Kenya's Economic Woes Hit Hardest in Slums

FROM the crowded Kibera slum in Nairobi and across the country, people are buying less milk, fewer new clothes, and even postponing marriage, as living costs shoot up in Kenya's declining economy.

Once a model in Africa, the growth rate here dropped by 50 percent to 2.2 percent last year and is likely to drop even more this year, according to latest government projections. Inflation is running at nearly 20 percent annually, according to the government. Private estimates put that figure closer to 40 percent.

Meanwhile, Kenya's rapid population growth (estimated at 3.4 percent to 3.8 percent a year), is outpacing food production, available farmland, and jobs.

Western diplomats and Kenyan critics pin part of the blame on government corruption and mismanagement; while government economists blame the declining economy on global recession and political unrest in Kenya that are cutting into tourism, the country's main source of foreign exchange.

Kenyan officials also point to a severe drought in the northeastern part of the country. Kenya, traditionally a food exporter, last week declared a food emergency and requested international food aid. Aid suspension

The government says last November's cutoff of most international aid, as a pressure tactic for more economic and political reforms in Kenya, is further damaging the economy.

Western donors want Kenya to trim its budget deficit by paring back its bloated civil service, ending subsidies and price controls, and selling many of the more than 200 parastatals - businesses owned wholly or partially by the government.

In response to the aid suspension, President Daniel arap Moi has agreed to hold multiparty elections before next March, replacing his one-party system. Also, the government's new budget, which offers tax breaks to try to stimulate the economy, promises to trim the budget deficit from 6.5 percent of the gross domestic product last year to 3.5 percent this year.

"That is not enough," says one Western diplomat, who says donors are waiting for proof of political and economic change, not just promises, before loosening the aid purse strings anew.

The freeze includes about $300 million to $350 million in loans from the World Bank and the International Monetary Fund (IMF). Most donors are holding up money for new development projects such as roads, hospitals, and water supply.

"I can get very bitter about this," says Economics Secretary T. C. I. Ryan, a senior official in the Ministry of Finance. "We're being told: We `won't give you any money till you get your budget under control.' " But the freeze is crippling Kenya's foreign exchange reserves, he says. Manufacturers are being forced to scale back imports, cutting production and reducing federal revenues on import taxes. The lack of foreign exchange also is forcing the government to borrow money, hence driving up interest rates and increasing inflation, Ryan explains.

But one Western diplomat counters that there would be less damage from the aid freeze if the government filled the gap in foreign exchange from "money filtering out of the country into various privileged bank accounts and sweetheart deals." The diplomat claims corrupt contracts involving parastatals provide kickbacks to political favorites running them.

This diplomat claims Moi government officials are rapidly skimming off as much as they can in case they lose the next election. "If you are running scared, you try to get out what you can get out while you can get it out," the diplomat adds, pointing to Swiss banking figures that indicate $2.7 billion in accounts there that have owners who list Kenya as their address.

In a speech to the nation June 1, President Moi said that both in government and the private sector, there are "management shortcomings - such as corruption, theft, lack of team work in some areas, favoritism, and laxity." He called on all Kenyans to "fight to eliminate" such ills.

Dr. Njuguna Ng'ethe, director of the Institute for Development Studies at the University of Nairobi, says "the worst aspect of corruption is the disintegration of institutions." He claims money is shuffled between government offices with no accountability.

Not only can this end up enriching some officials, he says, but it destroys the utility of the institutions and the effectiveness of government, and drives out honest, capable managers. Street-level impact

Meanwhile, Kenyans in the Kibera slum of Nairobi are feeling the economic pinch.

Business at the tiny Kibera dressmaking stall of Cornelia Anyango has fallen off. Her customers say they have less to spend on clothing because food prices have climbed sharply. Those who do buy take longer to pay for the dresses.

"They make a deposit and pay it off in bits and pieces," taking up to three months to pay the balance, instead of the usual three weeks, says Mrs. Anyango.

Kibera resident Mary Adhiambo says she "quit buying milk two months ago due to the price."

Following government decontrol of the price of milk, one of 50 items whose price has been decontrolled in this year alone, the cost of a pint of milk doubled.