Committee for the Abolition of Illegitimate Debt

We, the CADTM and Kenyan allies:
 

• Alarmed by the capture of the Kenyan government by the International Monetary Fund IMF
  International Monetary Fund Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.
  
  When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.
  
  As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).
  
  The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
  The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.
  
  http://imf.org (IMF) that has worsened the Kenyan debt crisis.

• • Affirm our solidarity with the Kenyan people in their struggle against the neoliberal and neocolonial policies of the International Monetary Fund (IMF) imposed on the government of Kenya that have resulted in a Kenyan Peasant Revolution against the IMF led by the young people, popularly known as “Gen Zs.”.

• • Recall that in April 2021, Kenya, under former President Uhuru Kenyatta and then-Deputy President, now President Ruto, entered into an agreement with the IMF for debt relief that came in the form of a 38-month programme that matured in June 2024.
     
• Aware that the Finance Bill 2024, just like the past Finance Bills in Kenya, has been drafted by the IMF and imposed on the Kenyan people.

• Aware that the aim of the punitive tax proposal in the Finance Bill 2024, including the 16% Value Added Tax (VAT) on bread, 16% Value Added Tax (VAT) on supply of bread, 16% Value Added Tax (VAT) on supply of electric bicycles, 16% Value Added Tax (VAT) on supply of solar panels, and 16% Value Added Tax (VAT) on transportation of sugarcane from farms to milling factories, was to ensure that Kenya raises enough money to service the facility that matured in June 2024.

• Cognizant of the direct link between the IMF’s neoliberal and neocolonial policies on the government of Kenya and the ongoing Gen Z-led Peasant Revolution in Kenya.

• Opposed to the proposed privatisation of key public parastatals including the Kenya Seed Company Limited, Kenya Literature Bureau (KLB), Kenyatta International Convention Centre (KICC), Kenya Pipeline Company (KPC), New Kenya Co-operative Creameries, National Oil Company of Kenya (NOCK), Numerical Machining Complex, Kenya Vehicle Manufacturers Limited, and Rivatex East Africa Limited, among others, that is linked to the Debt Relief negotiations of April 2021.

• • Call for scrapping all public-private partnerships that have continued to promote privatisation of key public parastatals in Kenya.

• • Reiterate our call for the cancellation of all forms of illegal, illegitimate, and odious debts—public and private—including microcredit debt, peasant debt, student debt, household mortgage Mortgage A loan made against property collateral. There are two sorts of mortgages:
    1) the most common form where the property that the loan is used to purchase is used as the collateral;
    2) a broader use of property to guarantee any loan: it is sufficient that the borrower possesses and engages the property as collateral. debt, and others that have continued to hold the people of Kenya hostage.

• • Affirm our struggle against all predatory lending, investment, and trade agreements—be they coming from International Financial Institutions like the IMF, from Global North powers, or from emerging powers such as China, Turkey, Russia, Iran, South Africa, and India, whose policies have negative outcomes that plunge the ordinary Kenyan peasants into a vicious circle of austerity, unemployment, and poverty.

• • Demand an immediate end to all sorts of illegal, illegitimate, and odious lending by the governments, IMF, Multilateral Development Banks, and others that destroys and devastates the lives and livelihoods of ordinary Kenyan peasants and ruins nature.

• • Oppose the deployment of the Kenyan Police to Haiti as part of the Multilateral Security Support (MSS) Mission, as this is part of the neoliberal and neocolonial policies of the IMF that will contribute to odious debts in Kenya.

• • Oppose attempts by the IMF-backed Kenyan political establishment to hijack the Gen Z-led peasant revolution in Kenya through calls for the establishment of a government-backed National Multisectoral Forum (NMF) and an opposition-backed National Convention, as they are all based on the same logic that created the problem leading to the Gen Z-led peasant revolution.

• • Reject the continued presentation of microfinance and microcredit by the IMF, World Bank World Bank
    WB The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.
    
    It consists of several closely associated institutions, among which :
    
    1. The International Bank for Reconstruction and Development (IBRD, 189 members in 2017), which provides loans in productive sectors such as farming or energy ;
    
    2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;
    
    3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.
    
    As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.
    
    , and Kenyan government as a solution to get Kenyan people out of poverty since it has had disastrous effects on poor populations in the country.

• • Oppose the abusive interest rates Interest rates When A lends money to B, B repays the amount lent by A (the capital) as well as a supplementary sum known as interest, so that A has an interest in agreeing to this financial operation. The interest is determined by the interest rate, which may be high or low. To take a very simple example: if A borrows 100 million dollars for 10 years at a fixed interest rate of 5%, the first year he will repay a tenth of the capital initially borrowed (10 million dollars) plus 5% of the capital owed, i.e. 5 million dollars, that is a total of 15 million dollars. In the second year, he will again repay 10% of the capital borrowed, but the 5% now only applies to the remaining 90 million dollars still due, i.e. 4.5 million dollars, or a total of 14.5 million dollars. And so on, until the tenth year when he will repay the last 10 million dollars, plus 5% of that remaining 10 million dollars, i.e. 0.5 million dollars, giving a total of 10.5 million dollars. Over 10 years, the total amount repaid will come to 127.5 million dollars. The repayment of the capital is not usually made in equal instalments. In the initial years, the repayment concerns mainly the interest, and the proportion of capital repaid increases over the years. In this case, if repayments are stopped, the capital still due is higher…
    
    The nominal interest rate is the rate at which the loan is contracted. The real interest rate is the nominal rate reduced by the rate of inflation. and conditions of microfinance and microcredit that have plunged ordinary Kenyans into a debt trap, forcing them to contract multiple loans to pay back for the former ones and to make huge sacrifices to reimburse them over years and decades.

• Aware that Kenyan women are by far the primary victims of microfinance and microcredit, and we express our solidarity with their struggles against microcredit in Kenya.

• • Oppose debt in all its manifestations as it weighs directly on the ordinary Kenyans since the government is forced to draw huge portions from the state budget to repay it, leading to budget cuts in public sectors that benefit the majority of Kenyans, like public health services, water, education, security, employment, and social services.

• • Note that the debt system promoted by the IMF in Kenya involves a massive transfer of wealth from the Kenyan people to the creditors, while the local dominant classes have their cut in the transfer.

• • Reiterate that public debt is used as a tool for domination of the people of Kenya and to perpetuate our dependence on the market and private sector as opposed to the state-funded public sector, which in itself is a continuation of neo-colonialism.

• • Resolve to carry on with the fight against the capitalist system that creates, perpetuates, exacerbates, and sustains inequalities and strengthens all social oppressions, including patriarchy, tribalism, racism, ultra-nationalism, religious fundamentalism, corruption, and others, in Kenya through exploitation and dominance by seeing both Kenyan citizens and natural resources as commodities Commodities The goods exchanged on the commodities market, traditionally raw materials such as metals and fuels, and cereals. to be exploited and traded for the maximisation of profit Profit The positive gain yielded from a company’s activity. Net profit is profit after tax. Distributable profit is the part of the net profit which can be distributed to the shareholders. of the multinational institutions and the ruling elite in Kenya and the global north at the expense of ordinary Kenyans and climate.

• • Reiterate that the capitalist system uses debt not only as a tool for economic subjugation but also for political domination, as capitalism goes hand in hand with the debt system.

• • Note that the Kenyan government continues to draw from their national budgets to repay the debts, leaving very little to spend on social sectors like education, healthcare, water, food, and other social security sectors, forcing households in Kenya to turn to private borrowing, leading to an increase in household debts as the households are compelled to borrow to access services that their states ought to be providing them with but have failed due to increased spending for debt servicing.

• • Call for immediate constitution of a Citizen Debt Audit Commission to establish the purpose of all Kenyan debts, who decided to contract the Kenyan debts on behalf of Kenyans, whether Kenya have received the entire amount of the debt money, who holds the Kenyan debt, who has so far profited from the Kenyan debt, the interest Interest An amount paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set. rates of repayment, what interest has been paid so far, the portion of the Kenyan budget that is used to service the Kenyan debt, the creditors conditions, how Kenya is financing repayment of the debt, and the social, economic, ecological, gender, and regional effects of the loans as well as their impact on the lives of the people of Kenya.

• • Call for transparency and accountability of all projects financed by overseas lenders and international financial institutions, including the IMF in Kenya, and further call on all such projects to be brought under democratic oversight through public participation.
  • Call for alternative possibilities like subsidies and grants, zero-interest loans without discrimination, socially and collectively managed community projects through community-community partnerships, etc.

• • Call for the renewed development of free, high-quality public services and increases in the funds available for social spending in Kenya.

• • Call upon all Kenyan citizens to unite in our struggles against the illegal, illegitimate, and odious debt Odious Debt According to the doctrine, for a debt to be odious it must meet two conditions:
    1) It must have been contracted against the interests of the Nation, or against the interests of the People, or against the interests of the State.
    2) Creditors cannot prove they they were unaware of how the borrowed money would be used.
    
    We must underline that according to the doctrine of odious debt, the nature of the borrowing regime or government does not signify, since what matters is what the debt is used for. If a democratic government gets into debt against the interests of its population, the contracted debt can be called odious if it also meets the second condition. Consequently, contrary to a misleading version of the doctrine, odious debt is not only about dictatorial regimes.
    
    (See Éric Toussaint, The Doctrine of Odious Debt : from Alexander Sack to the CADTM).
    
    The father of the odious debt doctrine, Alexander Nahum Sack, clearly says that odious debts can be contracted by any regular government. Sack considers that a debt that is regularly incurred by a regular government can be branded as odious if the two above-mentioned conditions are met.
    He adds, “once these two points are established, the burden of proof that the funds were used for the general or special needs of the State and were not of an odious character, would be upon the creditors.”
    
    Sack defines a regular government as follows: “By a regular government is to be understood the supreme power that effectively exists within the limits of a given territory. Whether that government be monarchical (absolute or limited) or republican; whether it functions by “the grace of God” or “the will of the people”; whether it express “the will of the people” or not, of all the people or only of some; whether it be legally established or not, etc., none of that is relevant to the problem we are concerned with.”
    
    So clearly for Sack, all regular governments, whether despotic or democratic, in one guise or another, can incur odious debts. system and free trade agreements that humiliate and exploit the people, plunder and destroy the environment, and push whole populations onto penury and destitution.

Date: July 24, 2024