Amid Kenya power struggle, IMF says investment program in crisis

[January 17, 2020]  By Duncan Miriri

NAIROBI (Reuters) - Hundreds of mismanaged infrastructure projects have stalled in Kenya and it will cost around $10 billion to revive them, the IMF said in a report whose findings point to a growing power struggle at the heart of government.

Amid mounting public anger over ballooning state debt and a series of graft scandals, President Uhuru Kenyatta on Tuesday confirmed acting finance minister Ukur Yatani in the post after its previous incumbent, Henry Rotich, was charged with financial misconduct - an accusation he denies.

The government has acknowledged that some past investment projects did not pass muster, and Yatani told a budget preparation meeting on Wednesday that available resources would be "dedicated only to projects and programs that will ensure higher economic and social returns."

Yatani, an ally of Kenyatta while Rotich was closer to Deputy President William Ruto, has won support from voters since provisionally taking over at the ministry in July.

The International Monetary Fund report, published on Wednesday, lays bare the scale of the task Yatani now faces.

It said an estimated 500 projects - around half of the total - had ground to a halt due to "non-payment to contractors, insufficient allocation of funds to projects, and litigation cases in court."

The state would need to raise around 1 trillion shillings ($10 billion) to complete them, the report said.

Kenya has ramped up public investment projects since 2010.

Kenya's acting Finance Minister Ukur Yatani speaks during a budget planning meeting in Nairobi, Kenya September 12, 2019. REUTERS/Njeri Mwangi/File Photo

But that increase "occurred without enough screening for project viability and readiness before they entered the budget," the IMF said.

"There has been a subsequent squeeze on ongoing projects in the absence of fiscal space, which is now accruing large costs to the government."

The fund named no specific projects, but construction of roads, markets and stadiums has stalled all over the country.

Unpaid bills from the infrastructure department to suppliers and contractors totaled 78 billion shillings as of June, the IMF said.

Yatani said the government was reconstituting its planning and project monitoring unit to "ensure timely completion of projects and realization of value for money."

His confirmation as finance minister was part of a government reshuffle that adds to signs of a rift between Kenyatta, who must step down when his second five-year term finishes in 2022, and Ruto, who considers himself the heir apparent but has begun to fall out of favor.

(editing by John Stonestreet)

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