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Kenya: Coronavirus Graft Sparks Political Tension

Odinga has called for a full audit of all funds made available to state agencies, departments and ministries to fight the pandemic, and establish the facts as to whether they were misappropriated.

Kenyan President Uhuru Kenyatta pledged to make government spending more transparent in a bid to temper a political backlash over allegations that contracts awarded to combat the coronavirus were tainted by graft.

The health ministry was directed to publish details about the procurement of Covid-19-related goods and services on an online portal within 30 days — a move Kenyatta said is aimed at restoring public trust that state resources were being used appropriately.

Lawmakers are investigating claims that the Kenya Medical Supplies Authority bought sub-standard and overpriced equipment to be used to combat the virus and that some officials used proxies to conduct business with the state agency. Health-care unions have threatened to go on strike next week, partly because they say poor quality protective equipment increases the risk of becoming infected.

The scandal comes at a delicate political juncture for Kenyatta, who is seeking to amend the constitution and do away with winner-take-all elections that have sparked violent clashes. The president’s proposed reforms have the support of Raila Odinga, the main opposition leader and former prime minister, who has alleged that he was cheated of victory in a succession of votes.

Political Expediency

The rapprochement between the two men has divided the ruling Jubilee party and alienated Deputy President William Ruto, who is angling to take over the top job when Kenyatta’s second and final term ends in 2022. The political rivalries have extended to the battle against graft, with Ruto citing political expediency in decisions on who to target.

“It is clear that you, the owners and operators of the Corruption Laundromat are working overtime in your effort to “sanitise” the Covid Billionaires,” Ruto said on Twitter on Aug. 25. The “double standards are too glaring and obvious,” he said.

Odinga has called for a full audit of all funds made available to state agencies, departments and ministries to fight the pandemic, and establish the facts as to whether they were misappropriated.

Empty Coffers

Meanwhile Kenya is in talks with the World Bank for a loan to provide further budget support, according to Treasury Secretary Ukur Yatani.

The East African nation’s government and the lender are “still discussing policy areas” to be covered by the financing and are yet to agree on the amount, Yatani said. The loan “doesn’t look likely for this financial year,” he said Tuesday in a text message.

The World Bank in May approved $1 billion in budget support for Kenya, which followed a $750 million package approved in 2019. The government will spend the money on subsidized agricultural inputs, affordable housing and improving transparency in public financial management, the lender said at the time.

This will be the third time Kenya takes up a so-called development policy operation loan from the World Bank. It is a tool used to provide financing to help countries plug budget deficits and signals the nation’s shift to seek cheaper concessional funding as it faces debt distress concerns. The International Monetary Fund in May raised Kenya’s risk of debt distress to high from moderate, citing coronavirus shocks.

The budget gap of East Africa’s biggest economy is seen at 840.6 billion shillings ($7.8 billion) in the current fiscal year, or 7.5% of gross domestic product, and will be partly financed via net foreign borrowing of 347 billion shillings, Yatani said in his June budget speech. Kenya also plans to borrow 493.4 billion shillings domestically.

Kenya has no plans to issue commercial debt such as Eurobonds or syndicated loans to finance the budget in the current financial year that ends June 2021, Yatani said on Tuesday.