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Donors Threatening to Hold Back Funding to Kenya Over Corruption - 2004-07-19

Major donor nations, including the United States, Britain, Japan and Norway, have voiced strong criticism of the Kenyan government in recent weeks over its failure to curb official corruption. The government of President Mwai Kibaki won historic elections 17 months ago, largely on promises to fight graft, which flourished under the previous administration of Daniel arap Moi. The Kenyan leadership is under mounting pressure to enact reforms, or face a cutoff of international aid.

For months, diplomats from countries, which provide the bulk of funding for Kenya's development say they have tried to persuade President Kibaki to quickly intensify efforts to root out growing official corruption within his government.

But their frustration over the lack of progress boiled into anger in June, when details of Kenya's latest corruption deal were uncovered by a member of the opposition party. That scandal involved at least four senior government officials, who signed a nearly $40 million deal to purchase passports and other equipment for the country's immigration office through a mysterious front company.

The project fell through, and the four officials were suspended. But the man many people believe should be held accountable for the scandal, Finance Minister David Mwiraria, has not been reprimanded.

The U.S. ambassador to Kenya, William Bellamy, says the United States is deeply disappointed in the government's apparent reluctance to take meaningful steps to end official corruption.

Ambassador Bellamy notes that most foreign aid and investments, which stopped during the last three years of Daniel arap Moi's corrupt regime, began to flow back into Kenya only after Mr. Kibaki had pledged to wage an all-out war on graft.

"To be honest, that critical transition is not going as well as many hoped it would. Sadly, the revelations of recent weeks and the government's reaction to those revelations have cast a long shadow over the Kibaki administration's promises to fight corruption," he says. "Clearly, more work remains to be done. The question we now all ask is whether the political will still exists to do it."

On July 5, the United States, the European Union and Japan warned Kenya that it could lose funding because of continuing corruption. But the Kenyan government received the most shockingly worded warning last week from the British high commissioner to Kenya, Edward Clay.

During a closed-door speech to British investors in Nairobi, Ambassador Clay said Kenyan government officials had, in his words, the arrogance, greed and perhaps a desperate sense of panic to eat like gluttons, estimating that official corruption under the Kibaki government has so far cost the country almost $200 million in lost revenue.

He said lending nations were now unlikely to give any more money to the government, until a credible financial management system is in place. That could deal a severe blow to Kenya, which is facing a $10 billion shortfall in the budgets for this year and for 2005.

And donors are not the only ones who feel let down by the Kibaki government. Twenty-four-year-old Kenyan businessman Muchiri Ndegwa says the scandal has devastated Kenyans like him, who had voted for Mr. Kibaki in the belief that his government was sincere in its promise to clean up corruption.

"We are disappointed as Kenyans to learn that the people in our government right now are corrupt. We had a lot of hope and trust for these guys," he says.

President Kibaki says he vehemently rejects charges that he is not doing enough to fulfill his promises to tackle corruption. "The anti-corruption campaign continues to gather momentum. I have recently appointed the national anti-corruption steering committee to spearhead public awareness and campaigns against vice," he says. "The committee will ensure that Kenyans are mobilized to reject corruption in all its manifestations. In addition, a number of corruption cases are being prosecuted in our courts."

But the Nairobi-based spokeswoman for the political watchdog group, Transparency International, Gladwell Otieno, says she believes it is legitimate for donors to be questioning Mr. Kibaki's reform efforts and to be rethinking their policy in Kenya.

"Last year, a lot was done in terms of setting up institutions, setting up mechanisms. But now these things have to start moving. They have to start working, and we are concerned that things seem to have come to a grinding halt, particularly where high-level corruption is concerned," she says. "I think the pessimism is caused by the lack of clear leadership. People need to have clear signals as to where the government intends to go, what the strategy is, what its plans are, and that is not just a question of commitment. It is also a question of action."

The perceived inaction of the Kenyan government has taken a toll on international business confidence as well. In Transparency International's 2003 survey of investor perceptions of corruption, Kenya ranked a dismal 122nd out of 133 countries in the survey.