No to IMF loans! Cancel Kenyan debt!

30 March by David Calleb Otieno


On 4 March 2020, the International Monetary Fund (IMF) during a joint press conference with the World Bank Group announced that it was ready to lend $1 trillion to its members around the world that are struggling with the humanitarian and economic impact of the novel coronavirus. At the same time, the World Bank Group announced a $12bn fund in fast-track grants, loans and low-interest loans to help poor countries like Kenya to fight the coronavirus.

This means that countries like Kenya are likely to enter into loan agreements to bolster its efforts to fight the coronavirus. Already Kenya has received $60mn from World Bank World Bank
WB
The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.

It consists of several closely associated institutions, among which :

1. The International Bank for Reconstruction and Development (IBRD, 189 members in 2017), which provides loans in productive sectors such as farming or energy ;

2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;

3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.

As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.

to help the country fight coronavirus and all indications point out that Kenya is likely to ’benefit’ from the IMF IMF
International Monetary Fund
Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.

http://imf.org
loan to fight the coronavirus. However, all these loan transactions will take place without public participation as has been the norm and, in contravention of the principles of public finance management under article 201 of the Constitution of Kenya 2010 providing that there must be public participation in all financial matters and that the burdens of public borrowing should be shared equitably between present and future generations. The government is likely to argue that due to coronavirus, public meetings are not allowed and due to the nature of emergency caused by coronavirus, things have to move with speed.

The social security sector in Kenya is in shambles. It has been ravaged by decades of Structural Adjustments Programs (SAPs) prescribed by the IMF and World Bank and implemented by the Kenyan government as part of ’poverty reduction strategy’. The SAPs has led to reduced spending in public sectors like health and food and has also led to privatization of critical sectors like healthcare services and food sector exposing majority of Kenyans living in poor rural areas and in impoverished urban informal settlements to grave dangers and risk imposed by coronavirus. Majority of the health centers in Kenya lack drugs, enough personnel, bed capacity and are ill prepared to offer health services in cases of full-blown outbreak of coronavirus. The Community Health Workers (CHWs) have been trained but have not been given any protective gear despite the fact that they are involved in documenting the vulnerable and in some cases contact tracing.

It is therefore baffling to see the IMF and World Bank offering false prescriptions to a problem that has been caused by their failed policies. A problem cannot be solved by the same logic that created it. The IMF and World Bank prescriptions’ to fight coronavirus will plunge Kenya deeper into the debt crisis increasing Kenya’s debt burden. As a result, the social expenditure will see a proportionate reduction in the near future.

A few days after the IMF and World Bank announcement, on 12 March 2020, Kenya confirmed its first case of Coronavirus Disease (Covid-19). According to information on the Ministry of Health website the case was that of a Kenyan citizen who travelled back to Nairobi from the United States of America via London, United Kingdom and that the person arrived on the 5th March 2020. Kenyan citizens would very much like to question, how could a person who is Covid-19+ pass through the Jomo Kenyatta International Airport (JKIA) unnoticed. So far there are 42 confirmed cases of coronavirus disease, one death and one recovery according to the ministry of health.

Meanwhile on 28 February 2020, a China Southern Airlines flight landed in Kenya with around 239 passengers on board. This action drew a sharp criticism from Kenyan citizens who accused the government of failing to take the health safety of Kenyans seriously while at the same time, others claimed that the government deliberately wanted cases to be reported in Kenya so that the country could benefit from funds set aside by the IMF and World Bank to fight coronavirus.

There are briefs by the government almost every day mostly done by the Heath Cabinet Secretary Mutahi Kagwe and government spokesperson Cyrus Oguna. However, on certain occasions President Kenyatta himself addresses the nation. During such much-televised addresses, a raft of decisions and policy statements are made to the members of the public without the participation of the people though he acknowledged that decisions affect the public most. For example, decisions affecting public transport and public health are made by people who use private transport and access health services privately.

Such unilateral decisions are made without taking into consideration the realities of life in densely populated poor Nairobi informal settlements and poor rural settings and who are likely to be the worst hit in cases of large outbreaks. Despite the lack of government involvement, social movements and other community organizations have taken it upon themselves to ensure that their communities are safe. Without elaborate training and resources, the social movements have taken it upon themselves to mobilize resources and communities to fight against coronavirus.

The Kenyan Peasants League (KPL), a member of La Via Campesina has mobilized its ten clusters in Migori, Nairobi and Machakos county to enhance seed & food banking in anticipation of acute food shortage in events of total lockdown due to corona virus and the locust plague. KPL has also established a food distribution system linking all its ten clusters to be activated in cases of complete shortage of food. The KPL Women Collective has also enhanced seed collections and the banking and production of locally made soaps by members to ensure that those members who can’t afford the high price of sanitizers and industrial soap due to increased demands can have access to soap in order to wash their hands and stay clean.

The KPL households have developed collective household plans to fight coronavirus to make them compliant households. The plan involves all members of a household or a homestead collectively sensitize one another on the coronavirus and jointly develop a plan that guide their behavior and that of visitors in a bid to fight the coronavirus. KPL believes that the household and/or the homestead is the frontier for the fight against coronavirus and must receive adequate support from government to make the fight against coronavirus effective.

The KPL Youth brigade from compliant households are taking charge in sensitizing community, documenting food needs of members and the vulnerable groups. They are also engaged in improvising hand washing units and are also leading in household sensitization.

Members of KPL are also focusing on growing fast-growing immune boosting indigenous crops to ensure steady supply and has linked to other movements and individuals both locally and in Europe to help raising resources for supporting the food distribution systems and community initiatives.

Sadly though, groups like KPL and many others who are working in the communities to fight the coronavirus were not included in the list of exempted groups not to be affected by the curfew despite the work they are doing in their communities. They are neither involved in daily decisions and policies being made by government in their effort to fight coronavirus.

Within the communities, safe habits like keeping physical distances, regular washing of hands and stopping of shaking of hands are still inadequately practiced despite increased advices by the government during the addresses and through social media raising questions on the effectiveness of the government approach. The communities think it is a problem at the level of governance and they have limited or no responsibilities. This is why KPL has adopted a household sensitization approach since there can’t be a community without the households. To change a community, one needs to change the households.

The inefficacy of the governmental advices and messages are due to the fact that it has not been able to inspire people to change of habits in a bid to fight coronavirus and, has resulted in the lack of ownership by the communities. It is because there is no public participation in developing policies and measures to fight the coronavirus including in incurring loans in the name of fighting the coronavirus. Article 10 of the Constitution of Kenya 2010 demands the participation of the people in all decisions and actions being taken by the government. In the same breath, section 91 of the County Government Act provides for establishing ICT based platforms to aid in public participation.

Already, both the national and county governments, through their respective structures are preparing lists of the vulnerable to benefit from food rations and hand sanitizers among other things in anticipation of the funds from IMF and World Bank without public participation of social movements like KPL and the affected communities who are living and working in the frontline to fight coronavirus and is therefore, not likely to reach the intended beneficiaries. Due to high level of corruption within the government structures, the money will be diverted with very little reaching the affected communities while all Kenyans will have to contribute in paying back the loan. So sad!

The KPL is therefore:
Asking the Kenyan government to suspend repayment of all debts due to coronavirus outbreak and divert the money in expanding and improving the healthcare sector, invest in local food production, invest in water provision and offer social security to the poor living in rural areas and in informal settlements as stipulated under article 43 and including local research to develop remedy for coronavirus.
Asking the government to reject the IMF loan offer including debt relief program and instead officially issue a moratorium to the IMF and World Bank.
Asking each household and community to develop localized plans in fighting coronavirus.
Asking the government to recognize all groups like KPL and others working in the communities to fight coronavirus and involving them in developing policies to fight the novel virus.




David Calleb Otieno

KPL International Coordinator and Convener, Kenyan Social Movements for Abolition of Illegitimate Debts

CADTM

COMMITTEE FOR THE ABOLITION OF ILLEGITIMATE DEBT

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00324 226 62 85
info@cadtm.org

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