: Why was the account balance of Silver Ray, an overseas job placements company overstated in the KNAO audit as at 30th June 2008?

Amongst its programmes, the Youth Enterprise Development Fund has a relocation programme for placing Kenyans with jobs. Silver Ray a local recruitment company was contracted to implement this programme. They are also the sole listed agent to provide relocation loans.

However, the Kenya National Audit Office found that as at June 30th 2008, the Silver Ray account with the Youth Fund was overstated by Kshs. 2 million. Why was this overstated?

Figure 2: Silver Ray’s website

Figure 3: YEDF website showing Silver Ray as the sole listed agent for relocation loans

Question #3: Why was Apex Consulting Africa Limited single sourced for YEDF staff recruitment?

According to the KNAO letter, Apex Consulting was single sourced and paid a total of Kshs. 490,000. This of course is contrary to the Kenya Government Public Procurement Act which states that approval must first be sought before entering into any single-sourced contractual obligation. The Partnership for Change is thus querying this transaction, asking if these staff members were so urgently required?

Question #4: What is the Enablis/YEDF partnership about?

According to media reports, the immediate former CEO of the Fund Umuro Wario was terminated due to reasons that included the single-sourcing of Enablis East Africa, an entrepreneur network that had links to President Kibaki’s nephew the late Alex Mureithi. The international network   (Enablis Global) is headed by social entrepreneur and philanthropist Charles Sirois. From the Enablis website, the Partnership for Change found the following information on the network:

Enablis Entrepreneurial Network is an organized, interactive network of entrepreneurs in

developing countries who share similar values and who believe in the importance of small-tomedium enterprises for poverty reduction and sustainable development. The result is a group of individuals drawn together by their capacity for entrepreneurship; a powerful force for change in the developing world.

Enablis entrepreneurs are specially selected, formally accredited, and endowed with a code of conduct and set of values that form the foundation of Enablis – Respect, Integrity,

Professionalism, and Sustainability.

Related Documents:

Youth Fund Status Report as at 31st March 2009

YOUTH ENTERPRISE DEVELOPMENT FUND ORDER 2007

Financial Statement Audit Of The Youth Enterprise Development Fund Board June 30th 2008

Mars Group Kenya

Yipe.org - ePowering Young Business

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A Report of the Mars Group Kenya.

In March 2009, a riot broke out at Kenya’s second largest University because students were not allowed to sit their final examinations unless and until they came up with the year’s fees - One Hundred Thousand Shillings (US$1,250). 

Kenyatta University, named after Kenya’s first President, is located in the heart of Kenya’s coffee rich Central Province and during the tenure of its founding father Jomo Kenyatta (1963-1978) it would have been unimaginable that the children of coffee growers wouldn’t have the money to pay for a year’s fee.  Kenyans, when I grew up, used to be awestruck by the good fortune of those privileged Kenyans who grew ‘black gold.’

Coffee, one of the most popular beverages in the world, is also a valuable tradable commodity internationally.  Coffee futures’ trading occurs at the New York Stock Exchange where washed Arabica coffee futures contracts are bought and sold by financial speculators. 

It is estimated that there are over 700,000 Kenyan coffee farmers today.  Kenya is a leading producer of Arabica coffee yet its small holder farmers are amongst the poorest Kenyans due to bad governance and oppressive regulation in the coffee value chain which has spawned a dealer’s and marketing cartel which has distorted price and market forces to their advantage at the expense of the small growers.   This happened in 2005, when amendments to the industry’s basic statute The Coffee Act (introduced through the annual Finance Bill which details taxation measures) radically altered the balance of power between coffee farmers, regulatory institutions and the trading market to the disadvantage of the farmers. 

A SKETCH HISTORY OF COFFEE IN KENYA

Coffee was introduced to Kenya by the Holy Ghost Fathers Catholic Order which first farmed coffee at what is now Saint Mary’ Boy’s School in the Lavington area of Nairobi.  In colonial times, coffee was a political crop and Africans were denied the right to plant it even though coffee production was a lucrative occupation for white farmers.  The right to plant coffee was a grievance articulated by among others Chief Koinange of Kiambu earning him punishment by the colonial authorities. 

When Africans were eventually allowed to plant coffee it was in two districts (Kisii and Meru) of the country where there was no competition with white farmers, and only on a prescribed experimental basis (limited to 100 trees a farmer).  White farmers formed powerful lobby groups that influenced the provisions in the first regulatory piece of legislation for the cash crop – The Coffee Act of 1933 – by ensuring that the legislation prescribed that farmers would be involved in the management of the coffee industry. 

Coffee farmers agreed to finance the operations of the various managerial, regulatory and research bodies which were created or given responsibility under the Coffee Act by way of a statutory ad valorem tax which the farmers themselves set voluntarily, they say, at the time the law was enacted.  It has always been their expectation that this ad valorem tax and the Coffee Act itself would not be changed without consultation with farmers, and for 7 decades this held true.  The ad valorem tax on the sale of coffee by farmers is 6% of the value of the coffee at the point and time of sale.

This farmers’ representation system ran from 1933 until the Coffee Act was amended in 2001.  Established under the Coffee Act was the Coffee Board of Kenya, which had the following functions:  regulation of the coffee industry, marketing and sale of Kenyan coffee, promotion of Kenyan coffee. 

Structural Adjustment and the Coffee Board

As Kenya’s economy declined in the 1980s, the Government accepted to institute the Structural Adjustment programmes of the World Bank and International Monetary Fund which among other things insisted that government should get out of business and abhorred state monopolies. 

The Coffee Board of Kenya which until that time had been responsible for both regulation and marketing of coffee was regarded as being inefficient and it was decided by the Government to amend the law to liberalise marketing and the auctioning of coffee to private players, leaving the Coffee Board only to perform regulatory and promotion functions.  The farmers participated in the discussions preceding the 2001 Coffee Act’s enactment, the last meeting for example took place at the Blue Posts Hotel and in attendance were all Members of Parliament from coffee growing areas.  Among them the current President Kibaki who represented Othaya constituency growers of coffee.  At this time also many of the most draconian provisions of the Coffee Act including the criminalisation of the neglect and uprooting of coffee trees were removed from the law.

Marketing Agents

The law once amended created new players in the industry called licensed coffee marketing agents who earned commissions on the sale of milled coffee.  They could be either companies or other bodies who signed marketing contracts with farmers.  To safeguard farmers section 24(1)(a) of the Coffee Act of 2001 required that marketing agents had either a bank guarantee of between 1 and 12 million US dollars deposited with the Coffee Board of Kenya; or one-and-a-half times the value of the coffee to be transacted during their operational year.  To prevent conflict of interests millers could only be marketing agents of they incorporated a new company with separate directors.  Presumably, millers could be investors but not directors of marketing agent companies.

Transition Period

The story of the transition period is instructive to demonstrate how vested interests can resist reform.  The Coffee Act was not operationalised on the day it was given presidential assent in its entirety.  Certain provisions were to be brought into force by the Minister for Agriculture and certain interim measures were to be taken during a transition period.  Unfortunately the length of the time period was not delimited and it ran for more than 8 years.  So the Coffee Board was prohibited from marketing coffee, and during the transition the three existing millers (SOCFINAF, Thika Coffee Mills and the Kenya Planters Cooperative Union) were appointed by law as the only licensed marketing agents in Kenya of coffee.

The Coffee Board tried to end this transitional oligopoly but was thwarted whenever it tried to completely liberalise the marketing of coffee by separating the role of millers and marketing agents.  Each Board that tried found itself attacked by political interests.  The KPCU initially even refused to incorporate a separate company as required by law.  The other two millers complied but their owners are the driving force behind the new companies albeit not as directors.  This raises the question of whether the conflict of interest safeguard actually worked.  Today there are several marketing agents.  During the same period dealers also started to insist that they too should be allowed to be marketing agents.

During the transition period there was also generally a policy of Government to reduce entry to trade or bureaucratic barriers to trade.  Targeted in this reform were the 11 licenses issued under section 18 of the Coffee Act by the Coffee Board, which were viewed to be too many.  They were:

1. Category ‘A’ license to import and export clean coffee
2. Category ‘B’ to import and export buni coffee
3. Buni dealers license to export buni coffee from anywhere
4. Marketing license
5. Millers license
6. Roasters license
7. Auctioneers licence
8. Warehouseman’s license
9. Packers license
10. Pulping station license

The 11 coffee licenses were subsequently reduced by the Licensing Laws Repeal and Amendment Act of 2007 to 4.  After this reduction of licenses dealers could play the role of selling and buying, creating a big conflict of interest.

European and World Bank Funds
Also during the same period there were funds disbursed by the European Union as Matching Funds, which were used not to benefit farmers but to benefit lobbyists of multinational dealers.  Under the Lome Convention a multilateral treaty that has since expired European funds on behalf of EU consumers were used to support coffee farmers and other agricultural commodity producers in Africa, the Caribbean and the Pacific.  In the case of Kenya’s coffee farmers as fund of about Ksh 12 billion was made available to support Kenyan coffee production, claimed from Europe by the Government of Kenya on their farmers’ behalf. 

High-level corruption and obvious political interests saw most of this fund diverted to the cereals sector.  Apart from paternalism and theft the Moi regime had no pressing reason to economically empower farmers in the Central Kenya region, which he viewed as, and in actual fact was, oppositionist. 

A Ksh 2 billion revolving fund placed with the Cooperative Bank of Kenya also had unintended consequences for the unlucky farmers.  Loans were given to farmers, secured by their farm title deeds to secure working capital and farm inputs.  The Tanzanian version of this scheme (Stabex in bureaucratic slang) that worked better at the end of the day saw direct compensation in cash to the coffee farmers there.  In Kenya instead of giving the money to the farmers to buy input for themselves, the money was given to middlemen from whom farmers collected fertiliser and other inputs.  These inputs did produce a bumper crop, but as seen elsewhere this eventually depressed the price domestically for the Kenyan farmer.  The farmers’ loss meant that their title deeds were seized by the Cooperative Bank, and all over Central Kenya and Eastern Province farms are at risk of auction.  Conversely, pre-recession foreign owned coffee farms (SOCFINAF), which had easy access to cheap northern credit, didn’t suffer the same fate.  Whether they enjoy freedom from these debts waits to be seen. 

Many believe that over 10 billion shillings worth of the Stabex funds disappeared in shady rural electrification and road building schemes.  Only 135 million shillings can be traced to the investment in a tissue culture laboratory at the Coffee Research Centre.   That the Kenyan coffee farmer is no better off for these funds is a common opinion amongst farmers. 

The Second Window

In 2005 farmers wanted to sell their coffee directly, hence the idea of a second window.  This was opposed by the KPCU and the Minister for Cooperatives, even as it was supported by the Coffee Board of Kenya, which wanted another marketing chain, as did the Minister for Agriculture. 

The demand by the farmers was motivated by a price-fixing scheme in which dealers suppressed the auction price to as low as US$ 30 per ton while millers (often the same ownership as the dealers) charged farmers US$ 100 per ton to mill coffee delivered by farmers.  Farmers arriving at millers to collect their payments were presented with invoices for what they owed in milling costs because of the low price their milled coffee obtained at the auction.  Throughout this period the real world price for Kenyan coffee was never lower than US$ 300 per ton.  Records of the International Coffee Organisation show that the price paid for a cup of coffee by consumers remained stable, and the Kenyan auction collapse could not be justified, and indeed was only explicable as a pernicious scheme.

Agitation for direct sale by farmers was initially opposed by government and the established millers for obvious reasons – they didn’t want competition for the three millers that had been designated marketing agents.  But the logjam was broken by the entry onto the scene, supported by the highest levels of Government, of Tetu Coffee a coffee brokerage, which proposed to buy every bag of Kenyan coffee available at minimum guaranteed prices higher than those offered by the auction.  The proposal made to the Coffee Board of Kenya that almost cornered the Kenyan coffee market.  Tetu Coffee, owned by Job Kareithi a politically connected Kenyan living in Houston, Texas advocated direct gate-sales of with guaranteed minimums a policy which was eventually accepted after an inter-ministerial committee of seven ministries approved the policy.  The scheme failed because Tetu could not secure the monopoly it sought and after it was revealed the promoter was not financially stable. 

Nonetheless, farmers after the amendments to the Coffee Act, which were introduced in the Finance Bill of 2005, remained free to appoint any licensed marketing agent, and today there are over 100 such agencies operating at the auction which sells Kenyan coffee every week.  However only about 10 are really active.  But these were not the only amendments to the Coffee Act as will be seen later.

The Finance Bill of 2005

Every year the Minister of Finance introduces a Finance Bill as part of the budget to Parliament.  Debate on the Finance Bill in Parliament is usually restricted to taxation and revenue measures but for whatever reason during the final stage (3rd reading) of that year’s Finance Bill, Patrick Muiruri, MP for Gatundu, moved several amendments to the Coffee Act of 2001 including a radical recomposition of the Board of the Coffee Board of Kenya and other bodies responsible for policy and research related to Coffee.  Though his amendments were opposed by Martha Karua, Mr. Muiruri’s amendments held sway and section 49 of the Finance Bill did away with the farmers elected representatives on the Coffee Board of Kenya and gave the Minister of Agriculture to appoint as many persons as he deemed fit to the Board instead.  Three years later this amendment would provoke litigation as farmers felt disenfranchised of their rights to representation to the board and other bodies for the first time since 1933.  It is not clear what Government objective was to be met by this amendment as it ran counter to the whole basis of reforms which had been carried out in the coffee sector since the structural adjustment liberalisation phase of the 1980s and 1990s.

Coffee Board of Kenya Composition pre-2005	Coffee Board of Kenya Board Composition after Finance Bill -2005
8 elected representatives of cooperatives	As many persons as Minister of Agriculture deems fit based on interests and expertise in coffee
3 elected representatives of plantations	Permanent Secretary, Ministry of Cooperatives Permanent Secretary Ministry of Trade
1 elected representative of coffee traders
Permanent Secretary, Min. of Agriculture
Director of Agriculture
Commissioner of Cooperatives
Managing Director Coffee Board of Kenya

 

Coffee Development Fund Board of Trustees Composition pre-2005	Coffee Development Fund Board of Trustees Composition after Finance Bill -2005
5 elected representatives of cooperatives	6 persons appointed by Minister of Agriculture
3 elected representatives of plantations	Permanent Secretary, Min. of Agriculture
Permanent Secretary, Min. of Agriculture	Permanent Secretary, Min. of Cooperatives
Permanent Secretary, Treasury (Ministry of Finance)	Permanent Secretary, Treasury (Ministry of Finance)
Managing Trustee	Managing Trustee

 

Since they were being disenfranchised farmers opposed the amendments to the Coffee Act.  They convened a special general meeting of the Kenya Coffee Growers Association which is the premier farmers (small and large) lobby group in February 2006 and made resolutions to petition the Minister of Agriculture to respect their right to elected representatives as had been the case since the first Coffee Act of 1933. 

The Minister’s Appointments of September 2008

In July 2008, the term of the last elected directors of the Coffee Board of Kenya expired.  On September 25th 2008, citing a non-existent provision of law as authority for his appointments, William Ruto the newly appointed Minister for Agriculture appointed an 8 member Board for the Coffee Board of Directors, none of whom were coffee farmers, and many of whom were actually coffee traders, marketing agents and dealers.  There was uproar in the coffee farming circles but the Minister stood his ground.  Just before Parliament went on a Christmas break, a question was asked in Parliament by the Chairman of the Departmental Committee on Agriculture as to why the Minister had appointed the directors without reference to Parliament as required by the controversial amendments brought by the Finance Bill of 2005.  The Assistant Minister for Agriculture asked for two weeks to responds while conceding that the appointment procedure appeared not to have been followed.  The promised reply has never been brought to Parliament since that time, and the departmental committee does not appear to have any more interest in the matter.

The farmer’s complaint is two or three-fold.  They believe that the Coffee Act was amended by stealth through the last minute expansion of taxation measures in the Finance Bill of 2005 to radically reshape the composition of all elected boards on which they had representatives – every time to their disadvantage.  Further they believe that the current Boards are invested with conflict of interest and are suspicious of the high predominance of non-farmers and traders on the Minister’s list of appointees. 

Coffee Board of Kenya Director post September 25th 2008

Jeremy Block

Major Waluke Koyi

Eldad Riungu Mpengu

Mercy Wambui Kamau

Joseph Kipkemboi

Mathew Kepha Ndege

John K. Mwangi

Elizabeth Mueni Kimakia

 

Finally farmers recalling an Americanism argue that they are now being taxed without representation by a board on which they are not represented, and that in excluding them from the board of the Coffee Board of Kenya and other institutions assets which their ad valorem tax payments built up over the years have been effectively nationalised by the Government of Kenya.  A twist of fate that is the inevitable consequence of logic, when one thinks about it the farmers are right.  Farmers still harbour bitterness at the invoicing incident of the early years of the transition period, and many hold current directors responsible for the schemes that collapsed coffee prices only in Kenya. 

A civil constitutional petition filed by a farmer from Western province soon after the Finance Bill amended the Coffee Act in 2006 still awaits a hearing date in 2009 months after the appointment by the Minister for Agriculture.  Further evidence in farming circles of the grand conspiracy against them.  This is not a paranoiac attitude.  When one examines the ramifications of the last 8 years of official policy it is clear that the farmers have suffered several adverse effects, even though all reforms have claimed to be for their benefit.  Conversely, at every stage of the reforms non-farmers have gained in leverage and influence over every aspect of the pricing and profit of this most valuable cash crop.  Looking at the farmers and their pauperisation it is clear that something very unfair has been going on in Kenya, and that despite their sophisticated branding the intermediates are running something of a con-game on rural folk.

Effect of the Minister of Agriculture’s Appointments

The farmers have petitioned Kenya’s President, but do not appear likely to get a reversal.  Today their political cache is much diminished.  Many Central Kenyan politicians who were once solidly behind the farmers during the days of opposition to Daniel Moi’s dictatorship appear to have a moderated view of the political worth of the farmers cause.  Many appear to have developed more sympathy for the intermediates between the farmer and the coffee drinkers. 

In the first Kibaki administration there definitely was attention towards boosting coffee production and farm inputs were easier available through a voucher system by which a European Union Fund was  channelled through the giant Cooperative Bank to appointed input (fertilisers etc…) brokers and ultimately to the farmers.  Bumper crops were realised at the time the second window was opening, but farmers had to mortgage their farm titles and after the invoicing incident the bubble burst. 

Today, it is claimed by knowledgeable farmers’ representatives that the auction block awaits hundreds of thousands of farmers unless there is an enlightened policy intervention.  They hold out a faint hope that if the consumer knew of their suffering they would get a better deal, but no Kenyan press appears interested in what looks like a fascinating story of market regulatory contamination by a special undeserving interest the middleman.  A Kenyan problem that has also recently been seen in the maize scandal that saw the emptying of the country’s Strategic Grain Reserves by Ministry of Agriculture bosses in collusion with MPs and businessmen.

So, if farmers have the worse end of the deal called reform of the coffee sector, who are the winners?  A casual search of the controlling hands and directorships of the companies between the farmer and the consumer in Europe or the United States tells a sorry tale of a cartel which appears to have insinuated itself into free market reforms and cunningly transformed itself into a shadowy system of gatekeepers extracting unwarranted share of the black gold which 700,000 poor farmers grow in Kenya.

Three-and-a-Half Million Victims

There are over 300 cooperative societies of coffee growers in 6 of Kenya’s 8 provinces.  700,000 farmers are registered as growers and with their dependants it is estimated that 3.5 million Kenyans depend on coffee for a living, even without counting the industry and trade that surrounds this bitter beverage. 

 

On June 9th 2009, this issue of illegal gazettment of Coffee Board Of Kenya was in Parliament. Coffee Board of Kenya - Illegal Gazettment - Hansard - June 9th 2009 as you will see there has been no action for the coffee farmers. This is likely to be the position we put our airports in if we allow the finance Bill to be passed without amending Mr Uhuru Kenyatta’s proposal to Parliament. "mambo ni yale yale".

 

Tags: 000 poor coffee farmers, 700, ad valorem tax, Africa, Arabica coffee, budget, Buni dealers license to export buni coffee from anywhere, Caribbean, Category ‘A’ license to import and export clean coffee, Category ‘B’ to import and export buni coffee, Central Kenya region, Central Province founding father, cereals sector, Chief Koinange, coffee, Coffee Board of Kenya coffee trees, Coffee futures, coffee industry, coffee production, Coffee Research Centre, Cooperative Bank of Kenya, Daniel Moi, dictatorship, Eastern Province, Elizabeth Mueni Kimakia, EU, Europe, farm inputs Stabex, Finance Bill, Governance, Government of Kenya, High-level corruption, Holy Ghost Fathers Catholic Order, Houston, IMF, International Coffee Organisation, International Monetary Fund, Job Kareithi, John K. Mwangi, Jomo Kenyatta, Joseph Kipkemboi, kenya, Kenya Coffee Growers Association, Kenya Planters Cooperative Union, Kenyan auction, Kenyan coffee, Kenyatta University, Kiambu districts, Kibaki administration, Kisii, KPCU, Lavington, licensed marketing agents, loans, lobbyists of multinational dealers, Lome Convention, Major Waluke Koyi Eldad Riungu Mpengu, Marketing license, Mars Group Kenya, Martha Karua, Matching Funds, Mathew Kepha Ndege, Mercy Wambui Kamau, Meru, milled coffee, Millers license, Minister of Agriculture, Minister of finance, Ministry of Agriculture, Moi regime, MP for Gatundu, Nairobi, New York Stock Exchange, oppressive regulation, Pacific, Packers license, parliament, Partnership for Change, Patrick Muiruri, poorest Kenyans, President, price-fixing scheme, Pulping station license European Union, revenue, riots, Roasters license Auctioneers licence, Saint Mary’ Boys School, Second Window, SOCFINAF, statute, Strategic Grain Reserves, Structural Adjustment programmes, taxation, taxation measures, Tetu Coffee, Texas, The Coffee Act, Thika Coffee Mills, ultilateral treaty European funds, United States, University, Warehouseman’s license, William Ruto, working capital, World Bank, ‘black gold’

BUDGET 2009/2010 CREATES A SECRET FUND INVOLVING MILLIONS OF US DOLLARS. WHY WAS PARLIAMENT NOT TOLD ABOUT THIS?

BUDGET 2009/2010 SERIES 001

Buried in the Finance Bill that the Minister of Finance, Uhuru Kenyatta tabled in Parliament last week is a proposal to amend two laws in order to create a fund whose purposes are barely specified. The Fund could be worth over 1 and a half billion shillings per annum, yet total discretion will be given to a parastatal corporation board who will decide how this money will be spent, without external oversight. The parastatal corporation which will be the legal owner of the fund is notorious for corruption and the parent ministry of Transport is behind at least some of the Anglo Leasing scams that cost the Treasury dearly since the mid 1990s.

In a clever side-stepping of Parliament, the law is to be changed to allow this parastatal corporation to borrow using its sink fund as collateral, avoiding the need to satisfy investors’ demands that it charge or mortgage its real assets – a practice specifically prohibited by Kenyan law. Why these legal changes are being done is a mystery as the issue did not feature at all in the 3 hour long Budget Day speech of last week.

If Parliament passes the Finance Bill without amendment it may just authorise the beginning of a series of unaccountable transactions involving potentially hundreds of millions of dollars, as the parastatal corporation has already signed contracts with external financiers for massive infrastructural projects.

The name of the parastatal corporation is…the Kenya Airports Authority

The amendments are to be made to the Kenya Airports Authority Act and the Air Passenger Service Charge Act. Subject to the latter every person who purchases a ticket for an external or internal journey must pay a passenger service tax of (20) twenty United States dollars or the equivalent in specified currency or in Kenya shillings for an external journey; and (100) one hundred shillings for an internal journey.

The amendments’ effect is that henceforth rather than paying taxes into the Consolidated Fund from which it can only be withdrawn as per the National Budget or with Parliamentary approval, the Kenya Revenue Authority shall,after deducting its expenses, pay all Air Passenger Service Tax into the newly created Kenya Airports Authority Fund. The amendments do not create an independent board of Trustees of the Fund, and the management of the Fund is left completely to the existing Management of the Kenya Airports Authority.

Under the amended law, the Kenya Airports Authority will be authorised to pay “out of the Fund any expenditure incurred by the Authority in the exercise of its powers or the performance of its functions under this Act.”

Parliament should consider whether it ought to approve these amendments.

Links
2009-2010 Budget Speech

Finance Bill 2009

Kenya Airports Authority Fund - amendments in The Finance Bill 2009

Source:
Board of Directors



Source:
Qatari Hotel Contract



Source:
Five Star Hotel Concept



Source:
Five Star Hotel @jkia



Source:
Jomo Kenyatta 10 billion shillings Expansion Project



Source:
JKIA

Tags: A SECRET FUND, Air Passenger Service Charge Act, Anglo leasing, board of Trustees of the Fund, BUDGET 2009/2010, Budget of the republic of Kenya, Collateral, Consolidated Fund, created Kenya Airports Authority Fund, Finance Bill, Government of Kenya, investors, kenya, Kenya Airports Authority, Kenya Airports Authority Act, Kenya shillings, Kenyan law, Laws, Mars Group, mortgage, National Budget, parastatal corporation board, parliament, Parliamentary approval, passenger service tax, real assets, sink fund, Taxes, that the Minister of Finance, the Kenya Revenue Authority expenses, Treasury, Uhuru Kenyatta, United States dollars

Disorganising Government - a tale of government bloat and waste
or how fewer Ministers and Districts could finance Agenda 4

“The only painless way Uhuru Kenyatta can finance Agenda 4 and balance his budget is to scrap 30 Ministries, stop paying bogus debts, force the Central Government to tighten its belt in solidarity with the dying public and demand the end of the proliferation of Districts.”
Partnership for Change

Public opposition to the largest cabinet in Kenya’s history has been vented since early 2008. Nevertheless it has been difficult to quantify the actual increased cost of the Grand Coalition Government vis-à-vis previous Governments of Kenya. 

For illustrative purposes there is no better budget line for the waste hunter than the sub vote ‘General Administration & Planning’ budget of the 43 Ministries.  They tell a tale of government bloat and waste, and all because political expediency trumped national planning in April 2008.  Last year the General Administration and Planning sub-vote topped Ksh 152.8 billion – a sum larger than the Wage Bill of the Entire Public Service; and just less than the Development Vote which caters for the Kenya Government’s investment for and on behalf of 35 million plus Kenyans. 

In every Ministry the first budget sub vote item, which Parliament is asked to approve is named General Administration & Planning.  It captures the bare minimum to keep the Minister’s Office and the Ministry running at HQ.  It is what pays for what one sees when they pay a visit to see the Waziri in Nairobi or his or her immediate staff at top-level.  It is the Minister’s Budget for his or her office and is more or less duplicated across the Cabinet Level.   For those not in the know, since April 18th 2008, Kenya has 93 Ministers and Assistant Ministers who represent the Government of Kenya in a Parliament of 222 Members; all purportedly in fulfilment of Agenda 3 of the Kenya National Accord of February 28th 2008.  By November 2008, the Government was broke.

Looking at the Administrative Costs of Government at Headquarters’ level, it is possible to see what the proliferation of Ministries costs the over-burdened Kenyan taxpayers each year.  It is also possible to estimate how much development we are foregoing as a Nation in order to keep non-performing Ministers in limousines and indefinitely.  The effect has been to impoverish the constituents that all politicians purport to represent. 

DISTRICT FOCUS FOR UNDER DEVELOPMENT
The situation is just as bad at District level within the public service.  First no one knows how many legal Districts the country has been carved up into. 

Apparently since 2003, President Kibaki has abandoned his previous criticism of Arap Moi’s District proliferation, and taken us from 70 districts to more than 210 districts. Although legality of all but 46 Districts – those named in the Constitution – is actually in doubt, the Executive has multiplied in a cancer-like fashion dividing and sub-dividing its units for political considerations – and ignoring basic principles of management efficiency.  With proliferation has come waste and corruption caused by stretching the oversight and control arms of government until they exhaust themselves and abandon oversight altogether. 

How well placed is the Controller & Auditor General – headed by Anthony Gatumbu – to audit the books of such a widely dispersed and hidden governmental structure?  How did it escape the appointing authority that Kenyans have greater problems than fighting over where to place the never-to-be-built District Headquarters? Such problems as 480 children die every day for lack of access – not to District Commissioners – but to medical personnel and medicine.

When one looks, in addition at the District level recurrent costs of the Central Government the situation is clear.  Political decisions with far reaching ramifications have been and are being taken about the size of Government with a cynical ‘wananchi will pay’ attitude to the detriment of developmental needs and government functions.  It’s almost a form of madness to govern so poorly.  140 more Districts while the all the High Court Judges in Kenya number only, and all Magistrates in Kenya won’t surpass 300 for a population of 35 million plus. 

We are sure that the Kenya National Accord was not intended to facilitate the underdevelopment of Kenyans in order to accommodate the two Principals (Mwai Kibaki & Raila Odinga) and their large political cohort.  The National Accord and Agenda 4 cannot be delivered with such a bloated and expensive Government – especially at Cabinet level.  To finance Agenda 4 Kenya needs to conserve its public resources better, and to plan to spend on a new development agenda for the people of Kenya. 

If it were up to us on Thursday afternoon, the budget would read as follows: ‘60:40 (Development: Recurrent) from June 30th this year’. It’s doable if there was the will, but only if Uhuru Kenyatta has the courage to deliver at a time when GDP growth is being easily outstripped by population growth, when jobs are being lost in the tens of thousands at a time; and when his Finance Ministry’s credibility is most strained by police and parliamentary investigations. 

On April 18th 2008 we wrote: “The truth is the Government had not planned over the period 2007-2009 to create any more Ministries. The truth is, despite the announcement on April 13th 2008, the Government has no revenue to do so, and there are no windfalls expected. The truth is, since December 2007 economic activity among the population has been interrupted, the Kenya Revenue Authority is collecting less tax, and many former taxpayers are struggling to survive. They simply don’t have enough to support the Grand Coalition cabinet of 93. The truth is, to finance the new Ministries, the Government will take the money from the only place it can, our development budget.  Once we dip into our development kitty to pay overheads, we will trigger a downward spiral in which, as we fall, we struggle to keep paying taxes not for our development but merely for the comfort of our servants. Underdevelopment is the obvious result of such a misplaced policy. With underdevelopment will come heightened social tensions and eventually insurrections against the conspicuous consumption of the servant class that calls itself Government.” 

Here’s hoping we get to April 2010 without reaching the tipping point.

 

Mwalimu Mati
Mars Group Kenya

Tags: Administrative Costs, Agenda 3, Agenda 4, Anthony Gatumbu, Assistant Ministers, budget, Cabinet Level, Central Government, Controller & Auditor General, Corruption, Development Vote, District Commissioners, District Headquarters, Districts, GDP growth, General Administration & Planning, government, Grand Coalition Government, High Court Judges, kenya, Kenya National Accord, Kenya Revenue Authority, management efficiency, Mars Group Kenya, medical personnel, Ministers, Moi, Mwai Kibaki, Mwalimu Mati, Nairobi, parliamentary investigations, Partnership for Change, President Kibaki, Raila Odinga, Treasury, Uhuru Kenyatta, Wage Bill, wananchi

GOVERNMENT OF KENYA SPENT KSH 23.2 BILLION IN 3 YEARS ON MOTOR VEHICLE RELATED EXPENSES – A CASE FOR A CAR COUNT?

GOK has spent a total of Ksh 23.2 billion over the last three years on motor vehicle related expenses, even though on June 15th 2006, Amos Kimunya, Minister for Finance said that “Ministers, Assistant Ministers and Permanent Secretaries will be allowed only one official car each to ensure equity.  I have factored the savings arising from this measure with a view to providing transport allowances to all civil servants.  Therefore from 1st July no public officials will be expected to use official vehicles to and from duty.” 

This was followed by Office of the President circular Ref: OP.CA3.23/1A of June 30th 2006 which adopted an official transportation policy “to address weaknesses observed in the existing transport policy which was characterised by mismanagement, high maintenance costs and inefficiency, lack of parity in allocation of transport facilities, proliferation of vehicle models and idle capacity due to the imbalance of number of vehicles and drivers, lack of capacity to enforce regulations on the4 use of government vehicles and e3scalating costs of providing government transport which stood in excess of Ksh 4 billion per annum, without corresponding improvement in service delivery.”
           
The Financial Secretary’s statement was in response to headline media coverage which had stated that public vehicles of luxury model were on sale secretly at throw away prices.  At the time the Financial Secretary stated that Treasury’s records indicated that 488 vehicles had been sold by December 2008 through open tender, and the sale had realised a total of Ksh 194,061,335 which had already been paid into the Exchequer.

Another 811 vehicles had been advertised for sale and as of November 25th 2008 were awaiting tender committee awards.  A further 789 GOK vehicles were under process to be sold by advertisement in early January 2009.

In total therefore, the Government had retrieved 2,088 vehicles from public departments for sale under this scheme.

What’s the Problem?

Since the 2006 budget speech the Government has actually spent Ksh 23.2 billion shillings in motor vehicle related expenses. 

Government of Kenya motor vehicle income and expenditure budget 3 years

	2006/2007	2007/2008	2008/2009	TOTAL
EXPENDITURE
Fuel Oil and Lubricants	2,446,460,318.00	3,078,743,865.00	3,239,313,362.00	8,764,517,545.00
Routine Maintenance - Vehicles and Other Transport Equipment	1,393,927,240.00	1,808,052,660.00	1,826,834,679.00	5,028,814,579.00
Overhaul of Vehicles and other Transport Equipment	855,204,523.00	327,079,222.00	254,867,886.00	1,437,151,631.00
Purchase of Vehicles and Other Transport Equipment	1,612,153,591.00	3,039,691,101.00	3,336,365,052.00	7,988,209,744.00
	6,307,745,672.00	8,253,566,848.00	8,657,380,979.00	23,218,693,499.00
INCOME
Receipts from the Sale of Vehicles and Transport Equipment	19,138,190.00	12,469,080.00	15,751,521.00	47,358,791.00

During the same period, the Treasury has stopped including the list of Government vehicles in the Budget Estimates presented to Parliament without any explanation.  The list was not included in either the Budget Estimates passed in June 2008 or the Supplementary Estimates of April/May 2009.

In the absence of this list (usually called Schedule 5 of the Estimates) it is not known how many vehicles GOK actually has.  When the number of cars was last reported (in 2007) it was stated that there were 10,589 GK cars.

Did Treasury sell 2,088 vehicles?
The Budget Reports over the past three years indicate that the sale of GK cars raised a total of Ksh 47.3 million shillings.

This contrasts directly with the Financial Secretary’s claim that Treasury’s income from the sale of 488 cars was Ksh 194,061,335.  Why wasn’t this reflected in the Budget for 2008-9?  Will it be reflected in the forthcoming budget?  We hope so.

Another question has the Treasury sold the other 1,600 cars referred to last year, and where if they have is the income reflected.  Certainly not in the budget for 2008-9, hopefully in the budget to be read on Thursday June 11th 2009.

The Need for Car Count?
Motor vehicles in GOK service are costly assets.  Not only do taxpayers have to cough up the purchase costs, but each year as can be seen from the table above there are substantial costs associated with driving such cars.  Is this sustainable?  In 2008-9, the GOK bought Ksh 7.9 billion worth of cars, and then spent another 15.2 billion on running costs as depicted below:

Budget Line Item	2006/2007	2007/2008	2008/2009	TOTAL 3 Yrs.
Fuel Oil and Lubricants	2,446,460,318.00	3,078,743,865.00	3,239,313,362.00	8,764,517,545.00
Routine Maintenance - Vehicles and Other Transport Equipment	1,393,927,240.00	1,808,052,660.00	1,826,834,679.00	5,028,814,579.00
Overhaul of Vehicles and other Transport Equipment	855,204,523.00	327,079,222.00	254,867,886.00	1,437,151,631.00

Recommendations:

1. To Parliament:  Prior to approving any vehicle related costs in the National Budget, it would be prudent and economical to insist on two things.  First the production of Schedule 5 for all GK cars; and Second a physical car count perhaps by the Efficiency Monitoring Unit which has the capacity and mandate to conduct such an exercise quickly having done a head count of the Teachers Service Commission staff payroll which involved over 200,000 teachers.  If vehicles do not exist then their running costs cannot be loaded onto the budget.  This closes a giant loophole for misapplication of public funds.
2. To Parliament:  Insist on the enforcement of the Office of the President Circular of 2006 by refusing approval for departments where Minister’s, Assistant Ministers and Permanent Secretaries have more than the officially stipulated number of cars at their beck and call.  In this case – 1 each.
3. To Parliament:  Insist that the practice of issuing private licence plates to Government cars stops forthwith.
4. Insist that you will hold the Finance Minister accountable for the stated policy of his Ministry.
5. The amount of money in question is over 6.5% of the Recurrent Budget of Government, it is therefore wise to look at the opportunity cost of waste and corruption on these car budget line items.  Ksh 23.2 billion invested over a 3 year period on development would for example achieve the following:

• A fund for an  annual USD 100 million investment in youth employment programmes – this is almost 4 times the National Youth Fund every year
• Would pay for 3 years of wages for all doctors and nurses and other medical personnel in public service – in other words Kenya could double medical personnel for what it is currently spending on ghost cars
• It would have made redundant the borrowing from the African Development Bank of Ksh 6.5 billion to construct 19 thousand homes for the IDPs.
• It approximates the Development Budget of the Ministry of Water & Irrigation for 2008-9.
• It would … (you get the drift?)

GK CARS PER DEPARTMENT (circa 2007-8)	Number
Ministry of Provincial Administration & Internal Security	2,390
Ministry of Medical Services	963
Ministry of Roads	837
Ministry of Agriculture	701
Ministry of Livestock Development	603
Ministry of Education	577
Ministry of Water and Irrigation	550
Ministry of Environment and Mineral Resources	525
Ministry of Lands	366
Ministry of State for Youth Affairs and Sports	307
Office of the Vice President and Ministry of Home Affairs	260
Ministry of Foreign Affairs	216
Ministry of State for Immigration and Registration of Persons	208
Ministry of State for Special Programmes	205
Ministry of Labour and Human Resource Development	196
Ministry of Finance	159
State House	149
Judicial Department	125
Ministry of Planning and National Development and Vision 2030	122
Cabinet Office	122
Ministry of Co-operative and Marketing	99
Office of the Deputy Prime Minister and Ministry of Trade	98
Ministry of Gender and Children Development	84
Electoral Commission of Kenya	75
Ministry of Information & Communications	73
Kenya Anti-Corruption Commission	70
Ministry of Housing	70
Ministry of State for Public Service	69
Ministry of Transport	66
Kenya National Audit Office	59
State Law Office	55
Ministry of Energy	50
Ministry of Justice, National Cohesion and Constitutional Affairs	25
Ministry of Higher Education, Science and Technology	23
Ministry of Tourism and Wildlife	22
Office of the Deputy Prime Minister and Ministry of Local Government	18
Ministry of East African Community	17
Ministry of Regional Development Authorities	14
Ministry of State for National Heritage	12
Ministry of State for Defence	9
	10,589

Tags: African Development Bank, Amos Kimunya, Assistant Ministers, Budget Estimates, Budget Reports, Car Count, civil servants, Corruption, Development Budget, doctors, Exchequer, Financial Secretary, Fuel Oil and Lubricants, ghost cars, GOK vehicles, government transport, government vehicles, IDPS, inefficiency, kenya, maintenance costs, Mars Group Kenya, media coverage, medical personnel, Minister for Finance, Ministers, Ministry of Water & Irrigation, Monitoring Unit, Motor vehicles, Mwai Kibaki, National Youth Fund, nurses, Office of the President, Office of the President Circular, open tender, Overhaul of Vehicles and other Transport Equipment, parliament, Partnership for Change, Permanent Secretaries, private licence plates, public departments, public service, Purchase of Vehicles and Other Transport Equipment, Raila Odinga, Receipts from the Sale of Vehicles and Transport Equipment, Recurrent Budget, Routine Maintenance - Vehicles and Other Transport Equipment, Supplementary estimates, Teachers Service Commission, tender committee, transport allowances, Treasury, Uhuru Kenyatta, youth employment programmes

THERE IS NEED FOR A HEADCOUNT

Government of Kenya has 484,830 staff according to the 2008-9 National Budget (Schedule IV – details of personal emoluments and other allowances).  This is about 1.2 % of the population and includes the all categories of public employees.  The Economic Survey says that employment in the public sector is 638,000 employees.

• Police officers – 45.057
• Prison officers 17,255
• Probation officers – 465
• Magistrates – 287
• Judges – 58
• Primary school teachers – 170,059 (1:45 pupil ratio)
• Secondary school teachers – 43,016 (1:28 students ratio)
• Registered medical personnel – 77,736 (1: 492) personnel to population ratio)
• doctors

The GOK spends 40.93% of its recurrent expenditure in wages and personal allowances for staff.  Recurrent expenditure is Ksh 349 billion 231 million 540 thousand One hundred and Ninety Shillings (349,231,540,190 Ksh).  This amounts to Ksh138.67 billion per annum.  Made up as follows:

CATEGORY OF WAGE BUDGET ITEM	Kenya Shillings	%age of Recurrent Expenditure
Basic Salaries - Permanent Employees	87,863,313,328.00	26.05
Personal Allowance Paid as Part of Salary	49,364,735,874.00	14.64
Personal Allowances Paid as Reimbursements	828,067,568.00	0.25
Personal Allowances Provided in Kind	709,372,492.00	0.21

However most civil servants do not earn huge salaries as one might imagine from the high budgetary provision.  Out of the 484,830 staff of GOK most earn less than Ksh 15 thousand per month, including their allowances.  In this category would be the majority of:

• Policemen and women
• Nurses.
• Prison warders
• Administration police and provincial administration officers
• Teachers

In the supplementary budget that was rejected by Parliament almost Ksh 8.6 billion of Teachers allowances were mysteriously unreported to Parliament.  This is worrying because every year over Ksh 29 billion is spent on Teachers Allowances.  Shockingly, recent press reports indicate differences in the payroll figures between the Teachers Service Commission, the Government Efficiency Monitoring Unity, and the Economic Survey itself.  These suggest that there could be a misapplication of teachers allowances hence the need for a headcount.  The same applies to other large payroll departments of the Government of Kenya.  A headcount in Uganda in 2006 found ghost workers and ghost schools complete with maintenance and other pupil-teacher costs

GOVERNMENT DOES NOT KNOW THE NUMBER OF TEACHERS IT EMPLOYS

 

Comparison of figures for teachers	TSC – Press Statement– 05/06/09	EMU	ES 2009	Budget   in position for 2008-9	Budget   Provides for 2008-9
	219,744	207,554	213,075	227,601	241,263

 

The executive arm of government handles the entire budget of the Government of Kenya, which for 2008-9 amounted to close to 10 billion US Dollars. Opportunities for grand and petty corruption are many within the executive, and should be controlled through systems and procedures that reduce discretion and introduce adequate checks and sanctions. Amongst such checks is certainty of payroll figures. More theft is possible through ghost worker payments than many would imagine.

Strong leadership from the Chief Executive – the President - is a core success factor. In Kenya this has never been fully demonstrated. Action on several allegations of grand corruption such as the Goldenberg scandal (1990s), Anglo Leasing scandal (1997 to date), and the recent Teachers Service Commission Supplementary Budget scandal (April-May 2009) have stopped largely at the conclusion of Commissions of Inquiry, or Parliamentary Reports. Minor administrative action has been taken in certain cases, but overall the key findings in commission reports have not been investigated further or acted upon significantly. In this regard the independent forensic audit into whom, how and what caused the Ksh 10. 7 billion “error” has yet to be empanelled three weeks after it was resolved by Parliament that the supplementary budget showed cause for an investigation into the National Budget over the past three years. At least Ksh 8.6 billion in this scandal was alleged to be personal allowances due to employees of the Teachers Service Commission.

Just last week, the Efficiency Monitoring Unit and the Teachers Service Commission have been engaged in a tit-for-tat exchange which makes it clear to Kenyans that no one really knows how many legitimate or ghost teachers there are on our public payroll. This is cause for concern because as the Teachers Service Commission likes to say, it is the largest single employer in Kenya (and often claims to be the largest in sub-Saharan Africa).

KENYANS ARE SAYING NO TO GHOSTS WHETHER  ANGLO LEASING OR IN PUBLIC SERVICE

The Partnership for Change inists that a thorough payroll cleaning exercise be undertaken immediately, because things do not look so good, in view of the recent confusion surrounding what should be a fairly straightforward question: How many teachers are there in Kenya’s Secondary and Primary Schools on the public payroll? In Uganda a similar exercise once unearthed not only ghost teachers but also a number of ghost schools complete with infrastructure / maintenance, teacher and pupil costs. As the Finance Minister prepares to read his budget this Thursday, he may want to check whether or not his provisions for teachers’ allowances are being padded. In any case we will not waster our tax money paying ghosts as we have been doing for decades. Kenyans are still paying Anglo Leasing ghosts.

Teacher Service Personnel - 2008-2009 AS IN THE APPROVED ESTIMATES

Teachers Service Commission Personnel - 2008-9
DATA FROM BUDGET ESTIMATES 2008-09	Approved Ceiling	In Position	Difference	Salary (Ksh)	House (Ksh)	Medical (Ksh)	total wages (Ksh)
Principal graduate teacher II – 8, 572	8572	910	7662	2,927,509,440.00	1,337,232,000.00	313,118,016.00	4,577,859,456.00
GAT I – 44,571	44571	44571	0	11,338,673,340.00	6,418,224,000.00	1,202,347,296.00	18,959,244,636.00
Senior Graduate Teacher – 26,821	26821	26821	0	8,368,152,000.00	3,862,224,000.00	733,822,560.00	12,964,198,560.00
GAT II – 12,058	12058	11800	258	2,758,629,240.00	868,176,000.00	274,488,312.00	3,901,293,552.00
Trained Technical Teachers – 728	728	728	0	170,483,040.00	52,416,000.00	16,572,192.00	239,471,232.00
UT Graduate Teacher – 700	700	700	0	146,454,000.00	37,800,000.00	13,708,800.00	197,962,800.00
S1/ Diploma Teacher – 2,151	2151	4886	-2735	450,032,220.00	116,154,000.00	42,125,184.00	608,311,404.00
Approved Teacher iv – 63,396	63396	58580	4816	9,486,577,440.00	1,597,579,200.00	903,012,624.00	11,987,169,264.00
UT Tech Teacher – 500	500	500	0	74,820,000.00	18,000,000.00	7,122,000.00	99,942,000.00
P1 Teacher – 72,636	72636	68975	3661	10,093,498,560.00	1,830,427,200.00	835,023,456.00	12,758,949,216.00
P2 Teacher – 8,488	8488	8488	0	1,110,739,680.00	203,712,000.00	78,123,552.00	1,392,575,232.00
Chief Principal - 84	84	84	0	38,636,640.00	22,176,000.00	4,447,296.00	65,259,936.00
Senior Principal – 125	125	125	0	53,070,000.00	33,000,000.00	5,871,000.00	91,941,000.00
Principal Teacher 1 - 433	433	433	0	167,493,060.00	114,312,000.00	17,941,788.00	299,746,848.00
	241,263.00	227,601.00	13,662.00	47,184,768,660.00	16,511,432,400.00	4,447,724,076.00	68,143,925,136.00

Recommendations:

1. Conduct a national headcount of all public officers. If they do not exist they should not be paid.

Tags: Administration Police, Approved Teacher, budget errors, budgetary provision, Chief Principal, civil servants, Commissions of Inquiry, doctors, Economic Survey, Finance Minister, Forensic Audit, ghost schools, ghost worker, Goldenberg scandal, Government Efficiency Monitoring Unit, Government of Kenya, Judges, kenya, Magistrates, Mars Group Kenya, National Budget, nurses, P1 Teacher, P2 Teacher, parliament, Parliamentary Reports, Partnershipforchange, Personal Allowance, personal emoluments, petty corruption, police officers, Policemen and women, President, Primary school teachers, Primary Schools, Principal graduate teacher, Principal Teacher 1, prison officers, Prison warders, Probation officers, provincial administration officers, public employees, public payroll, public sector, pupil ratio, Recurrent Expenditure, Registered medical personnel to population ratio, Secondary school teachers, Secondary Schools, Senior Graduate Teacher, students ratio, sub-Saharan Africa, Supplementary budget, teachers, Teachers Service Commission, Trained Technical Teachers, Uganda, Uhuru Kenyatta, UT Graduate Teacher

WIKILEAKS PRESS RELEASE - For Immediate Release
Wednesday June 3, 2009

“WikiLeaks wins Amnesty International 2009 Media Award”

WikiLeaks editor Julian Assange has won the Amnesty 2009 New Media Award for work exposing hundreds of recent extrajudicial assassinations in Kenya. The award was presented last night at a ceremony in London.

Four people associated with investigating the killings have themselves been murdered, including noted human rights lawyers Oscar Kingara and John Paul Oulo, who were assassinated driving to an afternoon meeting at the Kenyan National Commission on Human Rights in March this year.

WikiLeaks first ran its first story on the killings for a week on its fronpage, beginning November 1, 2008. Eventually the story was picked up by print media, starting with Jon Swain from the Sunday Times. Then, earlier this year the United Nations sent a team to Nairobi, lead by Prof. Alston, to investigate.

According to AFP, earlier today a session of the U.N. Human Rights Council was told by the U.N Special Rapporteur on extrajudical killings, Prof. Philip Alston, that Kenya’s police were a “major stumbling block” for probes into the killings.

Prof. Alston also told that 47 member Human Rights Council on Wednesday that “Attacks on those who document abuses do not absolve a government of its obligation to investigate, prosecute and punish those responsible for extrajudicial executions,”.

In accepting the award, Mr. Assange stated “It is a reflection of the courage and strength of Kenyan civil society that this injustice was documented. Through the tremendous work of organizations such as the Oscar foundation, the KNHCR, Mars Group Kenya and others we had the primary support we needed to expose these murders to the world. I know that they will not rest, and we will not rest, until justice is done.”

Source documents

1. Murder in Nairobi: Wikileaks related human rights lawyers assassinated

2. Kenya: The Cry of Blood - Report on Extra-Judicial Killings and Disappearances, Sep 2008

3. Kenyan assassinations: slain human rights lawyer Oscar Kamau Kingara letter to the International Criminal Court, 1 Jan 2009

4. Oscar Foundation - assassinated Kamau Kingara final report - The Veil of Impunity, 9 Oct 2008

5. Oscar Foundation letter to Minister for Internal Security over extra-judicial killings in Kenya, 14 Oct 2008

6. US Ambassador to Internal Security head over Kenyan assassination

Selected reportage

• Cooperate with FBI, Raila tells Kenya police
• Demonstrators accuse police over disappearance of kin
• International Criminal Court will handle politicians but who will tame police
• Raila now attacks security agencies
• Two Kenyan rights activists shot dead
• UN group to probe poll chaos deaths
• UN probe indicts Kenya on police killings
• UN urges probe into Kenya murders

http://wikileaks.org/wiki/WikiLeaks_wins_Amnesty_International_2009_Media_Award

Tags: 1 Jan 2009, 2009 Media Award, AFP, Amnesty International, extra-judicial killings in Kenya, extrajudicial assassinations in Kenya, FBI, Human Rights Council, human rights lawyers, Internal Security, International Criminal Court, John Paul Oulo, Jon Swain, Julian Assange, kenya, Kenya Police, Kenyan National Commission, London, Mars Group Kenya, Minister for Internal Security, Murder in Nairobi, Nairobi, Oscar Foundation, Oscar Kingara, Prof. Alston, raila, Sunday Times, The Cry of Blood, the KNHCR, The Veil of Impunity, U.N Special Rapporteur on extrajudical killings, U.N. Human Rights Council, United Nations, US Ambassador, Wikileaks

June 2nd 2009.

Mr. Dominique Strauss-Kahn
Managing Director
The International Monetary Fund
700 19th Street, N.W.,
Washington, D.C. 20431
For the attention of the Board of Directors

Through W. Scott Rogers, IMF Resident Representative to Kenya.

Dear Sir,

RE: IMF’s ODIOUS LOANS ARE IMPOVERISHING KENYA THROUGH COLLUSION WITH CORRUPT AGENTS

“Transparency requires that the Kenyan citizen knows what they owe, to whom they owe, and for what purpose they have a debt” – Partnership for Change

We refer you to our letter to the IMF dated March 30th 2009 regarding a loan request made by the Kenya Government to the IMF requesting for US$ 100 million. We also refer you to recent statements by your Representative to Kenya, W. Scott Rogers regarding investigations into the Supplementary Budget Estimates made on May 30th 2009. Mr. Rogers has been quoted in the media as saying:

“When the errors contained in the first printed supplementary estimates emerged, the ministry called me in to have a look at their database and talk with their staff and budget supplies to see if we could find out the origin of the problem,” he said. “When those codes were correctly put in and the estimates reprinted as far as we can tell the errors went away.” - W. Scott Rogers, IMF Resident Representative to Kenya May 30th, 2009 on the occasion of signing a USD 209 million loan for balance of payments support

The Partnership for Change finds the above statement strangely equivocal, especially since the re-submitted Supplementary Estimates still contain errors AND Parliament has authorised an independent forensic audit into the budget going back three years. We are reliably informed by Parliament that the process of procuring the services of an independent auditor is underway.

The Partnership for Change is demanding that Kenyan Members of Parliament, as the representatives of the People, make a stand against this most recent and what the Partnership for Change terms as an odious loan, based on the following arguments:

1. According to the IMF website, the IMF undertakes annual Country surveillances that take the form of regular comprehensive consultations with individual member countries with interim discussions as needed. The consultations are referred to as “Article IV consultations” because they are required by Article IV of the IMF’s Articles of Agreement. During an Article IV consultation, an IMF team of economists visits a country to collect economic and financial data and to discuss the country’s economic policies with government and central bank officials. IMF staff missions also often reach out beyond their official interlocutors for discussions with parliamentarians and representatives of business, labor unions, and civil society.

a. At no time during their Supplementary Budget investigations did the IMF reach out to the Partnership for Change (originators of the report into the Supplementary Budget Estimate errors), nor any other civil society member whose work concerns Kenya’s national budget-making process. The Partnership for Change can only conclude that the IMF’s findings announced by W. Scott Rogers on May 30th 2009 are invalid as they do not incorporate any views except from the Treasury.

b. Furthermore, the Partnership for Change previously wrote to the IMF on 30th March 2009, requesting the organisation to exercise prudence in respect of the Government of Kenya seeking a US$ 100 million loan. At the time, Partnership for Change urged the IMF’s Board to insist that:

i. The Government of Kenya immediately demonstrates austerity measures, including the reduction of the number of ministries to a reasonable number.

ii. An Audit of Kenya’s External Public Debt Register be made and issued to the Public through the National Assembly

iii. A Report on pending legislation and threatened proceedings against the Government of Kenya on the basis of Sovereign debt be made and issued to the Public through the National Assembly

iv. In the Public Interest that the Permanent Secretary, Treasury and the Head of Debt Management resign.

v. All wasteful expenditure is removed from the National Budget estimates to be presented to Parliament in June 2009 and that the Estimates to reflect 60% in Development expenditure and 40% in recurrent expenditure.

vi. Provision by the Government of Kenya of evidence that it has requested mutual legal assistance for international asset recovery on past corruption cases and has taken action to seize proceeds of corruption in Kenya.

Apart from an acknowledgement of receipt to Mwalimu Mati on behalf of the Partnership for Change from Mr. Scott Rogers and an indication that the same letter was passed onto yourself, the Partnership for Change has never received any other official communication from your organisation. Once again, the Partnership for Change can only conclude that in light of no response from April 2009, that the IMF chose to ignore the high priority matters regarding Kenya’s economic policy, and thus in line with the IMF’s Article IV, recent findings by the IMF on the Treasury do not concur with the IMF’s internal procedures, and thus should be deemed null and void.

We however received a request to unsubscribe Mr. Scott Rogers from our website. This request came when the Partnership for Change began to profile the budget. It is noteworthy to mention that we declined to do so in the public interest and because we expect that this subscription is in effect our voice to the International Monetary Fund Board, and these addresses are in the public domain.

c. The history of the IMF in Kenya has been one where information on loans are only privy to a select few. It is important that those who re-pay these loans, in this case the Kenyan Citizen are consulted and agreeable through Parliament to incurring such debts.

2. The IMF has developed standards and codes of good practice in economic policymaking. It is therefore inconceivable that the same IMF has given a pass grade to the financial impropriety carried out by the Treasury passing it off as a mere “coding” error.

3. It is additionally astounding that the recent events in Kenya concerning the Supplementary Budget Estimates have not been found to fit the IMF’s vulnerability indicators and early warning system models which were developed in the first place to improve the organs ability to identify countries at risk.

4. The IMF has also let itself and its member country contributors down by being lax in its mission to promote good governance, particularly in the public sector. In turn the Treasury has let the IMF down if it has been a recipient of IMF training in fiscal policy and management (specifically budget formulation, expenditure management, design of social safety nets, and management of domestic and foreign debt).

5. The IMF terms as it’s “main business” oversight of member countries macroeconomic and financial sector policies. These include oversight of member country policies relating to the government’s budget. The Partnership for Change states that in Supplementary Estimates this has not been the case.

6. Supposedly, IMF lending signals that a country’s economic policies are on the right track, reassuring foreign investors of the safety of their investment in loanee countries. Thus, IMF financing acts a catalyst for attracting funds from other sources. The Partnership for Change in this case is issuing a caveat emptor for any interested investor, not to take this latest irresponsible injection as an indication that all is well in Kenya.

7. The IMF claims to promote the UN Millennium Development Goals through financial assistance and advice. However its recent actions will not promote:

• Eradication of extreme poverty and hunger
• Achievement of universal primary education
• Promotion of gender equality and women’s empowerment
• Reduction of child mortality
• Improvement of maternal health
• Combating HIV/AIDS, malaria, and other diseases
• Ensuring environmental sustainability

Lending 16billion shillings to a government where 85% of its budget is spent on recurrent expenditure, and who according to the Supplementary Budget is more interested in budget items such as personal allowances and foreign travel, means that the chances of expenditure on these MDG goals will suffer.

8. The IMF agreed in 1997 to take “a more proactive approach” in trying to “eliminate opportunity for rent seeking, corruption and fraudulent activity.” The Supplementary Budget errors were clearly an attempt to defraud the Kenyan populace of its resources yet the IMF was not proactive in this instance.

The Partnership for Change therefore is joining calls for the IMF to immediately do an inventory of loans lost to corruption and public sector financial impropriety GLOBALLY. An independent panel of experts should determine, on a case by case basis, where responsibility lies. If it is found that IMF staff knowingly lent money to regimes who then siphoned it off through corruption, thereby contravening the institutions’ fiduciary mandate, negotiations about sharing liability should commence immediately.

Kenya simply cannot afford more of the IMF’s loan “medicine”. We as a people are demanding the freedom to follow economic policies that protect the country from more harm.

The IMF is governed by, and is accountable to, its member countries. As we are the ones that elected Kenya’s leadership, in effect it means that the IMF is ultimately beholden to us.

ODIOUS DEBTS

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 the process it has financed dictators, spawned corruption, harmed the environment, wrecked economies, and then forced the Third World’s hostage public to pay the money back. In law, these debts are known as “odious”.

Most Third World Countries have very little to show for all IMF 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 drain the funds needed for education, health care and development.

Economist Henry James argues First World countries also pay a hefty price tag in the form of increased requirements for homeland security and military might, as more and more countries descend into the ranks of the “Fourth World” — failed states that foster transnational corruption, drug running, arms traffic, and terrorism as a result of irresponsible loan making and loan taking.

Apart from their support for corrupt regimes, the IMF’s draconian prescriptive policies that insist on public expenditure cuts and the raising of interest rates have also played a huge role in entrenching poverty.

Today 70% of Africans live on less than two dollars a day meanwhile the IMF continues to loan hundreds of billions of dollars to their corrupt leaders with nothing to show for it.

Ethiopia, one of the poorest countries in the world was forced to hike fuel prices, cut public spending, and reduce its deficit. Ukraine was forced to keep its deficit at zero. Belarus and Latvia had to cut public-sector wages. Pakistan had to raise its electricity taarifs. Hungary suppressed workers’ “13th month” bonus after reducing retirement benefits as part of a previous agreement. The list goes on and on.

In Kenya the effect will be felt when IMF budget and wage caps prevent the government from spending what is needed to hire teachers and medical staff as well as efforts to ensure food security through modernization of the agricultural sector.

KENYANS WILL NOT TAKE IT LYING DOWN

The IMF who made the corrupt loans to Zaire and lent for projects in Africa that failed repeatedly is still in charge of the global economy. Its role has been enhanced because of its success in pushing loans. Can we reasonably trust the IMF to suddenly only lend wisely; to not give loans when the money might be wasted? Joseph Hanlon and Ann Pettifor of Jubilee Research write:

Preventing new wasted loans and new debt crises, and ensuring that there is not another debt crisis, means that the people who pushed the loans and caused this crisis cannot be left in charge.

The creditors or loan pushers cannot be left in charge, no matter how heartfelt their protestations that they have changed. Pushers and addicts need to work together, to bring to an end the entire reckless and corrupt lending and borrowing habit.

The IMF potion is so bitter but some governments have stood up against the IMF. The Ukraine declared the conditions imposed by the IMF to be “unacceptable”, especially the gradual raising of the retirement age and increased housing costs.

THE TIME HAS COME TO CHANGE THE IMF’s BAD HISTORY

In 1944 in a town called Bretton Woods in the United States where a group of leaders from 45 countries met to rectify the damage caused by the 1930’s depression on the world economy. A foundling organisation was decided upon, 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.

When a country joins the IMF, it agrees to subject it’s economic and financial policies to the scrutiny of the IMF as well as the international community. And it makes 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) is intended to identify weaknesses that are causing or could lead to trouble in individual member countries.

Technically, countries do not receive loans from the IMF; they “purchase” foreign exchange from the IMF’s reserve assets, repaying with their own currency. The loan is considered repaid when the borrower “repurchases” its currency from the IMF in exchange for reserve assets.

As a form of membership fee, each member country deposits into the IMF a certain sum of money, called a quota subscription, based on its wealth and economic performance. Countries pay the quota which determine their votes in operating the fund and their borrowing limit.

When a member country cannot earn enough foreign currency to meet its obligations, it can borrow from the IMF pool to tide it over. To date, the IMF has lent member states some $100 billion for this one purpose; the only purpose for which it lends.

A LITANY OF THE DAMAGE IMF ODIOUS LOANS HAVE WREAKED

Third World countries have incurred trillions of dollars in debt through loans contracted from the IMF. Most of these conditional loans have been either stolen or used to service debts already owned by these poor countries. A portion of these loans have also been used to pay foreign expatriates supplied by the IMF as ´technical experts´. In other instances outlined below, IMF loans have been used to prop up corrupt regimes.

INDONESIA

During the Suharto era, it was an open secret that many deals were tainted with bribery, but this not deter the IMF from extending loans in a country where at the time, 95% of the country’s foreign debt was owed by 50 individuals.

At a time where the Suharto regime meant strengthening of the military who policed the population with impunity, the IMF who held great sway did not propose lessening in the power of the military.

On May 12 1998, six young people died of bullet wounds when police opened fire on students who were peacefully demonstrating against price increases ordered by the IMF and against the military dictatorship which has ruled Indonesia for 32 years. This massacre triggered the fall of the Suharto-regime. In all this time, the IMF neither registered disapproval nor curtailed financing the government.

Workers organized by an unofficial trade union marched on the downtown Jakarta offices of the International Monetary Fund, protesting the terms of the IMF adjustment program adopted by the Suharto government under IMF pressure where the government slashed fuel and transport subsidies. IMF demands of austerity which incorporated the dismantling of all forms of national economic regulation, particularly the tax breaks, monopolies, and trade controls enjoyed by the Suharto family and its associates, by far cannot be compared to the brunt of their policies on the common Indonesian man and woman.

However, Stephen Schwartz, the IMF’s Country Director for Indonesia, was quoted as believing that the country achieved significant macroeconomic stability. According to him, “the Indonesian government handled the abolition of the fuel subsidy very well in terms of containing inflationary pressures, and showed sound judgment in respect of monetary policy… In fact, Indonesia has done so well in terms of macroeconomic and fiscal performance, that it paid back its IMF loan four years ahead of schedule,” he said.

Schwartz acknowledged that the IMF’s role was not at all popular with the Indonesian people. However, once the country’s financial crises was resolved he remarked, “It’s very different nowadays, I can openly tell people where I work, except perhaps, for taxi drivers”.

President Suharto only resigned after suspension of the IMF’s $43 billion aid program, under orders from the Clinton administration.

KOREA

In late November 1997 following the dramatic plunge of the Korean won on the foreign exchange market, an IMF team was rushed to Seoul. Its mandate: negotiate the terms of a ‘Mexican-style bailout’ with a view to ‘restoring economic health and stability’.

A ‘Memorandum on the Economic Programme’ was put together in a hurry on behalf of the Korean government with virtually no analysis of the broader causes of the financial meltdown. The ‘policy solutions’ had already been decided upon and thus no analysis was deemed necessary.

The IMF programme derogated Korea’s economic sovereignty, plunging the country virtually overnight into a deep recession. The social impact was devastating. The standard of living collapsed, as the IMF programme depressed wages and created massive unemployment. The agreement also required the government to introduce ‘labour market flexibility’ including procedures for compressing wages and shedding ’surplus workers’.

A de facto ‘parallel government’ was installed rubberstamped by Korea’s parliament, whereby the Bank of Korea (BOK) had to be reorganised, while meanwhile, the powers of the Ministry of Finance were to be redefined. Under the IMF bailout, fiscal and monetary policy would be dictated by external creditors. Monetary policy was tightened and government spending on social programmes and infrastructure curtailed.

Industry was almost paralysed. Automotive group Kia, amongst Korea’s largest conglomerates, declared insolvency. A similar fate affected the Halla Group involved in shipbuilding, engineering and auto-parts.

ZAIRE – 1978

Joseph Hanlon of Jubilee Research UK gives details to what happened to monies loaned to Mobutu of former Zaire now DR.Congo. He writes: In 1978 the IMF appointed Edwin Blumenthal, to a key post in Zaire´s central bank. He resigned two years later, complaining of “sordid and pernicious corruption” that was so serious that “there is no chance, I repeat no chance, that Zaire’s numerous creditors will ever recover their loans.”

Shortly after Blumenthal’s report to the IMF, it gave Zaire the largest ever loan given to an African country. When Blumenthal wrote his report, Zaire’s debt was $5 billion; by the time Mobutu was overthrown and died in 1998, the debt was over $13 billion. In the six years after Blumenthal’s report, the IMF lent Zaire $600 million.

About 50% of the $13-billion was stolen and deposited in Western Banks while the rest was wasted on white elephant projects. Today the majority of Congolese live on less than a dollar a day while hundreds of millions of dollars are paid annually to the IMF as fees for loans taken and stolen by Mobutu.

PHILIPINNES

In the Philippines during the regime of the dictator Ferdinand Marcos, the IMF was absolutely aware that most loans to Philippines were transferred into personal bank accounts of Marcos, his wife Imelda and his generals; nevertheless they considered it as a necessary bribe for paying the political staff in power in order to ensure the acceleration of the neo-liberal counter reform. So far the Philipinos are still paying for the policies of the Bank and IMF.

IRAQ

In December 2005, the IMF in exchange for giving a loan of $685 million to the Iraqi government, insisted that the Iraqis lift subsidies on the price of oil and open the economy to more private investment.

The impact of the IMF extortion was swift and brutal on Iraqi’s. Fuel prices increased five-fold. According to a Los Angeles Times report dated December 28: “the move has shocked Iraqis long accustomed to hefty subsidies of gasoline, kerosene, cooking gas, and other fuels.”

Not surprisingly, these enormous price hikes led to riots culminating with police firing on 3,000 protesters in Nassiryeh.

ICELAND

Faced with the complete collapse of its financial system in 2008, the Icelandic government accepted a US$6 billion “bailout package”, which would include more than $1 billion input from the International Monetary Fund.

The state now owes more than $60 billion, more than 80% of which was held by the banking sector, which is more than six times its annual gross domestic product.

The October 20 2008 British Financial Times reported on the IMF loan to Iceland, stating: “The IMF sought assurances on the restructuring of the banking sector and has demanded a review of Iceland’s banking legislation to ensure it conforms with international best practice.” The article concludes that “The IMF will ask the government to compile a credible plan for fiscal tightening in response to government debt levels”, which in effect means that all decisions about Iceland’s economy are subject to IMF approval.

LATVIA

Latvia in March 2009 suffered most dramatically, with the IMF withholding a promised loan installment of $200 million because public spending (one of the IMF Washington office-generated models and draconian regulations) was not being cut fast enough. This resulted in the government having to cut its budget by 40%, thus inflicting damage on hospitals and pensions, amongst other critical social services.

PAKISTAN

In November 2008 the IMF granted Pakistan a jaw-dropping $7.6 billion. The purpose of this IMF economic-stabilization package was also to help instil confidence among foreign investors who were scared away by the country’s breakdown of law and order, terror strikes, political chaos and weakening economy.

But rather than instilling confidence, moving such large sums of money to a country with a well-documented history of using such funds corruptly — according to the U.K.’s Guardian newspaper, looked like tacit approval for corruption to thrive.

Previously, in 1998 the Pakistani anti-corruption agency investigated over 20 Western companies for paying kickbacks to Benazir Bhutto’s government for public contracts to provide electricity. Six of the companies later confessed to offering bribes. Instead of receiving support from the IMF and other Western governments they were told to quash the investigation on the grounds that investors would shy away from Pakistan. The IMF even made a package of loans conditional on the government dropping the charges against the companies involved.

RUSSIA

IMF loans to Russia were creamed off by the Russian elite and deposited in Western banks. Former President Boris Yeltsin used $5 billion of multilateral funds, including those from the IMF, for his re-election campaign in 1996. In this instance, the IMF remained silent and continued lending to the country until late 1999 when allegations surfaced that its loans were being laundered back into US bank accounts.

MEXICO

In Mexico the IMF also continued lending to the government of President Carlos Salinas despite strong evidence of corruption. Extremely high interest rates aimed at attracting foreign investment and prevent capital flight strangled small and medium-sized Mexican producers, while encouraging foreign short-term speculators. Poor and working-class Mexicans, were ultimately the ones that shouldered the burden of adjustment.

KENYA

We wish to remind you that the IMF is governed by, and is accountable to, its member countries. As we are the ones that elected Kenya’s leadership, in effect it means that the IMF is ultimately beholden to us.

Partnership for Change

From Dictatorial Impunity to Democratic Accountability in Kenya

June 2, 2009, Nairobi Kenya

c.c.
Open Copies to

1. All Members of Parliament ( Kenya National Assembly)
2. Bi – Lateral Donors to Kenya
3. The Country Resident Director, the World Bank
4. The Resident Representative, African Development Bank
5. The Resident Representative, International Monetary Fund
6. Media
7. The Board of Directors of the World Bank

Tags: 'Mexican-style bailout, 'surplus workers, administration, agricultural sector, and central banks, Ann Pettifor, annual Country surveillances, annual gross domestic product, anti-corruption agency, arms traffic, Article IV consultations, Articles of Agreement, Audit, austerity measures, bailout package, Bank for International Settlements, Bank of Korea, banking legislation, banking sector, Belarus, Benazir Bhutto, Boris Yeltsin, Bretton Woods, British Financial Times, budget, budget formulation, budget items, capital flight, CAVEAT EMPTOR, child mortality, Civil Society, Clinton administration, codes of good practice, coding error, cooking gas, Corrupt Agents, corrupt regimes, Corruption, corruption in Kenya, Country Director, Country Manager, creditors, critical social services, customs policies, debt crisis, deep recession, depression, design of social safety nets, Development, Development Expenditure, domestic debt, Dominic Strauss-Khan, draconian prescriptive, drug running, economic health and stability, economic performance, economic policies, economic policymaking, economic sovereignty, economic-stabilization package, Economist, economy, education, Edwin Blumenthal, electricity, environmental sustainability, Eradication of extreme poverty and hunger, Ethiopia, expenditure management, external creditors, External Public Debt Register, Extremely high interest, Ferdinand Marcos, fiduciary mandate, financed dictators, financial assistance, financial data, financial developments, financial impropriety, financial meltdown, financial sectors, fiscal tightening, foreign debt, foreign exchange, foreign expatriates, foreign investors, foreign short-term speculators, foreign travel, Fourth World, fraudulent activity, free trade, fuel subsidy, gasoline, global, global economy, global prosperity, good governance, government, government debt levels, Guardian newspaper, Halla Group, hard currencies, harmed the environment, Head of the IMF, health care, hefty subsidies, Henry James, HIV/AIDS, homeland security, hospitals, housing costs, Hungary, Iceland, Icelandic government, Imelda, IMF extortion, IMF training, IMF’s, Indonesia, interim discussions, internal procedures, international asset recovery, international community, inventory of loans, Iraq, Iraqi government, irresponsible injection, irresponsible loan making, Jakarta, jaw-dropping, Joseph Hanlon, Jubilee Research UK, kenya, Kenya MPs, Kenya’s economic policy, kerosene, Kia, kickbacks, Korea, labor unions, Labour market flexibility, Latvia, laundered, law and order, lending members, loan pushers, loan taking, loanee countries, Los Angeles Times, macroeconomic, macroeconomic stability, malaria, market discipline, Mars Group, massive unemployment, maternal health, medical staff, member countries, Memorandum on the Economic Programme, Mexican producers, Mexicans, Mexico, military might, Ministry Of Finance, Mobutu, modernization, monetary policy, monitoring national, monopolies, mutual legal assistance, Nassiryeh, National Assembly, National Budget estimates, national economic regulation, neo-liberal counter reform, odious, Odious Debts, Odious Loans, oil, other fuels, Pakistan, panel of experts, parliamentarians, Partnership for Change, paying, Pensions, Permanent Secretary, pernicious corruption, personal allowances, personal bank accounts, Philipinos, Philippines, policy programs, policy solutions, political chaos, Poor and working-class, President Carlos Salinas, price increases, private investment, proactive approach, Promotion of gender equality, protesters, public, public contracts, public expenditure, public spending, quota subscription, Recurrent Expenditure, regional economic, representatives, retirement benefits, Russia, Russian elite, Scott Rogers, seize proceeds, Seoul, shark fees, small and medium-sized, social impact, Sovereign Debt, spawned corruption, standards, Stephen Schwartz, subsidies, Suharto, Supplementary budget, Supplementary Budget errors, Supplementary Budget Estimates, tacit approval, tax, tax breaks, taxi drivers, teachers, technical assistance, technical experts, terror strikes, terrorism, Third World countries, Third World governments, trade controls, transnational corruption, Treasury, Ukraine, UN Millennium Development Goals, United States, universal primary education, US bank accounts, weakening economy, Western Banks, Western companies, white elephant projects, women’s empowerment, World Bank, world economy, wrecked economies, Zaire