Kenya: Kenyans Almost Weaned Off Donor Aid

East African Standard (Nairobi) 11 September 2007
Donor funding could drop to one per cent of the Government's Budget next year, a World Bank official has said. This follows efforts to improve tax collection, borrow domestically and reduce reliance on external lenders to pay for State operations. Country Director, Mr Colin Bruce, said donor support has fallen from eight to five per cent of the national Budget since 2002. He added that if the Government sustains the current economic momentum, donor funding should fall further to about one per cent of Treasury's needs by next year. Bruce made the remarks at the launch of the Kenya Joint Assessment Strategy (KJAS) in Nairobi. The KJAS is a five-year blueprint that guides lending to Kenya from 17 nations, including major development partners like Japan, Germany, the United Kingdom and the United States. The World Bank official praised the Government's Vision 2030 economic blueprint, saying it contained key elements that could help Kenya achieve and sustain a higher level of economic growth, social equity and poverty reduction. He added that the State urgently needed to ensure more Kenyans benefited quickly from the ongoing economic recovery programmes. "We believe there are many positive developments taking place in Kenya on the economic front," he said. "We see many challenges too, including in key areas such as economic and social empowerment, infrastructure and internal security." Key reforms Bruce, who was speaking as the head of the Donor Coordinating Group, said the country was likely to achieve some elements of the United Nations' Millennium Development Goals (MDGs) by 2015 despite the challenges. The areas showing promise include enrolling all children in primary school, eliminating the gender gap, and reduction of both the HIV and Aids prevalence rate and malaria infections. He added that the country had to take new measures to meet some of the other goals. "It will be a challenge to reach the goals of reducing by half the proportion of people having no access to safe water, the proportion of malnourished children, and the proportion of people living on one dollar or less a day," he warned. "At current rates of progress, Kenya is also unlikely to reduce maternal mortality by three quarters and child mortality by two third by 2015 as set by the UN." He said the country has attained a stable currency because of the huge financial inflows from Kenyans in the Diaspora. He pointed out that there had been improvements in fiscal discipline and public sector management, the business climate and investment in human development. The country's Gross Domestic product (GDP) currently stands at Sh1.7trillion. Finance minister, Mr Amos Kimunya, who also attended the event, said the growth in real GDP climbed from 0.5 per cent to six per cent and is estimated to keep growing. "By the end of the year, we expect the rate to be around 6.9 to seven per cent," the minister said. He also noted that poverty has eased with the proportion of people living on less than a dollar a day reducing to 46 per cent of the population, down from 56 per cent in 2005. "Indeed, income per capita, which was $400 (about Sh27,000) in 2004, is now slightly over $600 (Sh40,000)," he said. "To achieve Vision 2030, we will require to invest heavily in sectors such as tourism, agriculture, manufacturing, business process outsourcing and in physical and social infrastructure programmes."
Editorial: Bank's policy shift strange