Military

DATE=1/10/03

TYPE=BACKGROUND REPORT

TITLE=KENYA / FINANCE MINISTER

NUMBER=5-52843

BYLINE=ALISHA RYU

DATELINE=NAIROBI

CONTENT=

VOICED AT:

INTRO: The finance minister in Kenya's new government is vowing to restore investor confidence in a country crippled by decades of corruption and government mismanagement. V-O-A Correspondent Alisha Ryu examines the challenges facing the minister, David Mwiraria.

TEXT: At his inauguration on December 30th, Kenya's new president, Mwai Kibaki, promised that his first priority would be to tackle the country's economic problems.

/// KIBAKI ACT ///

My government will embark on policies geared to economic reconstruction, employment creation and immediate rehabilitation of the collapsed infrastructure.

/// END ACT ///

Few people were therefore surprised when Mr. Kibaki last week gave the key post of finance minister to David Mwiraria. The two men are close friends. Decades ago, they were schoolmates at the prestigious Makerere University in Uganda.

Mr. Mwiraria also boasts a solid financial resume. He has worked as a consultant for the World Bank, and headed the common market department of the East Africa community, a political and economic body composed of Kenya, Tanzania and Uganda. As the opposition's shadow finance minister for the past five years, he was a strong critic of the financial policies of the previous KANU-led government of Daniel arap Moi.

The finance minister tells V-O-A, his government has ambitious plans to correct the wrongs of the past.

/// MWIRARIA ACT ///

The first thing we want to do is to stop wastage of public funds through fraudulent payments, to improve revenue collections by stopping corruption and to improve our relations with donors.

/// END ACT ///

Things were not always so bad in Kenya. In 1971, the country's economic indicators were about the same as Singapore's, and the average income was around 420-dollars a year.

But in the years since then, persistent corruption under the long-ruling KANU party gradually drove most international investors away. The corruption, combined with the Moi government's refusal to seriously fight it, led the International Monetary Fund to suspend its loans to Kenya of 500-million dollars a year. The suspension, which was imposed two years ago and remains in force, has dealt a crippling blow to the economy.

Mr. Kibaki and his National Rainbow Coalition have inherited a country that is virtually bankrupt. The average Singaporean now earns 14 times as much as the average Kenyan, whose annual income is now around 350 dollars, one-fifth less than it was in 1971.

Mr. Mwiraria says he and his staff are already taking steps to boost the economy and restore donor and investor confidence in the country. They are working on privatization plans for giant state-owned organizations, such as the Ports Authority, Telekom Kenya and the Social Security Fund.

The firms are thought to have earned a lot of money, but many Kenyans believe that most of it -- millions of dollars every year -- went into the pockets of KANU leaders, not the state economy.

Mr. Mwiraria says ending this kind of corruption is essential, if Kenya's economy is going to be rebuilt.

/// 2nd MWIRARIA ACT ///

Our government is really working hard to bring back good governance, to stop corruption, to introduce a code of ethics among the civil service and the government. And, in this way, we believe donors will start cooperating with the government.

/// END ACT ///

Though it has only been in power since the end of December, the new government's determination to fight corruption is already attracting attention. Analysts say donors and potential investors have begun responding positively to the finance minister's plans. Robert Shaw is an economist at the Nairobi-based Institute of Economic Affairs.

/// SHAW ACT ///

I think the Kenya government's relations with donors will undoubtedly improve. There is considerable good will on the part of donors, as there is on the part of Kenyans and investors generally. Where we need to be a little bit wary is that, we should not be expecting too much from donors immediately. The government machinery itself is very, very run down. It has been run down and politicized for a number of years now. So, even with the best will in the world, it is going to take quite a lot of effort to implement some of these things.

/// END ACT ///

Mr. Mwiraria says his ministry is already in talks with the I-M-F and the World Bank to restore financial assistance to the country. He says he expects significant progress soon, possibly in the next three months.

If Mr. Mwiraria succeeds in negotiating the return of foreign aid and investments, he will be hailed as a hero in a country that has not had a hero in a very long time. (Signed)

NEB/AR/KL/FC/TW