Treasury CS Mbadi Reflects on Humbling Experience at IMF Annual Meetings in US

At the 2024 International Monetary Fund (IMF) and World Bank annual meetings in Washington, D.C., Kenya’s National Treasury Cabinet Secretary, John Mbadi, found himself in an uncomfortable situation. As he reflected on the events, Mbadi revealed a feeling of embarrassment not due to mistreatment, but rather by the positioning and procedure for African delegations at the global finance gathering. Mbadi, alongside Central Bank Governor Kamau Thugge and National Treasury Principal Secretary Chris Kiptoo, led the high-level Kenyan delegation. Their primary goal was to address critical economic concerns, engage in policy discussions, and secure funding for Kenya’s ongoing development agenda.

Pride and Protocol: The African Delegation’s Experience

In his reflections, Mbadi was candid about a procedure he described as “demeaning” for African countries. At the meetings, each African nation was reportedly asked to wait in line before being called in individually. This treatment, though not outwardly harsh, seemed to reflect an underlying power dynamic that frustrated some officials, Mbadi included. “For those of us who have some pride, it is a bit demeaning,” Mbadi said. He emphasized that while African nations were not directly mistreated, the setting highlighted the disparities between Western powers and African nations at such international platforms.

This experience points to a larger issue: how the structure and process of global financial governance impact developing nations. African leaders like Mbadi often face the delicate task of balancing national dignity with the need for financial assistance. For many, the perception of African nations being “called in one by one” not only recalls past eras of subordination but also signals the complexities of seeking aid without compromising self-respect.

Kenya’s Financial Outlook and the IMF Loan

Despite the uncomfortable optics of the meetings, Kenya achieved significant progress. The IMF approved a loan disbursement of Sh78.3 billion ($606.1 million) to Kenya, marking a pivotal moment for the country’s financial outlook. The loan approval follows Kenya’s protracted review process, hindered by legislative challenges back home, notably the withdrawal of the Finance Bill, 2024.

Mbadi, however, voiced concerns about Kenya’s reliance on international loans. He believes that with improved domestic revenue collection, Kenya could significantly reduce its dependence on external funding. “If we just tighten our systems, we can do without some of these loans,” he stated, adding that efficient Kenya Revenue Authority (KRA) systems could potentially raise an additional Sh400 billion—an amount five times larger than the IMF loan approved.

The Need for Financial Autonomy: Can Kenya Raise Its Own Revenue?

Mbadi’s comment touches on a longstanding ambition in Kenya’s economic policy: self-reliance. Like many African countries, Kenya aspires to establish fiscal policies that are sustainable and resilient to external pressures. This includes enhancing tax revenue collection and reducing leakages that drain public funds. The Cabinet Secretary’s remarks reflect a commitment to financial autonomy, which many economists argue is crucial for the country’s long-term development.

However, achieving this goal is not without its challenges. Kenya’s economy, though experiencing growth, continues to grapple with issues like high debt levels, public sector inefficiencies, and revenue shortfalls. Overcoming these hurdles will require decisive policy reforms and the political will to enforce them.

One of the key areas identified for improvement is tax administration. Strengthening the KRA’s capacity to collect taxes effectively, minimizing corruption, and closing loopholes are among the strategies needed to bolster domestic revenue. If successful, this approach could help Kenya finance its development projects without over-relying on international lenders, preserving the country’s financial sovereignty.

Themes and Objectives: A Focus on Global Economic Challenges

At the annual meetings, the theme “Delivering with Ambition” aligned with Kenya’s vision for sustainable development and economic stability. Mbadi, Thugge, and Kiptoo engaged in discussions on crucial issues like poverty reduction, financial stability, green financing, and sustainable development topics that resonate deeply with Kenya’s own economic priorities.

These dialogues provided Kenyan officials with the opportunity to showcase the country’s progress, which includes a declining inflation rate, a steady GDP growth trajectory, and a stable currency. As the delegation presented updates on Kenya’s economic reforms under IMF-supported programs, they highlighted efforts to strengthen Kenya’s economic fundamentals.

Kenya’s representation at the meeting also underscores the interconnected nature of today’s financial systems. Challenges like climate change, trade imbalances, and inflation are not confined by borders, requiring international collaboration. For instance, Kenya’s commitment to green financing aligns with the IMF and World Bank’s broader goal of financing initiatives that reduce environmental impact and build climate resilience—a critical concern for Kenya as it battles climate-related challenges like droughts and floods.

The IMF Loan: Benefits and Potential Risks

The IMF loan provides Kenya with a financial cushion as it pursues its development agenda. These funds could be directed towards sectors critical to growth and welfare, such as infrastructure, healthcare, and education. Access to international funds also helps stabilize Kenya’s foreign exchange reserves, offering greater flexibility in dealing with economic shocks.

However, loans from international lenders often come with conditions that can impact a country’s fiscal policies. The IMF’s influence over a nation’s economic policies can sometimes restrict the flexibility of domestic policy-makers. In Kenya, past IMF recommendations have included proposals to reform tax structures, reduce public sector wages, and cut subsidies policies that are often politically sensitive.

Despite these challenges, Kenya’s recent loan approval may be seen as an endorsement of its economic reform trajectory. For Mbadi and his team, this is a sign of confidence from the international community, one that can bolster investor sentiment and potentially attract further foreign investments.

The Broader Picture: Africa’s Position in Global Financial Governance

Mbadi’s experience raises questions about the structural dynamics of global financial governance and Africa’s role within it. The treatment of African countries at the meetings highlights the persisting inequalities in international institutions like the IMF and World Bank. Africa’s limited representation in decision-making bodies such as the IMF Executive Board underscores the need for reforms that would grant African nations greater voice and influence over global economic policies.

As African countries strive for economic independence and stability, leaders like Mbadi are calling for a fairer, more inclusive approach to global finance. The push for reforms that enable equal participation in institutions like the IMF is gaining momentum, with African nations increasingly advocating for changes in how these organizations are structured.

Towards a More Dignified Engagement

As Kenya continues to navigate its relationship with international lenders, there is a clear desire for a more dignified engagement. The incident Mbadi described at the annual meetings is a reminder that respect and equality in international diplomacy are as important as financial support. For Kenya, cultivating financial independence and strengthening its economy will not only provide a stronger bargaining position in global forums but also enhance the nation’s self-respect on the world stage.

Conclusion: The Path Forward

Kenya’s experience at the 2024 IMF and World Bank meetings underscores the complexities of international financial diplomacy for African nations. While financial aid remains a critical component of Kenya’s economic strategy, there is a growing consensus that reliance on loans is unsustainable in the long term. Mbadi’s vision for enhanced revenue collection and financial self-reliance presents a compelling alternative to Kenya’s loan dependence.

For Kenya to achieve this, it will need to focus on structural reforms that address issues such as corruption, tax collection efficiency, and public spending transparency. By investing in these areas, Kenya can gradually reduce its dependency on external financing, positioning itself as a stronger, more autonomous player on the global stage. The next step for Kenyan policymakers will be to translate this vision into concrete actions that foster long-term growth and economic resilience.