As Kenya celebrates the new middle-income status, International monetary Fund, (IMF), announced again that the country’s economy is poised to reap great rewards of economic reforms because of its prudent macroeconomic policies. IMF pre-empted that rising domestic and foreign investment are set to boost economic activity in its regular review of the country’s economy revealing: “Foreign reserves have increased steadily and are broadly adequate.” It also noted a surge in public investment in infrastructure, renewed interest of foreign investors, and lower transaction costs induced by information technology, albeit dreaded rising food prices and rapid credit growth could fuel inflation outlooks.

That was the good side, but on the other hand, IMF chief mission for Kenya Mauro Mecagni, and resident representative Ragnar Gudmundsson, warned that unfavorable spending could further hurt Kenya’s fiscal sustainability- startling news. While on one hand, IMF is against mass transfer of cash to counties, on the other, it recognizes that devolution is the sure tool to poverty reduction in the new 47 administrative units. One is thus left wondering what IMF analysis portends to the units’ future.

Warning Kenyans against mass cash transfers to counties stressing it will hurt our macro economic health, and coming in the wake of raging referenda debate on whether to amend the law or not, means that IMF is conscientious on devolution. It could mean that devolution is facing extinction at a time when some pro-devolution governors have launched ‘Pesa Mashinani’ campaigns and the Opposition is pushing for ‘Okoa Kenya’  to increase cash allocations to counties.

From this view, IMF’s warning is cast in qualm because at the moment, 85 percent of the national revenue is still retained at the central government and only 15 percent is trickling down to the counties. The governors want this increased at least to 45 percent.

It defies logic of devolution if sufficient funds cannot be disbursed to the counties to run the devolved units impeccably. This is why I think the IMF’s caution is inexplicable, if not part of conspiracy theory to "starve the counties of cash and to frustrate devolution" that was overwhelmingly endorsed by 67 percent of Kenyans before it was ratified into action. If Kenya’s high wage Bill is the problem as IMF puts it, then by deductive economic sense, it is supporting the push for a referendum to redress the economic disparities in the law, since it has recognized that devolution is a tool for poverty reduction. Currently, we are told that 150,000 Kenyans jobs are likely to go as EU taxes Kenyans goods. What does this portend to Kenya’s new status of a middle-income economy?

In future, the IMF should collect as wide information as possible from a broad range of think tanks and Kenyans to identify diverse preferences and perceptions that are valid for sustainable economic growth. The IMF elites and Executives Honorable Mascagni and Hon Ragnar must come here again and move from County to County to repeat the warning to collect and collate the public responses.

I recall that the President pledged during the pre-election campaigns to boost economic growth to 7 or to 10 percent by 2015 and to create a million jobs annually. How will this be realized if more jobs are lost due to proposed outrageous economic reforms?

Time and again, I have supported effort by the civil society organizations in Africa and Kenya inclusive, to lobby for cancellation of debts for the industrializing democracies -Third World countries. This is the biggest news we expect from IMF. This is what has kept Africans in a vicious circle of begging for sustainable growth, it is the only way out to make our African economies stable.

It defies an iota of economic sense for multilateral institutions to paint a "picture" of economic success that falls short of the future sustainable development plans for economic growth. By collecting wide information from abroad range of think tanks, and people IMF will identify diverse preferences and perceptions that are valid for sustainable economic growth.

By Kepher Okongo

The author [email protected] is a consulting Business Editor and the Bureau chief East African Digest, Nairobi Kenya.