By IPS Correspondents
NAIROBI, Jun 10 2005 (IPS)

The organisers of Kenya’s strike, which paralysed the East African country for six days, called off their industrial action just before this week’s budget day.

The workers, through their umbrella body, the Union of Kenya Civil Servants, were demanding a 600-percent pay rise during the June 1-6 strike.

The majority of the union’s 120,000 members, who downed their tools, were health workers. They paralysed services in seven hospitals across Kenya, resulting into untold sufferings, according to eyewitnesses.

In an unexpected announcement that clearly sounded like a threat, the government said it had hired 400 nurses to replace those who had refused to return to work.

Alphayo Nyakundi, the union’s secretary general, told IPS the lowest paid civil servant in Kenya gets about 34.4 dollars, compared to a permanent secretary whose earnings are as high as 8,000 dollars, per month.

In his budget speech June 8, finance minister David Mwiraria allocated a salary hike of about 28 million dollars for civil servants. Unfortunately, this increment is nowhere near the 600 percent pay rise the workers were demanding.

Donors and multinational agencies consider the size of Kenya’s civil servants, estimated at 250,000, as unsustainable. In 2003, the World Bank asked the government to reduce the size of its workforce.

The solution, as things stand now, lies in creating more jobs in the private sector. And this year’s budget focused on wooing investors by reducing red tapes that hamper foreign investment in Kenya.

Presenting the budget in parliament, Mwiraria reduced the number of permits and licences a trader requires to obtain before setting up a business in the East African nation.

‘’Currently, there are about 600 licences in Kenya that directly affect trade and investments. Therefore, the government will review these licenses with a view to eliminating those that are not justified on grounds of health, environment and safety,” Mwararia said.

‘’As a first step in this direction, I propose to eliminate 17 licenses, which no longer serve a useful purpose, and amend 30 others. These measures should help make the private sector more competitive and contribute to economic growth and poverty alleviation,” he said.

With over 56 percent of its population living below the poverty level of less than a dollar a day, Kenya’s economy has grown to 4.3 percent in 2004 up from 2.8 percent in 2003 and 0.4 percent in 2002, according to official statistics.

Such investor-friendly measures are expected to further increase the growth of the economy to seven percent in 2006, as stipulated in the Economic Recovery Strategy for Wealth and Employment Creation (ERS). The five-year (2003/2007) government plan was launched in mid 2003 and serves as a blueprint for the country’s economic development.

With improved infrastructure, the targeted growth rate is likely to be realised, analysts say. ‘’Putting more funds on development of physical infrastructure, particularly roads, is critical because this will help reduce the cost of doing business and certainly attract more investors,” Lee Karuri, chairman of the Kenya Private Sector Alliance, told IPS.

And Mwiraria made sure that the physical infrastructure enjoyed significant raise in resource allocation. It was awarded an increase of over 36 percent of the over 6.6-billion-dollar budget, which is expected to see the country’s dilapidated roads improved.

To woo investors, the government has also reiterated its plans to combat corruption, which is rampant in Kenya. ‘’The government recognises that bad governance has been a major constraint to investment and growth. To reduce opportunities for corruption and to deter corrupt practices, the government will enhance the effectiveness of anti-corruption investigation agencies,” Mwiraria remarked.

Such agencies include the Kenya Anti-Corruption Authority (KACA), which is charged with the responsibility of investigating persons involved in corrupt practices.

This body has been described as toothless since it lacks powers to prosecute. Recently, the government announced that the KACA had investigated over 47 cases, which it had handed over to the Attorney General’s office, pending action.

The donor community is keenly waiting for the government to implement these anti-corruption pledges, as promised during a meeting in April.

‘’Donors accepted the government’s strategy to fight graft at the consultative group meeting. Now we are looking at the government’s implementation of the strategies. The meeting was held in April and it may be too early to start judging. We have to be a bit patient and see what the government will do,” Derek Fee, head of delegation of the European Union (EU) in Kenya, told IPS.

The EU is the country’s second largest donor after the World Bank.

The meeting Derek referred to was held in Nairobi on Apr. 11-12. It was to review the government’s development programmes. The gathering brought together bilateral and multilateral development partners, as well as senior government officials and the private sector.

During the meeting, the government unveiled a comprehensive anti-corruption strategy to fight graft. One of the strategies, and which was also mentioned at the budget, was the implementation of the recommendations of the Goldenberg Commission of Inquiry.

Established in early 2003, the commission was mandated to investigate a multi-billion-dollar scandal that involved exportation and importation of dubious gold and diamonds in the early 1990s. Even though the findings of the commission, which ended its work in November 2004, have not been made public, sources told IPS that some of them include prosecuting those implicated.

Key officials in the present and former governments, including former president Daniel arap Moi, allegedly feature prominently in the report.

Analysts say if what Mwiraria promised in this year’s budget is anything to go by, then Kenya’s economic growth may soon match that of her neighbours; Tanzania, whose rate stands at 6.9 percent in 2005 from 6.7 percent last year, and Uganda at 5.8 percent this year as compared to 5.9 percent last year.

The budgets of the three East African countries, which were read simultaneously this week, focused on spurring economic growth. The three East African countries comprise Kenya, Tanzania and Uganda.

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