By NATION Reporter

The high failure rate among foreign-funded projects has been blamed on misplaced donor demands.

Their insistence that supplies be obtained from the countries in which they are based was a major cause of failure, Vice-President George Saitoti said yesterday.

This, he said, had resulted in companies buying obsolete equipment at inflated prices.

He urged donors to involve the recipients in formulating loan conditions instead of imposing terms on them.

"Developing countries have little choice in the matter since the money is given at competitive rates. The result is that projects maintenance beyond launch is difficult," said Prof Saitoti.

Speaking at the start of an international conference on finance and development at a Nairobi hotel, the Vice-President urged donors to employ the same stringent conditions imposed on governments when dealing with NGOs, which, he said, had become important channels for foreign cash inflows.

He said the expected sale by the Government's 49-per cent stake in Telkom Kenya would play a crucial role in arresting the Sh170 billion domestic debt.

The forum, on the theme "Evidence and Policy Issues", is organised by the Kenya Institute of Public Policy Research and Analysis (Kippra) and the European Finance and Development Research Programme, the latter a research consortium of several British universities funded by Department for International Development.

The two-day conference brings together Government officials, researchers, company executives, lecturers and NGO employees.

Economist Dr Njuguna Ndung'u argued that the control of the local banking industry by a few players "who worked together" had frustrated the state's monetary policies.