Tag Archives: IMF

Is the conviction of IMF head Christine Legard, after the Strauss-Kahn affair, warning to look deeper at Kenya’s Eurobond questions?

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There are substantial unanswered questions about the proceeds of Kenya’s Eurobond sales, and the murkiness accompanying all this is unnecessary.  Likewise, anyone who pays any attention at all knew long before the 2014 Eurobond transactions that it is a well established practice for major transactions by the Government of Kenya to be subject to what might be called a “corruption tax” or a “re-election tax” where some portion of the funds goes separately to the politicians in power directly through cash payments, through payments to companies in which they are equity participants in some fashion (“Mobiltelea”, “Goldenburg”, “Anglo Leasing”), payments to companies owned by their immediate family members or other relatives, etc.

The primary assurance internationally that there was nothing untoward about the handling of the bond sale proceeds and that there has been nothing to see has come from the statements to that effect from the IMF, accompanied by Nairobi visits by Ms. Legard.

For a lot of people in the West, who can accept that power in Kenya does not necessarily equate to complete veracity on issues of grand corruption, there seems to be a strange willingness to take the word of political figures from Western countries when they achieve power or status in some international institution.  There can be some legitimate reasons for this, perhaps, but there are also illegitimate ones.  In this case, the United States has the responsibility to get to the bottom of the Eurobond matter rather than simply taking the word of whomever at the IMF.  We all saw some strange dealings at the World Bank in relation to the Kibaki re-election campaign in 2007 and we all know that “the Nairobi curse” makes it very seductive for international organizations who work in and out of Nairobi and enjoy its comforts and convenience to look the other way on matters of corruption that would offend their “hosts” in the Government of Kenya.

Here is the link from BBC announcing the conviction. 

“Eurobond billions: the international side of the story” is one of David Ndii’s recent columns on the subject in the Daily Nation.  Ndii asks explicitly why the IMF has “cooked the books” one way to address missing Eurobond proceeds while Kenya’s Treasury “cooked the books” in a contradictory way. Given what we know was going on in Mozambique and in Malaysia–as well as all of what we know about the establish rule of corruption in Kenya–it is grossly negligent to allow these questions to go unanswered.  If there is a source of the smoke on Kenya’s bond sale proceeds other than the fires of corruption, it ought to be easy enough to see.  I’m from Missouri, and just being from Paris and telling me with a French rather than Kenyan accent is not a substitute for showing me.

[This post has  been slightly edited.]

Uganda Votes (updated)

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A reminder of the link to the Uchaguzi “Citizen Election Watch–IT” site. And the “Uganda Watch 2011” site, which is a partnership including Citizen Election Watch–IT with funding from the multi-donor Deepening Democracy and the U.S.’s National Democratic Institute.

Also follow the hashtag #ugandavotes on Twitter.

[Update:  with voting concluded, the internet is alive early evening Uganda time with unverified vote totals being reported on Twitter directly and from SMS from various polling stations.  The dispersion of communication technology is continuing to have an impact–this is well beyond what was available in Kenya in December 2007.  Here is the initial Bloomberg story from Sarah McGregor an hour after polls closed.]

The BBC reports that voting has been proceeding smoothly after delayed poll opening.

Here are a couple of the overview articles from yesterday’s international press.

“Heads I Win, Tails You Lose”, Michael J. Wilkerson in Foreign Policy:

It’s hard to overstate Museveni’s advantage in Friday’s ballot. He has significantly more campaign funds — both legitimate and under the table — than the opposition. He has access to state resources to mobilize his supporters, and the loyalty of the security services. Uganda has seen record economic growth in recent years under his oversight. And Museveni has strong Western backing, winning praise for example for his innovative HIV/AIDS campaign and his commitment to fighting terrorism. (It also helps, of course, that he appointed the electoral commission.)

Sounds easy, right? Yet Museveni and his party, the National Resistance Movement (NRM), are leaving nothing to chance. Across Kampala, major billboards usually devoted to expensive advertisements for Coca-Cola, phone companies, or other big spenders have almost all been replaced with NRM campaign items. The party has even hired a helicopter to fly around the city dropping leaflets and blaring Museveni’s campaign song — a remixed version of his attempt to bond with young voters by rapping at a rally. And then there is Museveni’s use of government resources, like the presidential helicopter, to travel around the country and campaign.

Since it’s not officially reported, campaign spending is hard to gauge here. But Andrew Mwenda, editor of the Independent weekly magazine and consistent critic of Museveni’s regime, has an estimate: “Museveni has spent $350 million dollars on this election alone,” he told me.

Meanwhile, the government is effectively bankrupt. In January, parliament passed a supplemental budget increase of $260 million, yet just weeks later, Minister of Finance Syda Bbumba announced that the government was broke and ministries would be examining emergency cost-cutting measures. According to local newspaper reports, government officials confirm that money was diverted to NRM campaigns for the presidency and parliamentary seats, and $1.3 billion, or almost a third of the annual budget was spent in January alone. (Unsurprisingly, the IMF refused last week to sign off on Uganda’s economic policies, diplomatically describing them as “inconsistent” with previous agreements with the fund.)

“Uganda Will Deploy Security at All Polling Stations” by Sarah McGregor, Bloomberg.


New IMF Survey Predicts 5%+ Average Growth in Sub-Saharan Africa

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IMF Regional Economic Outlook: Sub-Saharan Africa

The IMF identifies the biggest risk to a return to record pre-financial crisis growth levels in the region as an overall global slowdown, and also notes risk to the pace of policy reforms from the large number of elections scheduled for 2011.

Sub-Saharan Africa’s trading patterns have shown some dramatic shifts during the last few years toward China and other parts of developing Asia, the report said. These shifts were so marked that, by 2009, China’s share in the sub-Saharan Africa’s total exports and imports exceeded that between China and most other regions in the world.
Exports of goods and services make relatively small contributions to aggregate demand in most sub-Saharan African countries. Europe and other advanced countries remain the region’s dominant trading partners. However, in a minority of countries— including the major natural resource exporters— the impact of developing Asia on global export demand and commodity prices is expected to be significant in both the short and long term.

Overall, trade with Asia is therefore likely to be an increasingly important factor in maintaining growth for the region on its current trajectory. But the key drivers of African growth are likely to remain: political stability; the business climate, including the prudent exploitation of natural resources; and the quality of economic management.

Loose Change?–$2.1B in “Mystery Cash” flowed into Kenya last year

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“Mystery of Sh164bn smuggled into Kenya”, from the Daily Nation

Having risen to $2.1 billion, the current level represents a massive 100 per cent increase within a year. The mysterious billions are over and above the combined last year’s export earnings from coffee, tea and horticulture. As a matter of fact, the line ‘errors and omissions’ has grown into the single largest item in the economy’s balance of payments statistics.

The riddle of the mysterious billions has quickly become a major talking point within both Nairobi’s financial community and donor circles. Central Bank of Kenya governor Njuguna Ndung’u conceded that the strange inflows had become a big worry. He said the cash was “artificially driving the country’s balance of payments surplus”.

“We do not know where this money is from,” he added, promising that the Central Bank was designing new systems to trace the sources of such funds. The International Monetary Fund (IMF), which keeps close tabs on international capital flows, has already initiated discussions on the issue with the government, Central Bank of Kenya and some of the large commercial banks and foreign currency dealers.

According to IMF senior resident representative W. Scott Rogers, part of the billions flowing into the economy may be coming from Somali pirates, but he stressed that the situation was not wholly attributable to such activity. He told the Daily Nation that difficulties in capturing foreign exchange inflows by expatriates, the donor community and international NGOs had clearly aggravated the situation.

All the better to run campaigns!

Andrea Bohnstedt’s Modest Proposal on IMF event: “Geldof Should Get to Know Kenya First” (Updated)

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In the Nairobi Star courtesy of the Mars Group Andrea Bohnstedt takes down Bob Geldof’s featured role in the IMF’s Nairobi event last week. I expected Geldof’s star turn would surely generate an articulate retort, and this is it.

More broadly, the Mars Group Blog slams the IMF, asserting that it deserves an “F” grade for its record of 46 years of lending to Kenyan governments and should desist.

“Africa is Back” says IMF Head–Where did it go?

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Dominique Strauss-Kahn, IMF Managing Director, had this to say on the official IMF “blog” under the title “Africa is Back”:

In the wake of the global financial crisis, there is a fresh energy in Sub-Saharan Africa–and a broad consensus on the road ahead. Above all, there is the strong sense that Africa’s destiny will be driven by Africans, not by others.

That at least is my initial feeling after two days of dialogue in Kenya with President Kibaki and government officials, civil society leaders and trade unionists, academics and students, and ordinary Kenyans. “Africa is back” is how I described it in a live TV debate in Nairobi with Prime Minister Odinga, Minister of Finance Kenyatta, Nobel Laureate Wangari Mathai, Transparency International’s Akere Muna and my friend, Bob Geldof.

See commentary from Roubini Global Economics