Don't blame Moi for wrecking economy, blame IMF and World Bank

Especially in imposing on us the infamous Structural Adjustment Programmes.

In Summary
  • Whatever their intention in theory, in practice these programmes condemned poor nations to what amounted to a return to arbitrary and oppressive colonial rule.
  • Kibaki went a long way towards freeing Kenya from the dictates of these global financial institutions by greatly increasing internal tax revenues.

Like many other columnists, I have long taken advantage of the press freedom in Kenya to pour scorn on the late President Daniel arap Moi’s legacy on the economy.

And I refer here not to the ravages of official corruption, but rather the kind of delusionary economic policies that can have a far more destructive effect than political leaders seeking to get rich through inflated contracts.

We still live with the consequences of Moi-era policies on two important public sectors. That is to say that when it came to education (which he knew something about, having been a schoolteacher in his early years) Moi did a reasonably good job. But when it came to the management of the economy as a whole his tenure was disastrous.

 

A pattern was thus established which continues to this day: that Kenya’s education sector produces ever greater numbers of university graduates in various fields; but these young men and women often find upon graduation that there are no jobs available for them.

Like many others, I have in the past declared Moi’s handling of the economy as an unforgivable betrayal of an entire generation of young Kenyans. But more recently, I have wondered if indeed I was justified in this.

For it can be argued that the lack of economic progress during his presidency was not really Moi’s fault. And that the real problem was that Kenya’s economic policies during those years were dictated by the International Monetary Fund and the World Bank.

That it is these institutions which got it badly wrong, especially in imposing on us the infamous Structural Adjustment Programmes.

The disastrous failure of this approach to economic development is now widely acknowledged. Whatever their intention in theory, in practice these programmes condemned poor nations to what amounted to a return to arbitrary and oppressive colonial rule.

President Uhuru Kenyatta’s “Look East” policy has since led to those he previously trusted to run the Treasury embarking on a reckless spending spree, with massive loans being taken for projects that many dismiss as white elephants. This has more or less taken us back to where we were in the Moi era: once again we are a heavily indebted African nation, which can be compelled to obey instructions issued by foreigners.

Prof Joseph Stiglitz, a former World Bank Chief Economist (1997 to 2000); a winner of the Nobel Prize in Economics in 2001; currently teaching at Columbia University; had this to say in his book, Globalization and its Discontents: “…The IMF is not particularly interested in hearing the thoughts of its client countries on such topics as development strategy or financial austerity. All too often, the Fund’s approach to the developing countries has had the feel of a colonial ruler…”

 

And referring to the IMF’s dealings with Indonesia in the late 1990s, he notes that “The hapless [Indonesian] president was being forced, in effect, to turn over economic sovereignty of his country to the IMF in return for the aid his country needed. In the end, ironically, much of the money went not to help Indonesia, but to bail out the colonial power’s private sector creditors.”

Or consider this extract from another book, Hidden Agendas, by John Pilger: “… Under a plan devised by President Reagan’s Secretary to the Treasury, James Baker, indebted countries were offered World Bank and IMF servicing loans in return for the structural adjustment of their economies. This meant that the economic direction of each country would be planned, monitored and controlled in Washington…”

You may well ask: If our economic policies were largely imposed on us by powerful (and misguidedly doctrinaire) global financial institutions, then how is it that there was tangible economic progress – visible for all to see – once Mwai Kibaki took over as president.

Well, basically, Kibaki went a long way towards freeing Kenya from the dictates of these global financial institutions by greatly increasing internal tax revenues. This made the country less vulnerable to external influences, and also put us in a stronger position to repay any new loans.

But as we all know, President Uhuru Kenyatta’s “Look East” policy has since led to those he previously trusted to run the Treasury embarking on a reckless spending spree, with massive loans being taken for projects that many dismiss as white elephants.

This has more or less taken us back to where we were in the Moi era: once again we are a heavily indebted African nation, which can be compelled to obey instructions issued by foreigners.