Amani
Presidential candidate Musalia Mudavadi
book titled Musalia Mudavadi is out few days to general election on March 4th
The book
titled MUSALIA MUDAVADI with sub titles Aman with Vision to Kenya is penned by
local journalist turned writer James Bandi who is also the writer of best
selling of the late President of SudanJohn Garang among others.
The book
which was not officially launched but instead supplied to bookshops traces
Musalia Mudavadi from his childhood to the present day as among the 8 fighting
for the top seat in the land.
Mudavadi comes to public when he took over
from his late father Moses Bundamba Mudavadi in the late 80s and since then he
had been given important post including finance
Minstry, Marketing, Local government, DP among others.
According
to the new book which is likely going to give him additional vote at the late
hour Musalia made history as the youngest Minister at only 29 the shortest
serving VP and the first to be rejected by Sabatia voters and the first to reject nomination given to
him by Uhuru Kenyatta then leader of opposition after the end of KANU regime.
Even though the book is very useful not only it
this time of election it makes a good reading for historians and students, but
what the writer had failed to tell
Kenyans is that Western Kenya tycoon Ibrahim Abwere is the one who founded
Pastor Akaranga to remove Mudavadi
Abwere
was the enemy of Mudavadi late father
and he is still the enemy of Musalia Mudavadi because Abwere claims that
younger Mudavadi is using Asians business to fight him
Going
through the book it gives Mudavadi good name as far as economy is concern
example the Paris Club Meeting in 90s when Kenya economy was performing badly
among others.
IN THE NEW
BOOK JAMES USES JOURNILISTIC KNOWLEDGE
TO TRACE MUDAVADI AND HIS WONDERFUL SPEECHES
Mr. Musalia Mudavadi, then minster for finance
at consultative group meeting of Kenya donors has this to say in 1993.
On behalf
of the Government of Kenya and on my own behalf, I wish to express my pleasure
at being with you at this meeting of Kenya’s consultative group. We eagerly
look forward to the opportunity that this meeting affords us, coming as its
does, after a gap of two years. We are also very grateful to the World Bank for
hosting and organizing it.
For a
variety of reasons, this meeting is important to all of us. Firstly, it is an
important turning point, hopefully for the better, in our relations with the
international donor community. Secondly, it is taking place after an interval
of two years;- historic years which have seen fundamental political and
economic changes in Kenya, changes which encourages all of us this room today,
and which raise our hopes for a better future, we are meeting here today, even
as we are witnessing, serious human and instability in many countries in the
region.
On a
personal note also, this meeting is important for me; although I have had
discussions with many of you on an informal basis- including meeting here in
May- this is my first opportunity since taking over the finance portfolio early
this year, to place before you at this august forum both our record or
performance and the problems we are likely to face in the next two years.
On the
economic from, the last two years have been difficult for Kenya. Acute problems
have been created by a difficult for Kenya. Acute problems have been created by
a difficult combination of events such as the serious drought situation,
shortages of food and foreign exchange, the accumulation of debt arrears, the
political instability in the region leading to a large influx of refugees into
Kenya and serious law and order problems and the declining terms of trade for
our exports due to continuing world recession. This has also affected the
tourist industry. Nevertheless we have pressed ahead with political reforms.
Ladies and
gentlemen, before I follow the traditional practice of reviewing government
since the last meeting had discussing our plans for the medium-term. I would
like to highlight three critical issues.
The first
is the issue of debt arrears. As you might have noticed from the papers circulated, we are seeking
substantial financial support to clear out debt arrears as well as to finance
the projected gaps in the balance of mechanists exist for dealing with debt
arrears we are not seeking to discuss this issue in this forum.
The second
issue I am referring to is the need for food aid. As outlined in the recent FAO
/ World Food Programme Report, there is a projected shortfall of 1.85 million
tonnes in the period July, 1993 to September, 1994 mainly as a result of poor
and extremely badly distributed rainfall this year. The total cost of importing
this requirement is estimated at about US$200 million. After taking into
account the commercial imports and the World Food Programme stocks and
pipeline, some 1.25 million tones will be required in the next twelve months to
cover the huge deficit. While we are extremely grateful to the UNDP/FAO for
their initiatives in this regard, I would like to emphasis at the outset that
most of the financial requirements for these food imports are not included in
the financing paper. We would appreciate an early opportunity to meet in
Nairobi with donors concerned to seek the additional financing required.
The third
issue relates to the financial requirement of some US$20 million for programmes
as outlined in the government’s strategy to rehabilitate those affected in the
recent ethnic clashes. This strategy is derived from the UNDP’s study of this
tragic situation, and the UNDP has generously budgeted US$5 million towards
that requirement. We hope that other donors will also support this vitally
important effort.
Let me now
take you back to the last CG, mainly to provide a starting point for my
presentation today. When we departed in November, 1991, it was noted that in
Kenya, the enforcement of the rule of law, respect for human rights and firm
action to correct macro-economic imbalances. The critical components of
economic management were identified as fiscal discipline, civil service reform,
improvements in the financial performances and accountability of public
enterprises and the establishment of a supportive environment for the
growth of the private sector.
We have
outlined the actions taken in all these critical areas in our paper which has
been circulated for this meeting, I do not intend to repeat them all at this
stage, except to highlight briefly some of the more important developments.
Political and Administrative Reforms
The
political reforms of the period under review are major. We have amended the
constitution and held multi-party elections leading to enormous social and
political changes. Parliamentary debate is now more open, calling on ministers
to defend their policies and programmes in ways that would have been
inconceivable two years ago. The press in Kenya has also emerged as a powerful
force keeping government officials on their toes at all times.
Kenya’s
leadership succeeded in maintaining political and social stability during this
major political transition, while at the same time, creating conditions for the
gradual recovery of the economy to its earlier dynamism. Above all, the Kenyan
people have demonstrated extraordinary political maturity and have ensured
political stability despite the fundamental change in the political system.
Ladies and
gentlemen, you will agree that change in the administrative and legal areas is
an on-going and time consuming process. This change is also being pursued in right
earnest by the government as well as by our parliament and the press.
The attorney-general
has set up a number of task force to reform the civil and criminal laws of the
country and to establish ways of enhancing their effectiveness in removing
discrimination, inefficiency and duplication. We have also reviewed those legal
provisions, many of which date from the colonial era, under which ad
hoc benefits were being extended to certain people benefiting from some clauses in law. These provisions
had originally been introduced to provide for flexibility and speed of decision
making in the administration of laws; these included the Customs and Excise Act
and the Banking Act among others. These laws are amongst those which have been
revised so as to make explicit who are potential beneficiaries of such legal provisions.
Furthermore, by introducing independent appeals tribunals we have also made the
administrative authority accountable for its decision. A complaints commission
has also been established where those who are aggrieved may appeal and seek
redress against administrative action.
While I
realize that is extremely difficult to separate economics from politics,
particularly since questions of governance came to the fore in November, 1991
we discussed many of these more political issues in a meeting with the
ambassadors, high commissioners, and heads of multilateral Nairobi. We recognized
that our time here would be limited and so we hoped to give ample time for
these important issues to be aired.
Economic Management
Mr.
Chairman, I would now like to deal with issues of economic management, both on
the actions that have already been taken and out plans for the medium-term. At
the macro- economic level, the period since November, 1991 has seen a variety
of efforts to address economic concerns arising from temporary disruptions to
macro-economic stability. We have had our failures in this regard. In the early
part of the period, the dominant difficulties related to fiscal management
while in the letter part, monetary controls were more responsible for the
difficulties encountered in the economy. Throughout the period the balance of
payments has presented the major challenge and still remains a critical area to
be addressed, as you will have observed from the paper on financing
requirements distributed by the World Bank.
With
respect to up-front actions towards the medium-term targets, we have done many
things since preparing our distributed
document, you are all aware that we have successfully negotiated a
policy framework paper, which is currently before the boards of the World Banks and the IMF and which we have
distributed to you. We have also completed the basic discussion to allow the
IMF to process our application for a one year enhanced structural adjustment
facility. This is written inside of a three-year programme set out in the policy
framework paper. The Fund’s presentation will provide more details of this
programme. We have implemented actions in many areas additional to those PFP
and have continued the thrust of liberalization so as to ensure that when the
recovery is complete, the economy will be less vulnerable that in the past.
Unfortunately
in the past there has been backtracking on some measures this has raised doubts
on our commitment to reform. The present PFP has been generated on the basis of
unprecedented consultation, ensuring thereby government commitment to this
programme. I would wish to point out that it embodies a major shift in policy
encompassing as it does comprehensive change.
Fiscal and Monetary Management in 1992/93
On the
management of fiscal policy I would like to place a few facts before you to
dispel the notion of uncontrolled growth of public expenditures in Kenya. While
it is true that total expenditures increased from 28.8 percent of the GDP in
1988/89 to 32.5 per cent in 1992/93, this increase in domestic and foreign interest payments which
rose from 6.3 percent of GDP to 10.9 per cent during this period. There has
been a steady decline of ministry expenditures during the last four years with
recurrent expenditures declining from 16.5 per cent of the GDP in 1988/89 to
14.2 percent in 1992/93 and development expenditures from 7.2 percent to 5.8
per cent.
It is
against this trend that we should review the fiscal performance in 1992/93 when the overall budget deficit on
a commitment basis, exclusive of grants, increased to 10.4 per cent of the GDP
compared to 4.8 per cent in 1991/92. It
is extremely important to keep in view of the fact this increase is entirely
due to the very interest payments made in 1992/93, which amounted to some 10.9
per cent of the GDP.
Government’s
fiscal balance as measured by primary deficit (that is, overall deficit less
interest payments) continued to be positive for the second year in succession
as a result of a very tight financial control over expenditures. Several policy
measures are behind this improvement in fiscal performance, the most important
of which is a decline in the rate of growth of expenditures on salaries. As a
result of implementing an employment freeze on civil service positions in the
lowest job groups (job groups A-G), the actual number employed in these job groups declined by 1.7
per cent in 1992/93. More than 75 percent of the wage bill is accounted for by
these job groups.
Despite the
economic difficulties in 1992/93 which have led to a very depressed rate of
growth, revenue collections were high at 23.1 per cent of GDP. This fulfilled
the tax effort targets despite the lower than predicted growth.
Mr.
Chairman, we recognize that restoring monetary stability has a high price.
Fiscal discipline is in constant jeopardy because of the speed to maintain a
high interest rate to keep money supply in check. This is a price we are
willing to pay in the interests of controlling inflation, which is our most
important target of short-term economic management; thus we are continuously
constraining the budget so that government borrowing does not fuel the pressure
on price.
In the monetary
sector, the actions that we have taken so far this year have already started
showing excellent results. The strict enforcement of cash ratios and limits of
discount and over draft facilities, have contributed to the maintenance of a
very tight monetary stance. The effects of these are already to be seen in the
reduction of the three month annualized rate inflation over the last five
months from over 100 percent to 50 per cent.
Government will continue to implement very
tight controls on the rate of growth of its expenditures, while at the same
time improving their composition with a view to enhancing their effectiveness
on the economy. However, two important constraints will have to be taken into
account in the implementation of budgetary policies. The first is the need to
finance the payment of the accumulated external debt service arrears and
second, the much higher domestic interest charges which arise from necessary
actions taken on the monetary front to combat inflation.
Ladies and
gentlemen, by now the extent of damage suffered by our budget as a result of
the need to purchase food, maintain security and meet the interest payments
consequential on drying up liquidity, must be clear to you. Hence, this year’s
budget deficit will still be at an unpleasantly high level of about 6.1 per
cent of the GDP. This is exclusive of grants and on a commitment basis i.e. it
includes accumulated arrears.
At the same
time, we also recognize the need to concentrate expenditure on sectors that
will benefit a majority of Kenyans including public investment in
infrastructure, particularly improved maintenance and capacity utilization.
These are essential pre-requisites for promoting the growth processes in the
economy. In addition, public expenditures of increasing magnitude will have to
be incurred for implementing special programmes. These will benefit those
sections of the population which may be adversely affected by economic
adjustment measures.
Mobilization of Revenues
We should
also recognize that revenue collection efforts are exceptionally high for a
country at our level of development being over 23 percent of GDP. Although we
have successfully removed a lot of potential leakages through ad hoc exemptions
and through the re-introduction of PIN, which has led to an excellent performance in income tax
collections, we are pursuing several other measures which will maintain, if not
improve, the present ratio of revenues to the GDP.
Taking
these factors into account, government is currently planning a gradual
reduction of the budget deficit, with emphasis on achieving a substantial
primary surplus in the next three years. As currently planned, the overall
budget deficit excluding grants, is expected to come down from about 6.1
percent of the GDP in the current year to 2.9 percent in 1994.95, declining
further to about 2.0 per cent in 1994/95.
Civil Service reform
In order
that the targets of achieving a primary surplus and of improving the allocation
of public expenditure are realized, three major reforms are being implemented which
will address the key structural problems in the budget. These are civil service
reform, rationalization of public investments and the reform of public
enterprises including privatization
Public Investment Programme
As far as
public investments are concerned, we will continue to rationalize the existing projects
through strengthening the current procedures for selection. This process of
prioritization will continue and, in the recently of a review of projects in all sectors, the
total number of projects in the portfolio has been reduced from 2,119 in
1992/93 to 1,823 in 1993/94, with GOK financed projects reduced from 1,617 in
1992/93 to 1,407 in 1993/94.
The
government has already taken a decision to confine budget allocations in the
1994/95 budget to only “core” and “high priority” projects, either postponing
or cancelling the implementation of “other” projects. In this mounted a major
review of public expenditures in Kenya, the results of which are likely to be
available early next year and should be valuable inputs for the 1994/05 budget
if they are ready soon enough.
Absorption of Donor Project Assistance
Mr.
Chairman, as a result of the very tight fiscal policy we propose to follow in
the next two years, we must recognize the special problem of fiscal absorption
of loan commitments from the donor community for projects. Quite apart from the
fact that these projects generally require some government financial
contribution, any increased absorption of loan-financed projects results in a
higher budget-deficit. This problem has been compounded by the devaluation of
the Kenya Shilling, which now means that more shillings have to be included in
the budget for the same donor commitment as before. I would therefore, request all
of you to appreciate this fiscal constraint work together with us to solve this
difficulty.
As far as
increasing allocations to non-wage operating expenditures are concerned, we
have not been able to put up as much this year as we would have desired because
of budgetary constraints. Nevertheless, we have managed to put considerable
sums to support the social aspects of adjustment so as to ensure that the vulnerable
groups of the economy are nor as hard hit in these difficult time as they would
otherwise be.
Monetary and Financial Sector Policies
As I said
earlier, the underlying rate of inflation on a three- monthly annualized basis
has now come down to 24 per cent. Our most important short-term objective is to
continue bringing it down by maintaining
a very tight domestic credit situation. To support the monetary and
financial sector policies we have outlined
in the PFP, the Central Bank will continue to maintain a stable exchange
rate through daily activity in the
market. The government will also review the Central Bank and the Banking Acts
to make these instruments better modes of management.
We will also make sure that non-bank financial intermidiaries are not
able to act as a haemorrage as they have in the past. Moreover I am expanding
the net to draw on smaller savers so that they can benefit from the high
interest rate on treasury Bills. At the same time, I am pursuing strategies to
bring the National Bank of Kenya to point of sale by budget time next year.
On the rate of exchange, I will continue reforms
to strengthen export incentives, I do not wish to discuss the precise content
of those changes because of their budgetary implications, but one of them is
of interest to you all since it relates also to the area of customs efficiency
and accountability; I expect the new pre-shipment inspection agencies to be
selected in January, 1994 and, in consequence, I would wish to hear less
complaints of corruption and smuggling. Hence we aim to reduce our dependence
on aid to ensure both exchange rate stability an adequate supply of imports.
Incentives for Investment Mr. chairman,
let me now refer briefly to the measures we are taking to promote both domestic
and foreign private investments in the economy, to renew the growth processes,
and promote exports and employment. We will continue the reform of a variety
of regulations so as to enhance the business environment for private
investors, This will include the removal of all remaining price controls by
the beginning of the next fiscal year, I shall also review the Trade Licensing
Act as well as other legislation under which investors need licences. This sort
of action will make the playing field more level and provide encouragement to
those seeking to take advantage of Kenya's location and market as the new
development plan, which is due to be launched next month, comes into operation.
In trade and industry, the emphasis must be on
efficiency where we seek to expand exports or efficient import replacement.
That means that I will review effective rates of protection once again. We
will make our industrial structure competitive since the market for foreign
exchange is now liberalised, the interest rate is now liberalised, and price
controls are a thing of the past. If competition is a way of attaining
efficiency then sure the changes in Kenya are those that must bring it about.
To take a very up-to-date practical example, you must all be aware of the highly
successful meeting in Kampala last week which will go far to re-establishing
the economic benefits of East African trade.
Amongst the reforms that will encourage private investments will be
ones relating to corporate governance in parastatals so that their management
can be held fully responsible for their decisions. We will make all subsidies
transparent so that the same economic principles as apply in the private sector,
will apply to the use of scarce resources by public enterprises.
Agriculture
Mr. chairman, we will need
to carry forward strategies in agriculture and industry as well as the
financial sector if we are to get
prosperity to all corner of the country. Decontrols of prices and movement will
be introduced as appropriate and the NCPB will take on a limited role in
covering the strategic needs for food security. The dairy industry, the sugar
industry, the tea industry, the coffee industry and the Cotton Board will all
be addressed the course of 1994. This is a massive review of the agricultural
sector, you must admit.
Environment and Energy
Mr. chairman, before I close, I must also inform this meeting of the ongoing action in the area of
environment. This matter was explicitly raised in the informal meeting five
months ago here in Paris. We are on track to adopt a National Environmental
Action Plan by May next year. We will also have a forestry master plan by that
time. The government is also committed to carefully ensuring that
environmental crite -ria are considered in public projects and in allocation of
public land. We will similarly review the Water Act so as to ensure that water
catchment areas are protected.
In the area of energy, we will re organise the power sector
separating the generating operations from the aspects of transmission and
distribution. We will review electricity tariffs and work out performance
contracts with the various public institutions in the sector. Among the many
issues under energy, which we shall be addressing in the course of the next
year, are all those which relate to petroleum and the electricity plans for the
future. I hope that those of you who wish to get involved in these particular
afeas will be in close dialogue with the ministry as it pursues its discussions
with IDA.
Concluding Observations
Mr. chairman, our successful development of the Policy Framework
Paper and our negotiation of the Enhanced Structural Adjustment Facility with
the IMF, gives me confidence that the donor community are aware that the Kenya
economy has turned the corner. It is now on the road to achieve stability and
accelerated development. The government is preparing a sessional paper to
address the longer term framework for Kenya's forward progress, and I am sure
that you are all looking forward to its presentation to parliament so that you
can provide supportive messages, both to your governments and to your nationals
who may wish to invest in Kenya in the near future.
Efficient growth is the most effective way of addressing poverty
reduction; but enclaves of distress will still remain which require well
targeted interventions. We expect to see a recovery and savings and
investment as private sector confidence is restored following successful
control of inflation and the re-establishment of a pro-gramme which, while leading to a
sustainable balance of payments will give rise to high employment creating
growth.
Mr. chairman,
ladies and gentlemen, as I said earlier this is an important meeting from
several points of view and I look forward to a fruitful discussion of over the
next two days and to your constructive support to the programme that I have
outlined. In our discussions we should particularly bear in mind the critical
need to get through the very short run problems of clearing debt arrears and
bringing inflation down to single digit levels. Only then we will be able to
build constructively for the future.
The speeches
following mine must be ones that you look forward to since they are made by the
institutions which are best able to speak from an independent standpoint of the
major transformations which we, in Kenya, have undergone since we last met
officially in this forum.
Thank you.
MUSALIA
MUDAVADI Aman with version for Kenya is example of how politicians can remand
voters and readers about the past and the is why James Bandi and the publishers
should be given tick for such wonderful book.
Mudavadi joins
Prime Minister Raila Odinga who had published good books about his history, it
is my hope that numerous books will be published on politicians during this
period and after election for better understanding
FRANCIS ILAHAKA IS CULTURAL WRITER WORKING
ON ABOOK MAKING OF KENYA PRESIDENCY FROM KENYATTA TO KIBAKI
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