US war s Uga da on. forthcomi g electio s
8 SUNDAY NATiON,MAYt4; 1995
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a id to
Hundreds of Namibians crowded
onto the streets of the capital
Windhoek today to applaud 21year-old Chelsi Smith of the
United Sates, winner of the 1995
Miss Universe title.
gripped the city as crowds
thronged the main street hoping
for a glimpse of the brown-haired
Texan as she was driven past.
Miss Smith, a college student,
defeated 81 other young women
vying for the coveted title of Miss
Universe in the pageant.Miss
Smith, who has a white mother
and a black father.
Miss Smith scored highly in the
swimwear and interview categories to pocket more than $200,000
in cash and prizes that go with
the title. - Reuter
The European Union's aid
programme to the Rwandan government has been suspended after bloodshed at the country's
Kibeho refugee camp in April,
the European Commission said
The suspension will affect EU
development aid programmes but
not humanitarian or emergency
aid, a statement released late
The Commission said in late
April that official aid from the 15
EU countries should be suspended in protest against the slaughter of Hutus by the mainly Tutsi
army at Kibeho camp in southwestern Rwanda on April 22.
An international inquiry is investigating how many Hutus died
at the camp in April. - Reuter
Miss Universe 1995, 21-year old Cheisi Smith of the United States (center), posses for photos with Namibian President Sam Nujoma (Right) and
Minister Hage Geingob, at the conclusion ofthe pageant in Windhoek. Smith who hails from Texas, is the first African-American woman to
win the pageant. (Picture by Reuter)
A grenade blast in a prison in
troubled northern Burundi killed
14 prisoners and wounded four,
th: army said today.
A spokesman said the hand
grenade exploded in Busoni Prison in Kirundo Province on
Thursday evening. He gave no
details of the attack.
Earlier on Thursday, a gunman
killed a soldier from the Tutsi-.
dominated army in Kamenge, a
northern suburb of the capital
Bujumbura and a stronghold of
militants from the Hutu
The army spokesman said the
soldier was a guard and was killed
in an attack on the car of the
administrator of Bugabira cornmune in Ngozi Province in the
north. Burundi has been in the
grip of a cycle of ethnic attacks
and counter-attacks since the
killing of its first freely-elected
Hutu president. - Reuter
US war s Uga da on.
forthcomi g electio s
By DAN ELWANA,
in KAMPALA, Saturday
The United States has warned
the National Resistance Movement government and Uganda's
political parties to act responsibly at this critical juncture of
constitution making and place
the interest of the nation above
A staiement from the US Embassy in Kampala said, "the US
has noted with concern that despite remarkable progress that
Uganda has made, the stage is
being set for the entrenchment of
a system of government which
falls seriously short of full democracy and political
The US also warned that this
is not the time for quick decisions
on perceived short term, tactical
advantage, adding that decision
on the form of government
Uganda should be a product of
the most careful reflection of the
widest possible debate, both publicly and within the Constitution
Assembly which is currently debating the draft constitution.
The US cautioned the NRM
government and other political
parties in the country, that
Uganda is on the verge of reaching decisions on the future of democracy and human rights which
it said, "will have far reaching
consequences for the future of
A statement from the Amen-
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which guarantees human rights.
The statement warned that both
local and foreign confidence in
the NRM will be maintained if
the government of Uganda cornmits itself to such a programme
The statement comes amidst
increasing politicking in the run
up to the December general and
presidential elections. Uganda's
major political parties, the
Uganda People's Congress
(UPC), of exile former President
Milton Obote and the Democratic Party (DP) of Paul Kawanga
Semwogerere have been making
attempts to address public gathering in the northern and southern parts of the country.
By JOSEPH KITHAMAA,
DAB ES SALAAM, Saturday
making room reservations for
three weeks but shifted to anothen hotel after spending two nights
at the hotel.
The team leaden Martin Bneum
from Denmark, told the court
that they had to shift from the
hotel "because the conditions at
the hotel were unsatisfactory and
bills for the two days spent at the
hotel were settled".
The management of the hotel
claims that the journalists have
caused a loss of$ 10,125 by shortening their stay at the hotel "contrary to an agreement between
the customers and the management" The leader for the journalist alleges that he never signed
The Sudanese government said
on Saturday that the rebel Sudan
People's Liberation Army
(SPLA) had released 1,000 of the
20,000 children it was holding.
The government-owned newspaper al-Ingaz al-Watani
(National Salvation) said the UN
Children's Fund (UNICEF) had
helped bring most of the 1,000
children to the government-controlled border town of Nasir in
southern Sudan. It did not say
The SPLA, which has been
fighting the Sudanese army since
1983, says the children are a bunden and end up in its camps after
being separated from their
Al-Ingaz al-Watani quoted
Abderrahman Abu Doum, the
commissioner general for voluntary work, as saying the release
was a success for the government.
over hotel room coni ract
Fourteen foreign journalists from
Southern African Countries, currently in Tanzania for a course
on investigative reporting are
facing a charge of breaching an
agreement on room accommodation filed by a proprietor of a hotel in Dan Es Salaarn.
The journalists are attending a
course organised by the Maputobased Nordic- Sadc Centre for
Journalism (NSJ) were charged
in a Dar Es salaam court. In the
charge, they are identified as
businessmen from South Africa."
They were taken to court for
any agreement with the hotel.
The journalists were arrested
by police at the Dàr Es Salaam
port as they were about to board
a boat to Zanzibar and taken to
court the same day.
They were be bailed out by the
Principal of Tanzania School of
Journalism, Gervas Moshiro.
The case will be mentioned on
May 24 when the team returns to
Dar es Salaam. The journalists
are from South Africa, Zimbabwe, Zambia, Malawi, Swaziland,
Botswana and Tanzania. The
journalists are attending the first
part of a six-week course on investigative reporting funded by
the Nordic countries.
Zimbabwe detains publisher
can Embassy said, a constitution
is designed to protect human
nights and ensure free and fair
competition for, political leadership. "Some forces in Uganda
would like to see a constitution
that preserves monopoly power
indefinitely and continues the
prohibition on the right of association and the right of assembly,"
it added. The statement said, the
history of Uganda shows the undesirable, often tragic consequences of government which do
not allow political competition
and deny human rights to the
The statement said that the
best course, is an unambiguous
transition within five years to a
fully democratic government
OFFER VALID UP TO 18/5/95 SUBJECT TO
AVAILABILITY OF STOCKS
Police today detained the pubusher of Zimbabwe's leading independent newspaper and two of
his editors for allegedly defaming
a government.minister and a high
court judge, the publisher's wife
and media officials said.
A police spokesman confirmed
the arrests of Rusike, Trevor
Ncube, editor of the Financial
Gazette and his deputy
Simbarashe Makunike. The
spokesman said the three were
being held in Harare but he refused to give further details.
"They came early in the morning and took him (Rusike) away,
saying he had defamed (Public
Construction and Housing Mmister Enos) Chikowore and
(Judge Paddington) Garwe,"
Margaret Rusike, the publisher's
Rusike's flagship weekly Financial Gazette published a story
last month saying Garwe presided over a secret marriage between
Zimbabwean President Robert
Mugabe and Grace Marufu, his
President Mugabe, Garwe and
Chikowore, who was reported to
have witnessed the marriage during the Easter holidays, deny the
ceremony ever took place but the
Gazette insists it did. President
Mugabe, 72, has not commented
on the reports.- Router
SUNDAY NATION, MAY 14, 1995 7
There s more than meets the eye in shilling's drastic slide
By MBATAU wa NGAI
Pity the Central Bank of Kenya. Despite
its valiant efforts to maintain a stable
exchange rate, the gains ofthe first few
months are slipping through its fingers
like so many grains of sand.
True, for the last six months, up until
a fortnight ago, the shilling had
stabilised at about Sh44, 72, 32 and 53 to
the US dollar, Sterling pound, German
mark and 100 Japanese yen
But even then, the pressure on the local currency was building. Indeed,
there were allegations that CBK was
manipulating the exchange rate.
The evidence adduced was that under
normal circumstances, since the shilling
was floated last year, it should have followed the trend ofthe international currencies, especially the US dollar in
which a large volume of offshore commercial deals are transacted. Yet histead ofbehaving as expected, the shilling remained stable, at around Sh44 to
the dollar, even after the dollar lost up
to 20 per cent in international markets.
Additionally, those holding large
amounts of dollars should, rationally,
have converted their holdings into shillings to avoid exchange losses. The fact
that there was no evidence of such a
move gives credence to the charge of
manipulation but thejury is still out. Be
that as it may.
It has been clear for some time, even
top CBK officials now admit privately,
that it was only a matter oftime before
the value ofthe shilling began falling
against all the major currencies.
That explains why two weeks after
the rout ofthe shilling began, it cost
Sh53 to buy a dollar.
When that is compared to March last
year when the dollar went for Sh67 then
every Kenyan, not just investors, has
reason to worry.
But before delving into the reasons
why the once mighty shilling fell so suddenly, it needs to be said that CBK's
claim that the shilling's fall was caused
by the dollar which strengthened mar-
en its core base, agriculture.
Instead, they watch as the system or
individuals within the system systematically destroy the country's agricultural
base, which in turn wrecks the economy
as exemplified by the maize, wheat an4
dairy farmers awaiting payment months
after selling their produce to the
National Cereals and Produce Board
and Kenya Co-operative Creameries because the state firms squandered money
buying imported, sometimes sub-standard, commodities.
Investors' confidence in the economy
is sapped, too, when they watch other
state corporations raising prices for inefficient services and some products,
such as oil where the Government derives the bulk ofits revenue, yet monthly figures are produced ostensibly showing falling inflation rates.
How inflation could fall when prices
of essential services and products are
going up is a mystery that is never adequately explained.
When people, including foreign and
ginally against other currencies in the
international market is untenable because the local currency has lost ground
to all the major currencies. And they
can't all have strengthened at the same
time. No. The cause is nearer home.
This calls for the country's monetary
authorities to come up with more plausible explanations, and notjust in private,
ifthey hope to retain the credibility
they have worked so hard to build.
To do that, they should admit what
the market realised long ago: That exchange rates can be stabilised only as
long as the Government reduces its budget deficit and creates an enabling environment for investment because a currency is only as strong as its economy.
Since 1he value of a currency is directly linked to the perception, notjust the
reality, ofthe underlying strength of the
economy, Kenyans shouldn't be surprised when investors lose confidence in
the economy after they realise that no
serious effort is beiig made to strength-
local investors, see through the
smokescreen created by a Government
that doesn't seem to understand the relationship between inflation and price
increases, they vote with their wallets.
T That various bilateral donors were
the first to go behind the screen is now a
matter of history. What's more, they
seem poised to conclude that bossing or
bullying a government that is already
prickly about having its sovereignty
trampled on is unlikely to deliver decent
results in the long run. Perhaps these
donors are considering choosing more
carefully the Governments they back,
then back them properly.
The sidelining ofKenya from new
World Bank President James D.
Wolfensohn's first visit outside Washington after assuming office on June 15
while including Uganda in his five-country African itinerary may indicate that
the Bretton Woods institutions are
reaching the same conclusion. That
PAGE 17 —Co14
Robert Shaw explains the
dynamics of donor relations
with Kenya and shows why aid
levels are likely to remain low
he recent public revelation that there will be an
unscheduled meeting in July between the don-or
community and Kenya in Paris has understandably
caused considerable comment, consternation and
The last meeting was in December and momentum has been
gathering among an increasing number of donors since early last
month for a meeting as soon as possible. While some, including the
Government, dispute the fact about its unscheduled character, it is
evident that when all the participants of the last CG meeting left Paris
last December in a glow of warm publicity, there was little expectation
that they would meet again so soon.
Many Kenyans have a fascination, some say fixation, with the donor
community and the question of aid. This is understandable and
therefore not surprising considering that virtually every Kenyan is
likely to come into contact with some aspect or result of donor aid
every day of their lives.
This arguable addiction is also especially understandable, although
not necessarilyjustifiable, considering the enormity ofthe flows in the
late 1980s and at the turn of the decade.
In 1989, aid to Kenya exceeded all the foreign exchange earned from
exports and tourism. In the same year Kenya was the eighth largest
aid recipient in the world and aid accounted for 11 per cent of its Gross
National Product. Much of that aid was ill-advised and indeed The French-funded Turkwell Gorge hydro-electric power plant: A much-quoted example of how some aid projects are tilted to
favour the donors.
squandered and both the donors and the recipients were to blame.
The situation has somewhat
l)tirely a donor issue or should be
changed over the past four years.
viewed as a representation - of
Donor aid disbursements to
broad-based reservations about
Kenya peaked at around $1.2 bilKenya and its political, economic
lion at the beginning of this deand social problems.
cade and have declined to just
One view forwarded recently is
over half that figure today. These
that these donor concerns might
are disbursements, not pledges,
dampen or turn off any investwhich is very important because
ment interest in Kenya. Howevincreasingly the difference beer, that is the wrong way to look
tween what has been pledged and
at it. The events that are currentwhat actually gets disbursed is ofly worrying many donors are in
ten enormous. Also the figures do
111u(_ uc.be.ileuiie uiIe, 111tL
nrniptc un- as flpnn-,rl and (crm,rn, wh1-,not appear to be on the top of
not include food aid, a lot of
capacity is as much as fi ve years, also send alarm bells ringing with
dertaken by only conp'anies of take a stronger line on gover- Japan's priority list.
which went to refugees within
It is therefore not surprising work should have started some- investors, current and potential,
the lending country. France is a nance issues and which make it
local and international.
donor actions and signals time ago.
The impression in the public good example of this and an clear where they stand, and act that
The weighting of concerns may
are often different and the Paris
Various donors potentially
equally good example of one of accordingly.
domain that aid flows have reThentherearethe donors' meeting of November have considerable quantities of be biased towards such issues as
sumed and all is getting back nor- the most notorious and over1991 was argu ably one of the few money available for this area al- the economy and corruption but
mal, especially since last Decem- priced projects that it helped to multilaterals such as the World
times when there was obvious though quite a lot of it is now on as has already been pointed out,
ber, is incorrect. There has been a finance was Turkwell Gorge: Bank and the IMF which are haunanimity.
hold or being held up because cer- in the end they are intertwined
significant and consistent decline Lent in French francs but repay- sically lenders and funders proBut regardless of the different tam conditions have not been with the political.
ments denominated in Swiss viding structural adjustment and
in aid flows to Kenya since the
The current donor concerns
francs. The latter currency has a balance of payments support and stances, the trend of declining aid met.
early 1990s and it is likely that
to Kenya is a clear one and the
One of the loan requests the and actions are therefore only a
this trend will continue and may tradition of appreciating against development loans.
forthcoming donors' meeting World Bank recently put on hold microcosm of the overall reservathe former.
In Kenya's case, they are p0even accelerate.
could hasten this trend. One was a $100 million credit line for tions many people have about
Then there are the donors with tentially big lenders. They argue
Kenya and its foreseeable proscould also see more unanimity the energy sector. Another casuwith this subject is often at the
major interests in the status quo that their yardsticks are economthan there has been since 1991. alty is the project to rehabilitate pects or lack of them. Fresh, solid
expense of certain other related or are arguably beholden to it. ic, not political, although it is difinvestment is slight in spite of
In relation to this, the first the Nairobi-Mombasa road. Anfacets. One concerns the donors
Britain, with its numerous Asian fi cult to separate the two espequestion that needs to be asked is other is for urban roads rehabili- somemajor liberalisation meaand the whole issue of whether British passport holders resident cially in such murky areas as whether
any further donor cur- tation. It is likely that other do- sures. One of those barometers,
they are as homogeneous as they in Kenya and its significant com- corruption.
tailment could have a seriously nors interested in the sectors the Nairobi Stock Exchange, is a
are often portrayed. Another cenThey
mercial interests, is an obvious
effect on the economy. The antres around the possible econom- example.
dilemma on their hands. For swer to this is a firm yes because such as the European Union and
in conclusion, the general
ic consequences of any future aid
conIt argues the case for a quiet
trend in aid disbursements, as far
much of Kenya's infrastructure, considering similar moves.
reduction or freeze.
diplomatic style but in effect the
Os VifUUiL Oil onors ar eU011
be it roads, power or water supA follow-up to this is whether substance or end product is also
in a private and secretive man- ply, is literally falling apart and is
Looking further down the line cerned, is downwards and recent
what is happening to aid inflows weak. In the past few months, it ner. Now they are under increasdesperate need of investment there is a distinct danger that do- events indicate that an accelerais a good barometer on the over- has worked hard with the French ing pressure to be more open and in
nor interest in Kenya could free tion could be around the corner.
all investment confidence, or othaccountable
to water down any proposals
Infrastructure is the glue of the fall into terminal decline. A num- This is especially significant
erwise, in the country. In short, is within the European Union's but old habits die hard. What of- economy
every sector, be it her of bilaterals have recently bearing in mind the various doit a signal of a trend or can it be Resident Mission to take a "firm ten comes out is tough talk in tourism orand
drastically pruned their aid and nors' differing stances and
agriculture, is depenseen as an unrelated issue?
and formal approach" to the
dent on it. If it is in disrepair the World Bank is reportedly interests.
The donor community is a dis- many negative events of the past confusing cocktail for those not then
Lastly, and maybe most importhose economic and com- looking at the possibility of
parate bunch of countries and few months. Within weeks of the used to double-talk.
mercial activities are impeded dovngrading and reducing its tant, is the fact that many perorganisations often with very dif- December Maela event, it withStraddling in-between are a and the cost of carrying them out representation here in addition to ceptions of Kenya at present,
ferent priorities, levels of trans- drew from the Democratic Donumber of donors who are driven escalates.
the suspension of certain project whether donor or investor, vary
parency and methods of ap- nors Development Group, then
or not driven by a variety of moFor example, it is estimated proposals. Aid experts say it is from the wary to the negative.
proach. It is useful to look at chaired by the Canadian High
tives or priorities. Kenya's geomuch easier to cut and cancel aid This then translates into lack of
that the energy sector alone resome ot tile Oltterences.
Commission, on the grounds that graphically-strategicpositionis quires over $lbillion investment than it is to resume or increase it. confidence.
For example, there are the it saw no need for such a caucus. arguably a strong influence on over the next five years. Demand
The question that then arises
• Robert Shaw is a businesscountries which call themselves
At the other end of the bilater- US policy while at times human for power is fast exceeding supply is whether the recent moves and man and a regular writer on Kendonors, but in fact are merely al scale there are countries such rights issues and conditions do
and bearing in mind that the lead decisions by various donors is yan economic issues.
Do j, lor lie
a.11'*" ]Ld how
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