Recent protests in Kenya led by Generation Z against an International Monetary Fund-backed Finance Bill, 2024 must prompt a significant reassessment of the conditionalities by the Bretton Woods institution.
Before the Kenyan protests, African Ministers of Finance, Planning and Economic Development had called for key reforms of the Bretton Woods institutions at the Annual Meetings of the World Bank Group and the International Monetary Fund in Marrakech, Morocco last year.
But more than any other event, the protests largely caused by discontent among young Kenyans regarding the perceived inequities of the IMF, should cause the lender of last resort for cash-strapped countries to reflect and gather lessons to rethink conditions and operations.
Reforms are necessary to strengthen the IMF’s operational model, lending instruments and governance structure to deal more effectively with diverse challenges affecting some of the expected beneficiaries.
Truth be told, the global financial architecture has failed Africa, and the IMF is failing countries like Kenya. Many young people in Kenya and other African countries see IMF operations and conditions as detrimental to their economic future. And that is why something needs to be done.
The IMF must rethink its tough conditions attached to its financing to countries. Some of the conditions forcing countries to increase taxes and cut subsidies, must be implemented with care. At the same time, the IMF must ensure as conditions to its loans, that governments cut waste, adhere to debt quotas and remain transparent and accountable especially to citizens.
IMF and Africa must engage constructively as partners to make progress towards shared goal of raising living standards across Africa – ensure that its economic support and partnership with African countries is mutually beneficial.
The lender needs to change its approach, taking into concern that Africa is navigating a complex economic landscape. For example, given countries’ substantial long-term investment needs, loans at low interest and with long maturities are necessary.
Alleviating crushing debt is absolutely crucial. According to Economic Commission for Africa, the continent’s public debt has surged beyond 60 per cent of Gross Domestic Product (GDP), putting many countries in a precarious position. Interest payments now exceed 10 per cent of government revenues in over 20 African countries, undermining ability to invest in vital development initiatives.
At the same time and as part of the reforms, more needs to done to strengthen Africa’s voice and representation on the global stage – increase representation for developing countries on International Financial Institutions Boards.
Recent establishment of an additional chair to represent African countries at the IMF Executive Board is a welcome move that would help to amplify region’s voice and representation.
No doubt, there are no easy solutions to some of the economic problems facing African countries, but efforts must not ignore short-term suffering, while focusing only on long-term gains. At all times, IMF and governments must pay attention to genuine concerns of the populace to avoid resistance. Make no mistake, public trust and support is essential for progress.
