05 Jan Meeting IMF Managing Director, Christine Lagarde
This week, the 11th Managing Director of the IMF, Ms. Christine Lagarde is in Nairobi, at the end of a three year (2011-2013) credit facility to Kenya of $750 Million (over KES 65 Billion). Interestingly, this Extended Credit Facility was shepherded by the President when he was the Deputy Prime Minister and Minister for Finance in Feb 2011. (If you like to read, see: The Actual Request by the Kenya Government for the facility (Feb 2011), The First Review of the Credit Facility, Letter of Intent, Memorandum of Economic and Financial Policies, and Updated Technical Memorandum of Understanding and the Final Review of the Credit Facility – Note that there were 4 other reviews done (to make six in total) during the period and you can find them here.)
She will be holding a round of talks with President Uhuru Kenyatta and his cabinet on how the country is performing so far and ostensibly what our immediate future will be like. Ms. Lagarde will also be having lunch with some key sector players and The Open Institute is privileged to be one such player to be invited to the lunch.
As the Open Institute, we have a great interest in participating in the meeting with the IMF because we have great interest in citizens participating in their governance – at the very least by knowing what is going on and at best by actually contributing to the direction that government takes in policy development.
Taking this Extended Credit Facility into consideration, It occurs to us that Kenyans – even well educated and finance oriented professionals are likely not aware of the loan (thats what a credit facility is) or indeed what it was used for. It is laudable of the government of Kenya and the IMF that the above documents are available for public review, and having done a basic google search I have found this article from February 2011, when the loan was approved.
How, we ask ourselves, do we as a country and as a continent develop programmes that ensure that such information as this is provided to the citizen in simple english and how do we ensure that the citizens have tools to track the progress of such funds. Also, since Wanjiku (the Kenyan representative name of all citizens) will have to pay back that loan over the years, maybe she should be made aware of the loan amounts and how much of it she will pay back – and at what interest rates.
USD416.66 – What every Kenyan adult will have to contribute to pay back the IMF loan.
A simplistic cursory review, suggests that every Kenyan (including children and the old – regardless of their occupation will have to pay back at least $18.75 (assuming a population of 40 Million). The fact is that Kenya has an adult population of between 15-55 of approximately 15 Million people. Also, 40% of Kenyans are unemployed as of 2011 and therefore only about say, 6 million people actually are employed. But then according to the same article, 70% of the employed earn less than they need to even just cater for their own needs and so that leaves 30% or approximately 1.8 Million people who can credibly participate in the actual paying of this loan. This means that each adult Kenyan who is employed and earns above the poverty line will have to pay about USD 416 or Kshs. 36,229.17 assuming that this loan accrues no interest.
Do Kenyans know this? Do they know whether the 36,000 shillings they have each borrowed was well spent to make their lives better? Is there any part of it in which they had a say as to the policies and reforms that that money paid for?
Such are the things that concern us at the Open Institute and the subject of financial inclusiveness will form a significant part of our conversation with Ms. Lagarde and her team.