Global Policy Forum

By Njeri Rugene and Onesmus Kilonzo

An attempt to broker better understanding between Parliament and donors fell flat on its face after MPs rebelled and accused lenders of imposing policies which hurt ordinary people. Members of Parliament were meeting officials of the International Monetary Fund and the World Bank at a closed-door conference on economic management in Mombasa.

There has been speculation that the meeting, among other things, was to lobby MPs to support an amended version of the Donde Act which Attorney-General Amos Wako has presented to Parliament. Sources at the morning session told the Sunday Nation that representatives laid before the lawmakers the conditions which must be met before the resumption of lending.

Top among them, the sources said, was the immediate withdrawal of the Donde Act. Others were that the Code of Ethics for Civil Servants Bill be made law, anti-corruption courts be established and the immediate sacking of civil servants or ministers facing corruption charges in court. But the MPs swore support for the Donde Act, saying they would make amendments to the AG's Bill and revert to the original Act, which seeks to control bank interest rates.

The Donde Act was at first thrown out by the courts before the Court of Appeal ruled that it could still be brought back but given a new commencement date. The donors have prescribed policies which require bank interest rates to be determined by market forces but there have been complaints that the rates are too high and are a barrier to economic recovery.

At the end of the-two day conference, the MPs told officials of the two institutions to go back and change their policies on Africa and Kenya if they had good intentions. The lawmakers were particularly angry about liberalisation, saying it was harmful to the people, especially those who depended on agriculture. They also said they wanted the two organisations to be accessible to the people by having dialogue with Parliament.

The closed-door meeting was jointly sponsored by the IMF and the Government. It was attended by 140 MPs, senior officials from the IMF, the World Bank, the Central Bank, Treasury as well as economic experts from the private sector. MPs from both sides of the House were categorical that interest rates needed to come down and pledged their support for the Donde Act. No amount of lobbying by the government would deter them, they vowed.

Kandara MP Joshua Toro challenged Central Bank Governor Nahashon Nyagah to resign if he was not ready to implement Donde Act. The DP legislator said the Governor, who was at the meeting, had announced publicly that the law would never be implemented as long as he was at the helm.

Mr Toro accused the Bretton Woods of subjecting Kenyans to suffering through their "misplaced'' policies which he equated to neo-colonialism and slavery. Quoting from Alan Paton's Cry the Beloved Country, the MP told donors: "The IMF and the World Bank want to help the underdog (Africa), but they still want the dog to remain under.''

Vice-President George Saitoti said it was difficult for the people to identify with reforms prescribed by donors because they were not homegrown. Saying he spoke from experience, the VP said the policies came straight from Washington without the involvement of the finance minister, who was in turn expected to implement them and involve the people. Prof Saitoti served as finance minister for 10 years.

Gatanga MP David Murathe accused the IMF/WB of being hypocritical in dealing with Africa governance issues. He wondered why the two had not considered the fact that Kenya had stabilised its economy and resume lending rather than placing emphasis on political issues. Webuye MP Musikari Kombo asked the two organisations not to push the Attorney-General into publishing "shoddy'' Bills. Citing the Kenya Anti-Corruption Bill, which was rejected by Parliament, Mr Kombo said such laws must be homegrown.

He said Bills drafted at the behest of donors, and which were not in the nation's interest, would be rejected by Parliament. There was tension in the room when Runyenjes MP Njeru Kathangu accused international donor organisations of dishonesty.

He said though the two institutions insisted on transparency and good governance, they did nothing about a few well-heeled individuals who, with their knowledge, had stashed billions of shillings in foreign accounts while ordinary Kenyans suffered. Said the Ford-Asili MP: "If you know that somebody is a thief and you do not follow up to expose him, that is a collaboration.''

Cabinet minister Raila Odinga accused the two institutions of constantly shifting the goal posts as they looked for reasons not to lend to Kenya. "The issue is not about bad governance because the country is well governed. But the IMF and World Bank have their own reasons for denying us aid,'' he said.

But Alego-Usonga MP Oloo Aringo said the real problem lay with the government. "It prefers to have dialogue with the Bretton Woods institutions and talk to Kenyans through the WB and IMF," he said. He appealed to the Government to cultivate "transparent'' dialogue with Parliament. Ford-Kenya leader Michael Wamalwa told the lenders that if they wanted to help Kenya revive its economy, then they should focus on the agricultural sector and assist farmers.

However, Ntonyiri MP Maoka Maore and his Mwea counterpart, Mr Alfred Nderitu, accused those critical of the IMF and World Bank of being ignorant. They said the blame should go to the Government for failing to involve the public and Parliament in its dealings with donors.

Among those who attended the two-day conference were Mr Samuel Itam, the IMF country director, and Mr Makhtar Diop, the World Bank's country director and a former Prime Minister of Cote' d' Ivoire, Dr Allasane Ouattarra. Gem MP Joe Donde, who moved the Bill to control interest rates, said he was confident that the interest rates law would be in operation soon.

"My observation is that MPs are united in their desire to have the Act operational. I now feel that the easiest way is for Parliament to give the Act a commencement date through the Wako Bill, since it has already been published and ready for presentation in the House," he said. Imenti North MP David Mwiraria said a free market could not work when banks were imposing the highest interest rates since 1994.

"Banks are supposed to set aside 20 per cent of their total deposits as a safety net. Today, they are keeping in excess of 40 per cent because there are no customers to take their money. The interest rates are too high." He said most MPs wanted affordable credit for their constituents "and that can only come with lower interest rates."

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