I never imagined that opposing an International Monetary Fund (IMF) loan to Kenya would be viewed by the Kenyan authorities as a criminal act. But that’s exactly what happened last week when activist Mutemi Kiama was arrested and charged with “abusing digital gadgets”, “harming the presidency”, “creating public disorder” and other breaches of vague terms. Mutemi’s arrest was prompted by his posting on Twitter of an image of President Uhuru Kenyatta with the caption: âThis is about informing the world. . . that the person whose photograph and names appear above is not authorized to act or transact on behalf of the citizens of the Republic of Kenya and that the nation and future generations will not be held responsible for penalties of bad debts negotiated and / or borrowed by him. “He was released on a cash bond of KSh 500,000 with an order prohibiting him from using his social media accounts or talking about loans related to COVID-19.
Mutemi is among more than 200,000 Kenyans who have signed a petition to the IMF to end a KSh 257 billion ($ 2.3 billion) loan to Kenya, which was ostensibly obtained to protect the country from the impact. negative economic impact of COVID-19. Kenya is not the only country whose citizens have opposed an IMF loan. Protests against IMF loans have taken place in many countries, including Argentina, where people took to the streets in 2018 when the country took out a $ 50 billion loan from the IMF. In 2016, Eqyptian authorities were forced to lower fuel prices following protests against an IMF-backed decision to eliminate fuel subsidies. Similar protests have also taken place in Jordan, Lebanon and Ecuador in recent years.
Why would the citizens of a country be against a loan from an international financial institution like the IMF? Well, for Kenyans who survived (or barely survived) the IMF and World Bank Structural Adjustment Programs (SAPs) of the ’80s and’ 90s, the answer is obvious. The SAPs came with strict conditions, which led to many layoffs in the civil service and the removal of subsidies for essential services, such as health and education, which led to increasing levels of hardship. and precariousness, especially among middle and low income groups. African countries subject to SAPs have experienced what is often referred to as a âlost decade of developmentâ as belt tightening measures have blocked development programs and reduced economic opportunities.
In addition, African borrowing countries have lost their independence in economic policy. Since lenders, such as the World Bank and the IMF, decide national economic policy – for example, determining things like budget management, exchange rates, and public sector participation in the economy – they became the de facto political and decision-making authorities in the country who contracted their loans. This is why, in much of the 1980s and 1990s, the arrival of a World Bank or IMF delegation in Nairobi often worried Kenyans.
At that time (following a rise in oil prices in 1979 which saw most African countries experience rising import bills and declining export earnings), the heads of these international financial institutions were as feared as the authoritarian Kenyan president, Daniel arap Moi, because with the stroke of a pen they could devalue the Kenyan currency overnight and be fired from large sections of the civil service. As Kenyan economist David Ndii recently pointed out at a press conference organized by the Linda Katiba campaign, when the IMF comes knocking on the door, it essentially means that the country is “in receivership”. It can no longer claim to determine its own economic policies. Countries are essentially losing their sovereignty, a fact that seems to have escaped the technocrats who rushed to get this particular loan.
When he took office in 2002, President Mwai Kibaki kept the World Bank and the IMF at bay, preferring to take out unconditional infrastructure loans from China. Kibaki’s âLook Eastâ economic policy alarmed the Bretton Woods institutions and Western donors who had hitherto had a huge say in the country’s development trajectory, but it instilled a sense of pride and pride. autonomy to the Kenyans, which unfortunately was eroded by Uhuru and his incompetent cronies who loaned fishing expeditions, including massive Eurobonds worth 692 billion shillings (nearly $ 7 billion), which means that every Kenyan today has a debt of 137,000 shillings, more than three times what it was eight years ago when the Jubilee government came to power. At the end of last year, Kenya’s debt stood at nearly 70% of GDP, up from 50% at the end of 2015. This high level of indebtedness can prove deadly for a country like Kenya that borrows in currencies.
When the IMF comes knocking on the door, it basically means that the country is “in receivership”.
The Jubilee government would have us believe that the fact that the IMF accepted this loan is a sign that the country is economically sound, but as Ndii noted, quite often the opposite is true: the IMF intervenes precisely because a country is in financial crisis. In the case of Kenya, this crisis was precipitated by reckless borrowing from the Jubilee administration which saw Kenya’s debt drop from KSh 630 billion (around $ 6 billion at the current exchange rate) when Kibaki took its debt. functions in 2002, at a staggering KSh 7.2 trillion (around $ 70 billion) today, with little to show except for a standard gauge railway (SGR) funded by Chinese loans that seem unable to repay themselves. As an article in a local daily pointed out, that’s enough money to build 17 SGRs from Mombasa to Nairobi or 154 highways like the one from Nairobi to Thika. The tragedy is that many of these loans go unrecorded; in fact, many Kenyans believe they have to line individual pockets. Uhuru Kenyatta himself admitted that Kenya loses 2 billion shillings a day due to corruption in the government. Some of these lost billions could in fact be loans.
IMF loans on tough terms have often been touted as the solution to a country’s economic problems – a tightening measure that will instill fiscal discipline in a country’s economy by increasing revenues and decreasing spending. . However, the real purpose of these loans, some argue, is to bring about major and fundamental political changes at the national level – changes that reflect the neoliberal ethos of our time, with privatization, free market and deregulation.
The first worrying sign that the Kenyan government was about to embark on a perilous economic path was when IMF chief Christine Lagarde paid an official visit to Kenya shortly after President Uhuru was elected in 2013 At that point, I remember tweeting that it wasn’t a good omen; he said the IMF was preparing to bring Kenya back into the IMF’s fold.
Naomi Klein’s book, The doctrine of shock, shows how what she calls “disaster capitalism” has enabled the IMF, in particular, to deliver “shock therapy” to nations reeling from natural or man-made disasters or high levels of disaster. external debt. This has led to unnecessary privatization of state assets, government deregulation, massive layoffs of civil servants, and the reduction or elimination of subsidies, all of which can lead to increased poverty and inequality. . Klein is particularly critical of what is called the Chicago School of Economics which she believes justifies greed, corruption, theft of public resources and personal enrichment as long as they advance the cause. free markets and neoliberalism. It shows how in almost every country where the IMF’s âmedicineâ has been administered, levels of inequality have intensified and poverty has become systemic.
Sometimes the IMF creates a pseudo-crisis in a country to force it to obtain an IMF bailout loan. Or, through carefully manipulated data, it will make the country look economically sound so it feels safe to apply for more loans. When that country cannot repay the loans, which often happens, the IMF inflicts even more austerity measures (also known as âconditionalitiesâ), which leads to further poverty and inequality.
IMF and World Bank loans for infrastructure projects also benefit Western companies. Private companies hire experts to ensure that these companies get government contracts for large infrastructure projects funded by these international financial institutions. Companies in wealthy countries like the United States often hire people to bid on their behalf. In his “international word of mouth bestseller”, Confessions of an economic hitman, John Perkins explains how in the 1970s, while working for an international consulting firm, he was told his job was to “channel money from the World Bank, the United States Development Agency. international and other foreign aid organizations into the coffers of huge corporations and the pockets of a few wealthy families who control the planet’s resources â.
Sometimes the IMF creates a pseudo-crisis in a country to force it to obtain an IMF bailout loan.
The tools to achieve this goal, her employer unabashedly admitted, could include “fraudulent financial reports, rigged elections, rewards, extortion, sex and murder.” Perkins showed how in the 1970s he was instrumental in negotiating deals with countries ranging from Panama to Saudi Arabia, where he convinced executives to agree to projects that were detrimental to their own people but which benefited the interests of American companies enormously.
âUltimately, these leaders are trapped in a network of debts that guarantees their loyalty. We can draw inspiration from it whenever we want – to meet our political, economic or military needs. In turn, they are strengthening their political positions by providing their people with industrial parks, power plants and airports. Owners of American engineering and construction companies are getting fabulously wealthy, âa colleague told him when asked why his job was so important.
Kenyans, who are already financially suffering from the COVID-19 pandemic that wiped out nearly 2 million formal sector jobs last year, will now face austerity measures just when they need to. government subsidies and social safety nets. The second season of EWS is likely to make the lives of Kenyans even more miserable in the short to medium term.
We will have to wait and see if general dissatisfaction with the government will influence the outcome of the 2022 election. However, whoever wins this election will still have to deal with growing debt and unsustainable repayments that have become the legacy of the day. more durable of President Uhuru Kenyatta.