Kenya risks losing millions

2005-10-25 11:31

Nairobi - Kenya could lose millions of euros in European Union budgetary support unless President Mwai Kibaki approves tough anti-corruption measures by the end of the year, a senior EU official said on Tuesday.

Eric van der Linden, the bloc's new ambassador to Kenya, said he was hopeful that Kibaki would meet a December 31 deadline to sign a law that aims to make the country's graft-riddled government procurement more transparent.

Without implementation of the law, adopted by parliament in July after long delays, the European Union will be forced to withhold a first 50-million euro tranche of a planned 120-million euro aid package, he said.

"It took some time before the Public Procurement Bill (was) passed by parliament, now it has to be signed by the president," van der Linden said.

Agreed

"We discussed this with international financial institutions and we agreed that essentially most of the conditionalities have been met," he said.

"So, once the president (has) signed, we will sign the financing agreement and decide on the disbursement of the first tranche," he added, warning that if the deadline was not met, the EU's spending authorisation would expire.

"Then we (will) have trouble because we won't have the money anymore," van der Linden.

Assuming Kibaki does sign the law, the second tranche of the package will be "linked with additional conditionalities which have fixed and variable components" and the third will be released on the "basis of additional conditions to be met which are linked to the economic recovery strategy of Kenya", he said.

Most of those conditions involve enacting laws to privatise loss-making state-owned companies and boosting anti-corruption measures.

Donor

Earlier this year, the bloc, Kenya's largest collective donor, warned Kibaki's government about endemic corruption and its failure to crack down on graft which had already led to the suspension of millions of dollars in bilateral aid, notably from the United States and Germany.

Van der Linden said Nairobi had still not yet made good its pledge of ending graft, which donors estimate may have cost Kenya up to a billion dollars since 2002, nearly a fifth of the country's 2004-05 official state budget of about $5.5bn.

"There are obviously economic costs linked to this (graft)," he said. "In Kenya, more needs to be done to tackle it."

- AFP