• Thu. Jun 23rd, 2022

Urgent call for debt relief, transparency and accountability in the management of COVID-19 emergency funds to ensure they meet the needs of those affected – Kenya

ByTina R. Wimmer

Mar 11, 2021

For:
1. Amb. Ukur Yatani, Cabinet Secretary, National Treasury and Planning
2. Mr. Benedict Clement, Chief of Mission for Kenya, International Monetary Fund
3. Mr. Tobias Rasmussen, Resident Representative for Kenya, International Monetary Fund
4. Mr. Abebe Selassie, Director of the Africa Department, International Monetary Fund
5. Dr. Patrick Njoroge, Governor of the Central Bank of Kenya
6. Hon. Kimani Ichungwa, Chairman of the National Assembly Budget and Appropriations Committee
7. Hon. Joseph Limo, Chairman of the Finance and Planning Commission of the National Assembly
8. Senator Mahamud Mohamed, Chairman of the Senate Finance and Budget Committee

The Okoa Uchumi Coalition identifies Kenya’s debt levels as unsustainable and an imminent threat to Kenya’s economic and political stability. We have identified the aggravating factors of the debt crisis as the systematic violation of public funding requirements in debt management and the prioritization of dodgy infrastructure megaprojects informed by vested interests. The Okoa Uchumi Coalition is a platform committed to working with all stakeholders to address Kenya’s debt crisis by pushing for political responsibility and accountability.

We, the undersigned Civil Society Organizations and members of the Okoa Uchumi Coalition, note with concern that the outbreak of COVID-19 has come at a time when Kenya’s economy is extremely vulnerable due to high claims for reimbursement. debt, a depressed economic environment, historical underinvestment in the health sector, a large unsupported informal sector, high food prices and depleted strategic grain reserves, all exacerbated by the inability to fight corruption and financial mismanagement.

Despite this dire backdrop, we acknowledge the government’s efforts so far to respond to the COVID-19 pandemic and the measures taken to mitigate the economic effects on households and businesses. We appreciate the efforts of the IMF and the World Bank Group (WBG) to accelerate their responses and instill the necessary sense of urgency. The IMF approved the disbursement of $739 million to be drawn under the Rapid Credit Facility to support the Government of Kenya’s response to the COVID-19 pandemic on May 6, 2020.1 The World Bank Group (WBG) approved $50 million in immediate funding to support the response to the global COVID-19 (coronavirus) pandemic on April 2, 2020. 2 But we are not yet close to the scale needed to address the crisis. The Government of Kenya must use all means to protect and augment its limited resources to slow and stop the pandemic and avoid economic collapse.

Kenya Needs Debt Relief: We call on the government to immediately make additional funding available by seeking further debt relief measures.

• The government should formally request the suspension of debt payment to take advantage of the G203 agreement reached in April 2020. We also hope to see the IMF extend debt relief to Kenya through its Containment and Catastrophe Relief Trust, which it has already granted to 25 countries with . The IMF should also help Kenya discuss debt relief with the World Bank and other multilateral and private creditors who have not yet made any commitments.

• We support the government’s call for debt relief4 from all of its external lenders at this time. However, we note that this does not preclude the need to bring to justice those responsible for irresponsible borrowing and the large-scale looting of borrowed funds.

• The government should actively participate in continental-wide efforts at the African Union and United Nations level to design debt relief initiatives similar to the previously implemented HIPC debt relief initiative . Debt relief will result in increased fiscal space available for public health response and implementation of mitigation measures to limit the negative economic impacts of the COVID19 pandemic.

• The government should complete the promulgation of the debt policy and borrowing framework and institute proposed checks and balances and update the medium-term debt strategy 2020 in line with the realities of COVID-19.

Transparency and Accountability in the Management of COVID-19 Emergency Response Funds

Knowing that a crisis such as COVID-19 creates a loophole for corruption, we would like to point out that there have already been reported cases of mismanagement of COVID-19 emergency response funds – which currently total an amount estimated at KES 102,807,972,3505 as of May 6. 2020 both in kind and in cash. We would like to reiterate that transparency and accountability are essential to ensure that existing emergency funds and the funds the IMF is disbursing to Kenya are used to protect the lives and livelihoods of the most vulnerable due to the pandemic.

• Fiscal transparency and accountability. We call on the government to manage current and future COVID19 emergency response funds from other sources, including the World Bank and the IMF (Rapid Credit Facility) with ruthless accountability, transparency and strong public engagement. to ensure appropriate targeting of interventions, good value for money and prevention of corrupt practices. The government should disclose its: COVID-19 response plan, estimated budget, and planned measures to increase revenue; and its audits of tax, budget and expenditure data to help track and report on emergency response spending at the national and county government levels. The information disclosed should detail information on expenditures spent under the various projects to combat COVID-19, revenue collection measures and the amount of funds raised and managed under the Emergency Response Fund Board. COVID-19 emergency, funds allocated and disbursed to counties to help address the COVID-19 crisis, the amount used in cash transfers to protect Kenyans from the effects of the pandemic and the method of identifying beneficiaries cash transfers taking into account families made vulnerable by the pandemic.

• Stakeholder engagement and civic space. With financial support arriving rapidly in Kenya, it is crucial for independent civil society to track and monitor how these funds are spent. We call on the IMF and the World Bank to do their utmost to protect and promote a strong role for civil society capable of holding the government accountable for the use of these resources in an accountable and transparent manner, and for the institutions to provide technical support to civil society for these monitoring efforts. .

• Open contract. The government should take express steps to ensure that open procurement measures are adhered to by timely publishing procurement plans and notices for all emergency response activities, including the names of winning companies and beneficial owners.

• Performance management framework. The government should provide an updated performance management framework for monitoring the response.

Set up a special fund/closing fund under the national COVID fund to support small informal traders

• We urge the government to urgently identify informal trade sectors affected by COVID19 and provide financial support for their recovery.

• We urge the government to provide a return to work program for informal traders on very flexible terms.
We therefore propose that support for the informal sector be channeled through financial institutions, under the supervision of the Micro and Small Enterprises Authority. The delivery mechanism should go through existing chamas and informal trader groups at the local level.

• We propose the enactment of special regulations for the Micro and Small Enterprise Development Act (Section 51) to establish the Micro and Small Enterprise Emergency Response Fund.
The objective of the fund will be to support and boost micro, small and medium enterprises made vulnerable by the COVID-19 pandemic. Regulations should provide for the administration of the fund as well as the eligibility and verification of informal traders.

Safety net for job loss in the informal sector and casual workers

• The government has already identified the need to set up cash transfers to vulnerable households.

We urge the government to accelerate the implementation of its measures to protect vulnerable households affected by job loss and business closures, especially households with low-income jobs through a strong social protection mechanism and transparent. Article 21(3) of the Constitution defines vulnerable persons as including women, elderly members of society, persons with disabilities, children, young people, members of minority or marginalized communities and members of ethnic communities, religious or cultural. The government should provide a definition of who is considered vulnerable as part of the COVID emergency response. The government must also identify vulnerable households. We propose a triangulation of county-level data sources, including community health, county social services, county chiefs, village elders, and local NGOs/CBOs. The vulnerability status of households must be closely monitored by the same community structures.

Prioritizing the COVID-19 response

• While being careful not to divert spending from existing essential health services and other critical needs, we call on the government to put in place measures to reduce non-priority spending, including suspending major non-priority infrastructure projects. and redirecting funds to the COVID-19 response. This will increase the fiscal space available for the public health response and the implementation of mitigation measures to limit the negative economic impacts of the COVID-19 pandemic.
The statement is supported by the following civil society organizations

OXFAM in Kenya Transparency International Kenya The Institute for Social Accountability Interreligious Council Kenya PAWA 254 Diakonia Sweden Kenya Human Rights Commission Institute for Public Finance Kenya International Budget Partnership