Kenya: Slaying Hydra-Headed Corruption: While It Is Unrealistic to Expect Major Economic Gains So Soon after the Elections, Kenya's New Government Will Be Judged on Its Ability to Root out Endemic Corruption and Begin the Process of Economic Growth

By Ford, Neil | African Business, November 2003 | Go to article overview

Kenya: Slaying Hydra-Headed Corruption: While It Is Unrealistic to Expect Major Economic Gains So Soon after the Elections, Kenya's New Government Will Be Judged on Its Ability to Root out Endemic Corruption and Begin the Process of Economic Growth


Ford, Neil, African Business


The first 10 months of National Rainbow Coalition (NARC) rule have been marked by two main themes: Hope and uncertainty. Hope because Kenyans cannot believe that the country's economic performance can be worse under the new government than during the previous decade, which was characterised by a lack of investment and conflict with the multilaterals. And uncertainty because of an underlying fear that nothing is going to change and because NARC's headline grabbing election campaign promises have thus far not been reflected in substantive progress.

The least popular aspects of the NARC administration to date have been large salary increases and the provision of new cars for MPs, while the government's most popular policies during its first months in office have been the crackdown on corruption and the commitment on free primary school education.

Yet it is on the latter pair of promises that the government is likely to be judged in the long term, rather than on the accusations of fat cat MPs. Making the promise on free schooling will certainly be far easier than implementing it, while corruption affects the Kenyan economy so deeply that it seems almost impossible for the government to do anything other than scratch the surface of irregular financial practices.

It was the previous government's inability or unwillingness to tackle endemic corruption that caused the break in relations with the multilaterals in 2001. The president of the World Bank, James Wolfensohn explains: "The reason that we diminished our support was very straightforward. We had an understanding of what was to be done--those things were not done. We ate now coming to this relationship with an entirely different perception." The current government will be judged on how much money it is willing to commit to the fight and how far it wants to pursue incidents of fraud committed during the previous administration?"

Few in Kenya disagree with the notion of corruption undermining economic growth. The governor of the Central Bank, Andrew Mullei, says: "Bad governance and its results--corruption and mismanagement of resources--are responsible for our stagnant economy, hovering at less than 1% growth."

However, the new government has made a good start and much of the legislation which has been passed during 2003 comprises anti-corruption bills. According to a spokesperson for the Treasury, the Public Officer Ethics Act "provides for an elaborate mechanism under which civil servants, who ate the symbol of corruption in the past, declare and account for their wealth". The Anti-Corruption and Economic Crimes Act is aimed at tackling corruption in the private sector.

The government has already taken some measures to improve revenue collection and boost the efficiency of the civil service, including removing thousands of ghost workers from the pay list. The ranks of the ghost workers included those who had retired, died or were merely relatives of civil servants.

While the government's battle against corruption will do little to directly create employment and boost growth in the short term, its perceived success or failure will have a massive impact in influencing investor confidence.

INFRASTRUCTURE RUN DOWN

However, this anti corruption legislation looks likely to trigger renewed support from key lenders. IMF officials, including managing director Horst Kuchler have also been upbeat in their assessment of Kenya's economic future.

Much of the new money is committed to power sector projects and other capital expenditure. As with many run down African economies, the poor state of infrastructure in probably the biggest constraint on economic growth. Power, transport and telecommunications services are poor and expensive, and investment needs to be made now if the situation is to improve to any extent before the next election.

Yet beyond improving the economic environment, it is vital that some stability is engendered in the economy.

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