World Bank may cut aid if no political solution is found

from The Daily Nation

By PAUL REDFERN
Special Correspondent

The World Bank has said that it may consider suspending or cutting some of its aid programme in Kenya if a diplomatic solution to the current political crisis is not found.

In a joint statement put out together with the African Development Bank last week, it said that the two organisations “note with great sadness the troubling events in Kenya following the announcement of the results of the presidential election on December 30, 2007.

“We are gravely concerned at the loss of life and livelihoods, and its disproportionate impact on the poorest and most vulnerable Kenyans, especially women and children. Our early estimates suggest that the current situation could drive two million Kenyans into poverty, reversing the gains made over the past few years.

“The impact on other countries in East Africa from the falling out in Kenya, in particular the disruption of transit routes, is also high and will increase as the problems persist. Business confidence is being undermined.

“We wish to continue working with the people of Kenya in the fight against poverty but it is difficult to do so effectively in an environment of instability. Accordingly, in line with our policies, we will continue to monitor developments closely, keep our programmes under review and make necessary adjustments as the situation evolves.

“Only Kenyans can provide a viable long term solution. We support efforts by Kofi Annan and his team, under the African Union initiative, to bring all parties together to make credible and visible progress toward quick and peaceful reconciliation.”

The World Bank has been heavily criticised for not falling into line with other donors over the issue of aid to Kenya and its country director Colleen Bruce was accused of taking a “pro-Kibaki line” following the elections.

The latest statement, however, indicates a shift in direction from the Washington-based institution, which is Kenya’s biggest donor.

The World Bank currently funds 16 projects in Kenya totalling $919 million. It also funds three major regional trade and infrastructure projects worth a further $260 million.

Sir Edward Clay, Britain’s former high commissioner to Kenya, told the Independent newspaper recently that the World Bank was “duplicitous” in its dealings with Kenya.

“It seemed clear they were concerned to protect their budgets and projects, irrespective of the bad management by the government of its own people’s resources,” he said.

Sir Edward also said that it was important the World Bank fell into line with other donors in sending a clear message to President Kibaki’s government.

“If the donors have threatened a cut-off, the Bank should follow suit,” he said.

The World Bank is not the only organisation set to review its aid programme to Kenya.

Britain’s Department for International Development says that the international development community is continuing to “express its grave concern over the continued political crisis in Kenya.

“It is not working on a business-as-usual basis and has drawn attention to the lasting impacts on the confidence in Kenya’s democratic institutions, and on investment, growth and poverty reduction in the country, if a mutually acceptable solution is not found soon.”

DfID adds that it is “keeping its development programme in Kenya under review because of the current situation,” although “our commitment to the Kenyan people remains undiminished.

“It is too early to make any decisions about long-term impacts on our aid but the size and content of the future programme will reflect the extent to which political differences can be resolved. The UK continues to support efforts for a peaceful resolution to the political unrest and instability.”

While the majority of donors to Kenya, including the UK, the US and the European Commission have signed a statement threatening to withdraw aid if the Kenyan government’s commitment to “good governance, democracy, the rule of law and human rights weakens,” the World Bank did not do so.