The German Ambassador has described Kenya as the fastest collapsing economy in Africa after Zimbabwe.

Whereas the Ugandan and Tanzanian economies were growing at 5 per cent, Kenya's has been declining for the last few years, says Mr Jurgen Weerth

In Kenya, he said, the President, the cabinet and the civil service wielded the power to thwart efforts by citizens and the private sector to initiate progress.

He was speaking at Mombasa's Aga Khan Hall during the annual meeting of the local chapter of the National Chamber of Commerce and Industry.

The ambassador said, however, that, although the Government cannot control world food prices and rainfall, it had only half-heartedly responded to the people's demands.

He said President Moi had last Tuesday stated in Arusha during the EAC summit meeting that Africans needed to concentrate on basic issues such as growth and food security and should not be distracted by talk of democracy and corruption, which, he said, were even more sophisticated in the West.

The envoy said that while he did not dispute the need to concentrate on growth and food security, improving democratic institutions and addressing deficiencies like corruption are prerequisite to growth and food security.

He cited the 1997 clashes at the Coast, saying economic and political reforms went hand-in-hand. The clashes upset tourism, which was yet to recover.

The envoy said the most important things for Kenyans were political and social stability, good economic governance and greater participation by the private sector in economic development.

Without political and social stability, the envoy said, Kenya would continue deteriorating economically as investments drop.

There was no hidden agenda in the conditions attached to Western lending, he alleged.

"Donors have no hidden agenda," he said, adding that the official West believed certain political and economic conditions must prevail for their aid to make a difference.

Blaming donors for the ills facing Kenya, he said, would not solve anything.

Only social order drawn on the basis of democratic participation and the rule of law, he said, could offer an environment, which guarantees the lasting realisation of human rights and peace in which a quality of rights and dignity prevail.

Mr Weerth said foreign companies would only invest in Kenya if they saw good prospects of a return on investments.

He said the private sector and not the Government would be the main source of capital needed to secure the country's future.

The ambassador said aid and large prestige projects without participation of the affected population cannot fulfil desired objectives.