The International Monetary Fund (IMF) and the World Bank are the Bretton Woods Institutions. According to the Bretton Woods Project (2019), the institutions were launched in July1944 when 43 countries met at a conference in Bretton Woods, New Hampshire. In the same meeting, the countries agreed to include International Trade Organizations (ITO) into their plan but this remained dormant until the onset of 1990s when the World Trade Organization (WTO) came into existence (Bretton Woods Project, 2019). The main reason for creating Word Bank and IMF in the post-Second World was set up an economic order that would dependent on collective decision-making and collaborations in economic and trading connections. In particular, IMF’s role would be to establish effective conditions for international trade through maintenance of stability in currency exchange rates and by harmonizing the monetary policies of member states.

On the other hand, would specialize in promoting the participation of impoverished and war-torn nations in the trade by lending them money. WTO cooperates with African nations to enable them understand the international trade terms and agreements. This way, the countries can utilize the multinational trading structures to enhance economic growth and attain their development goals (United Nations, 2001). WTO also works with the rest of international organizations to ensure that the less developed African economies, receive the technical assistance they desire. This paper discusses the role of the Bretton Woods Institutions (mainly World Bank and IMF) on attainment of Kenya’s vision and policy. 

Contribution of Bretton Woods Institutions in Realization of Kenya’s Vision and Policy

This section with mainly focus on the activities of the World Bank and IMF that support Kenya to achieve its goals. The ‘vision’ here refers to Kenya’s need to achieve economic growth and development, hence the ‘policy’ defines all the initiatives or rules that promote the attainment of the vision. 


For Kenya and other African countries, IMF offers temporary financial aid that helps the countries to reduce adjustments in their balance of payment. The United Nations (2001) report indicated that IMF had extended its engagements with African countries through its notable concern over poverty issues. This was marked by IMF’s involvement with the Enhanced Highly Indebted Poor Countries (HIPC) program. Moreover, IMF and World Bank often support the African countries’ Poverty Reduction Strategy Papers, which utilize debt relief to achieve poverty reduction (United Nations, 2001). IMF also supports the International Finance Corporation (IFC), whose role is to endure that member countries have investment institutions and capacity for investment and that indigenous enterprises are stabilized. Again, IMF’s Multilateral Investment Guarantee Agency (MIGA) operates alongside World Bank Group to develop a sufficient approach for boosting development of the private sector (United Nations, 2001). Both IMF and the World Bank have a common goal, which is to improve the living standards of member states (IMF, 2021).

In particular, the IMF is concerned over long-term economic stability of members and macroeconomic development while the Bank concentrates on sustainable economic development and alleviation of poverty. Through monetary cooperation and policy advice, IMF avails the capacity enhancement assistance that enable attainment of financial and macroeconomic strength that ensure establishment of prosperous economies (IMF, 2021). Its short-to-medium term loans help countries like Kenya to create initiatives for resolving balance of payment issues at a time when international payment alternatives are unable to generate adequate financing.

The IMF programs intended for Sub-Saharan Africa also apply to Kenya. There are about 19 IMF projects currently in progress in Africa. One of the most popular programs is Extended Credit Facilities (ECF). IMF uses this initiative to support the low-income nations solve issues related to balance of payment as it is interest-free, provides around five years grace period, and its maturity is in a decade. Again, IMF has Extended Fund Facilities, launched in 1952 and upgraded in 2009 to Stand-By Arrangement (SBA). The tool is usually used by IMF to support emerging or advanced countries meet possible balance of payment challenges. Kenya is the only African country that has active SBA contract (IMF, 2021). Another support program that applies to Kenya is the Standby Credit Facility (SCF). This one has some features in common with SBA but it is meant for low-income countries with short-term needs for balance of payments.

In the phase of COVID-19, IMF issued Rapid Credit Facility (interest-free) loan amounting to $739 million to enable Kenya manage the shock due to the pandemic (IMF, 2021a). The financial support assisted the nation to settle costs such as social security, health, and other payments for protecting economic output. Kenya and IMF have additional program that aims to secure the next phase of response to the pandemic. This other project combines Extended Fund Facility with Extended Credit Facility to offer the country $2.4 billion low-cost loans that the country should repay in three years (IMF, 2021a). These initiatives have enabled the country to avoid investment and social project cuts. IMF (2014) findings proved the organization’s interest in Kenya’s economy as it monitors and reports its performance. 

The IMF staff sent on the monitoring mission reported that the country’s performance had improved in areas such as credit growth and practices within the investment contexts. Although the investigators detected a gradual devaluation of Kenyan currency, they explained that it could be due to the country’s participation in international currency markets. This report also noted major developments in Kenya such as the commencement of the project about the Standard Gauge Railway (SGR) which they believed was a significant initiative. With an overall focus on East Africa, the IMF staff stated that the railway project would improve integration in the region and cut on transportation costs. 

World Bank

The World Bank has a special focus on structural and financial sectors, reformation of social policies, better governance in African countries, alleviation of poverty, and enhanced management of the resources available to the public sector (United Nations, 2001). It, therefore, lends money to member countries to enhance economic adjustments in the long run. In Kenya and other African countries, the World Bank has shown substantial involvement in prevention of conflicts as well as controlling of diseases such as HIV/AIDS. Other than the involvement in HIPC, the Bank mobilizes the resources Kenya needs to organize social and physical infrastructure that help the country to reduce poverty and achieve sustainable development. World Bank’s projects in Kenya cover health, education, reconstruction in post-conflict, rural development, maintenance of water and sanitation, and conservation of natural resources (United Nations, 2001). 

The main goal of the World Bank is to support long-term economic advancement through poverty alleviation, financial support and technical aid that see the reformation of given sectors and investment projects. Examples of projects of the World Bank in Kenya include the construction of health centers and schools, provision of water and supply of electricity to rural areas, disease prevention, and environmental conservation (IMF, 2021). The Bank is concerned over availing of long-term assistance and its funds originate from both bond issuance and financing contributed by member countries.

In September 2020, the World Bank Board of Directors invested in an initiative to enhance transportation of goods and people in North-eastern Kenya (Muthembwa, 2020). This happened through approval of $750 million that was directed towards International Development Association. Apart from improved transportation, this financing improved digital connectivity and made social services available to more than three million people living around Isiolo-Mandera Regional Road Corridor. Furthermore, the Horn of Africa Gateway Development Project, a new operation, the World Bank plans to facilitate upgrading of another 365 kilometers of the Isiolo-Mandera Regional Road Corridor. The organization will as well finance reconstruction of spur roads up to 30 kilometers. Muthembwa (2020) also stated that the new project has additional offerings including embedding of fiber optic cables along the Regional Road Corridor, implementation of measures for promoting trade, availing of fundamental socio-economic infrastructure for residents, and improving preparedness for crises.

World Bank (2019) report indicated the organization’s focus on digital economy is a great way of propelling the growth of Kenyan economy and helping to balance rural and urban developments. Since 2016, the average rise in information and communications technology has been 10.8%. As a result, jobs have been created and this area appears to be a promising source of economic development (World Bank, 2019). In particular, the spread of digital skills in various school levels (primary, secondary and tertiary) are important for improving economic achievements of the country. For this reason, the report suggested that Kenyan government should focus on growing technological investments so that there are adequate infrastructure and personnel with expertise in this area. In the long-run, Kenya will gain a competitive edge in digital markets and in trade. 

World Bank (2019a) identified agriculture to be one of the key areas where government of Kenya needs to invest more funds. The report indicated that agriculture contributed up to 31.4% of poverty reduction and 21.9% (average growth between 2013 and 2017) towards gross domestic product (GDP). Moreover, the agricultural sector created employment opportunities for 56% of the labor force in 2017. World Bank (2019a) emphasized that apart from providing complete food security to the nation, agriculture also provides the largest amount of trade commodities that Kenya exports. Policies and practices from the World Bank to Kenyan government that encourage agricultural productivity are improving opportunities for agricultural financing, encourage farmers to use fertilizers, and minimize vulnerabilities of small farmers and make them prosperous agribusiness holders through structured commodities trading. Other recommended practices include investing in irrigation of crops and leading the establishment of powerful farmer organizations.

Joint Efforts of IMF and World Bank 

IMF and World Bank have often demonstrated joint participation in a number of projects that are intended to enable members attain sustainable development. Again, the two international organizations governors consult one another even as they share their opinions regarding the specific issues within international economics and finance sectors (IMF, 2021). This usually happens during annual meetings where the board of governors specify organizational priorities. The collaboration benefits both organizations as results from IMF’s country evaluations in the areas of economic situation and policies enable World Bank to determine the possible policy reforms and development projects to invest into. Reduction of debt burdens is an example of areas where both organizations work together. According to IMF (2021), the international organizations’ joint efforts promoted reduction of external debts for the poor countries with huge debts. They attained this through HIPC Initiative and Multilateral Debt Relief Initiative. Up to 2021, HIPC has offered around $76 billion towards debt-service relief by accepting debt relief requests of 36 out of 39 countries that qualified for this opportunity. Through collaboration of World Bank and IMF, Kenya and other low-income countries can still reach their development goals without debt accumulation. Together, these organizations conduct and present analyses of country debt sustainability as supported by Debt Sustainability Framework. IMF (2021) reported that World Bank and IMF formed Debt Service Suspension Initiative to enable IMF provide suspension of debt service to help the poorest nations withstand the serious effects of Covid-19 pandemic.  This initiative has seen the exclusion of over 40 countries and relief of more than $5 billion. Besides, the end date (originally 31 December 2020) has been pushed to June 2021. The collaboration enables these international organizations to track expenses, improve transparency of public debt, and encourage good borrowing practices. The two introduced Financial Sector Assessment Program in 1999. The program was intended to closely investigate financial systems of the countries of interest, reveal its strengths and weaknesses, and then offer proper policy recommendations. In 2015, they established Sustainable Development Goals to take the place that was formerly held the Millennium Development Goals (IMF, 2021). This was part of the 2030 Global Development Agenda. Both IMF and World Bank have committed to identification and implementation of relevant initiative to enable attainment of the new goals. In 2017, the IMF-World Bank Climate Change Policy Assignment strengthened climate change resilience. The focus was on examination of preparedness, vulnerabilities, and financing programs. At present, World Bank and IMF are promoting joint membership by strengthening tax systems within the developing nations. They are also working on G-20 Compact, which encourages private investments in Kenya and other African countries. 

Critique of the Operations of the Bretton Woods Organizations

At the time of launching the Sustainable Development Goals, IMF stated that it had the capacity to support the member countries attain the outlined objectives. However, Bird and Rowlands (2017) noted that since then, IMF has introduced a series of lending programs that may appear useful to the low-income countries in the short-term but could prove to be harmful in the long run. IMF initially operated Poverty Reduction and Growth Facility, which it later replaced with Enhanced structural adjustment Facility (ESAF). It later established Poverty Reduction and Growth Trust that came with three categories of lending windows (the Rapid Credit Facility, Extended Credit Facility, and Standby Credit Facility). These lending facilities could increase aid dependency and growth in debt burdens among the low-income economies but IMF still insists that the overall reason for introducing the facilities is to promote economic growth through maintenance of a stronger balance of payments. 

As indicated in the study by Bird and Rowlands (2017), IMF declared that it encountered significant problems in its attempt to establish connection with low-income countries. This was published in the 2005 Medium Term Financial Strategy. Although the later reforms appeared to address the issues identified by IMF, the issues may not have been addressed accurately because IMF’s programs have some indirect negative implications on the low-income economies such as of Kenya. According to Obamba (2013) the World Bank’s failures in areas such as revitalization measures is attributed to promotion of new era dependency, and neocolonialism, among others. The higher education enhancement and policy in Kenya and other Sub-Saharan African countries have been negatively influenced by the various policies issued by the World Bank. Obamba (2013) explained that the education lending received by sub-Saharan region in 2009 was $720 million, making this geographical location the second largest lender after Caribbean. This is one of the ways in which the international organizations encourage lending among the low-income countries.

It is true that the initiatives and projects by both the World Bank and IMF are meant to realize economic development (IMF, 2021; World Bank, 2019) but there are country specific factors that could lead to the ineffectiveness of implemented projects if the international organizations fail to place considerable attention on them. As it is Bird and Rowlands (2017) found a positive correlation between IMF’s concessional programs and growth potential in low-income countries. Therefore, World Bank and IMF must remember that every low-income country has its own economic issues and even if the issues are common, the level of severity is never the same so that they launch programs that are country-specific. There is need to recall a country’s first referral cause to determine the types of programs they are likely to agree to. Again, it is more likely for economies with very poor economic growth tendencies or those having significant debt growth levels and aid reliance to witness substantial positive impacts from the concessional projects by IMF (Bird & Rowlands, 2017). Moreover, a program with lower IMF financing has higher potential of generating positive impacts compared to one that is fully based on the organization’s funding. Still, these effects may vary across countries and Bird and Rowlands (2017) stated that these outcomes rely on the participation level of the country. Generally, the problem is that IMF funding targets countries with high level of resource constraints and there are lesser chances that minimizing dependency on IMF financing will do any good to the economy. There is still possibility that IMF aid reduces poverty to a certain level in low-income countries like Kenya but its operations could be more effective if the projects addressed of foreign aid issues. Therefore, it is more beneficial to utilize IMF initiatives alongside other aid donors. These will increase chances of achieving goals of SDGs (Bird and Rowlands, 2017). In other words, a country cannot achieve substantial economic development if it solely relies on IMF financing. 

Thomson, Kentikelenis and Stubbs (2017) indicated that institutions such like World Bank and IMF, set up fiscal measures that operate within the health policies of the developing nations and have continued to gain popularity. Thomson et al. (2017), however, argued that critics say that the structural adjustment loans that World Bank and IMF provide have huge social costs and they often do not succeed it promoting the attainment of macroeconomic sustainability. Furthermore, there is claim that the rigid fiscal objectives set by the structural adjustment funding only promote social spending   as the government will eventually exploit the social and health sectors in order to settle the incurred debts. Similar to Bird and Rowlands (2017), Thomson and colleagues see the attainment of Sustainable Development Goals to be close to impossible. In particular, Thomson et al. (2017) argued that the significant controlling of maternal and neonatal death levels may not be achieved by 2030 under these circumstances. In 2015, for instance, Sub-Saharan Africa reported 49.6% of global child mortality rates (under five years). Thomson et al. (2017) explained that the adjustment loans have direct impact on the health expenditure offered by the government leading to alteration of in the quality and amount of services offered to mothers and their young ones. In other words, as the government reduces the social spending so as to achieve fiscal goals, it minimizes fiscal opportunity which should be utilized by the health systems. In turn, the concerned nation start to face shortages in medical supply and personnel, and the traditional (birth attendant) forms of care start to resurface. In Sub-Saharan Africa, which includes Kenya, a decline in government spending greatly harms provision of health services for HIV/AIDS patients (Thomson et al., 2017). If the structural adjustments instead affect the healthcare workforce, health care institutions will experience some adverse effects on health quality offered to the general populations and the quantity available for children and mothers. The one way in which adjustment loans affect the healthcare workers is through decline in wages (Thomson et al., 2017). Consequently, they may move to other better paying institutions.