KENYA

1. KENYA Pressing Problems and Promising Solutions

2. Outline • Overview and Statistical Indicators • Political Issues • Economic Issues • Foreign Relations Issues • Humanitarian Issues • Policy Recommendations • Reasons For Hope

3. Overview • Independence: 1963 • Population: 37 million (California 36 million) • Population Density: 59 per squared km (US 31) • Government • Republic • Unicameral Legislature • Multi-Party • President & Legislators serve 5 year terms • Next election December 27th

4. Economic Indicators • Income Inequality • Top 10% control 42% of total income (Gini: 44.5) • US: Top 10% control 48.5% (Gini: 45) • Population Below Poverty Line: 50% (US 12%) • GDP: $41.48 Billion (92/229) • Unemployment Rate: 40% (187/199) • Top Industries: Small Scale Consumer Goods, Agriculture, Horticulture, Oil Refining, Tourism • Current Account: -$1.119 billion (118/163) • Exports: Tea, Horticultural Products, Coffee, Petroleum Products • Imports: Machinery and Transportation Equipment, Petroleum Products, Motor Vehicles, Iron and Steel • Aid: $768.3 million

5. GDP Growth

6. Inflation

7. Corruption Perception Index

8. POLITICS: Historical Context • Colonization • Arab occupation 8th century • Portugal in 1498 • Britain in 1895 • Independence: 1963 • Multiparty general elections: 1992

9. Jomo Kenyatta[1st President of Kenya 1963-78]

10. Daniel Toroitich Arap Moi[1978-2002]

11. President Mwai Kibaki[2002- ? ]

12. POLITICS: Contemporary Problems • Censorship of media outlets • Unequal representation of minority groups • Corruption

13. Media Censorship • 2003 crackdown on unregistered newspapers and radio station harassment • 2006 raid of Standard media group press Fear within populace and Western donors

14. Minority Group Representation • Political representation • Unequal distribution of land and resources • Land clashes of 1993 • Risk of ethnic conflict • Kikuyu 22%, Luhya 14%, Luo 13%, Kalenjin 12%, Kamba 111%, Kisii 6%, Meru 6%, other African 15%, non-African 1% • Over 40 ethnic groups, each of which speaks a more or less distinct language or dialect.

15. Corruption • Corruption Perception Index • [see chart] • Anti-Corruption Commission 2003 • http://www.kacc.go.ke/ • Corruption scandals of 2006

16. ECONOMY: History • After Independence, Rapid Growth • 1963-1973: 6.6% GDP growth/year • Small scale agriculture, FDI • Stagnation 1974-2002 • 1997-2002: 1.5% GDP growth/ year • Poor agricultural polices, poor credit, import substitution • Rebound 2003-Present • 2003-2006: 9.9% GDP Growth/ year • Privatization, export-led growth, removal of government controls, stable monetary and fiscal policies

17. ECONOMY: Key Issues • Corruption • Infrastructure • Privatization • Trade Barriers

18. CORRUPTION • Hurts Foreign Direct Investment • Low Investor Confidence • Aid Agencies Flee • World Bank, IMF, Foreign Countries delay or cancel loans • Inefficient Markets • Underground Markets distort prices, create economic inefficiency • Financial Support Not Passed Down • Aid does not make it to those who need it most • Business Distrust of Government • Government seen as enemy to growth, not facilitator • Creates and Sustains Income Inequality

19. INFRASTRUCTURE • Poor Transportation, Communication Infrastructure • Neglect of Rural Areas • Lack of Funding, Investment Development Outside Agriculture • Agriculture Mis-Practice • Poor Land Use Policies • Little Education about Best Practices • Overgrazing, Irrigation Issues

20. PRIVATIZATION • Import Substitution • Government Controlled Business • Wide-spread Government Regulation of Business • High inefficiency, Poor Business and Investor Environment • Move Towards Privatization • Deregulation of Railroad, Air Travel, Electricity • Reduction in amount of Civil Servants, Business Regulation • Continued Deregulation Needed

21. TRADE BARRIERS • Developed Countries High Tariffs on Imported Agricultural Goods Hurts Kenya • Little Progress in Reducing Tariffs at Doha • Need for Kenyan Industry to Diversify (Fewer Subsistence Farmers) • Need for Farmers to network (take advantage of economies of scale, access to larger markets, increased information transmission)

22. Foreign Relations • Create Regional Stability to Ensure Own Stability • Worked in Sudan to stabilize Southern Region • Provided UN Peacekeepers to African Conflicts in Somalia

23. Foreign Relations • Credit Worthy African Nation • The IMF Identifies Kenya as having a positive Credit Worthiness • Though they have massive debt for a developing nation, it has been paid back on time • Amassed SDR 136.4 Million in Loans from the IMF

24. Foreign Relations • Kenyan/US Relations • Very Strong Relationship since the 1998 Nairobi bombing • Ally in the war on Terrorism • Kenya is involved in the rebuilding of Afghanistan and Iraq • African Union has some contempt for Kenya for its strong ties to the US

25. Humanitarian Obstacles to Development • Health • Education • Women’s Rights • Education • Property Rights

26. Health • HIV/AIDS Pandemic • Health Care

27. HIV/AIDS • Lowers productivity • Treatment is inaccessible and expensive • Women are being forced to fill untraditional roles as men are lost to the disease

28. Insufficient funding Inadequate infrastructure makes it inaccessible Shortage of trained health workers Lack of money in the public sector reinforces inequality as professionals move to the private sector to make money Health Care

29. Education • Limited access • Especially for women • Most inaccessible in the North Eastern Province

30. Low Income • No fees for primary education • Instead there are funds, books, and clothes • Families can’t afford to send all or any children

31. Limited Access for Girls • When forced to choose, families send sons • Sons are the main recipients of family assets • Cultural • Especially in the North Eastern Province • Islamic influence has set up separate education system that promotes submissive behavior in girls

32. Other Problems • Environment • Teachers perpetuate gender stereotypes • Girls are not given access to subjects that will get them absorbed into the labor market • Physical and sexual abuse

33. Property Rights • Women are filling untraditional roles as men are lost to HIV/AIDS or move to urban areas in search of paid employment • Women have less access to education • Women cannot inherit land, are given poor plots of land, and can be evicted without cause

34. Repercussions • Low agricultural production, food shortages, underemployment, and rural poverty • Women are asked to fill men’s roles without the same resources • Slows development

35. Corruption Reduction: Key Elements • Strengthening institutional structure • Enforcing accountability and transparency • Educating the populace about corruption

36. SOLUTIONS: Corruption • Case Study: TI Teachers Service Commission May 2006 • TI integrity study recommendations: • Increase public education • Cooperate with outside actors (KACC, T.I.-Kenya) • Publicize anti-corruption policies & punishment of offenders • Develop monitoring and evaluating systems • Hire based on publicized ‘objective’ criteria/ audit and review existing staff • Lessen the ‘suspicion divide’ between junior and senior officials

37. SOLUTIONS: Corruption • TI integrity study recommendations continued • Strengthen Integrity Division • Hire officers trained by KACC • Remove ALL former officers and conduct transparent recruitment • Conduct corruption internal risk assessment to guide policy • Disseminate Code of Ethics

38. SOLUTIONS: Corruption • Conclusion • Applicability of recommendations to other institutions • Importance of strong judiciary for enforcement • Increase judges salaries • Expedite judicial process • Eliminate monopolies of prosecution agencies • Interconnectedness of problem

39. SOLUTIONS: Privatization/Devolution • Privatization • Less Government Control over Business Sector • Reduced Government Regulation, Red Tape, Reduction of Civil Servants • Restructures Incentives in favor of business • Devolution • More Local Control, Less Centralized • Give Localities more sovereignty, allows them to directly address own problems, improves efficiency • Already Occurring: Constituency Development Fund, Local Authorities Transfer Fund

40. SOLUTIONS: Foreign Relations • Take A Leading Role in East African Affairs • Stabilize Violent Regions to North • Trading Partners, Regional Markets • Economies of Scale, Leverage in Negations with Developing Nations • Responsible Management of Aid Organization Monies • Encourages More Aid • More Sovereignty

41. SOLUTIONS: Other • Infrastructure • Utilize money saved on corruption for investment in transportation/communication infrastructure • Especially to Northeast Region and other rural regions • Lack of infrastructure stalling economic development, reducing access to medical and emergency care, slowing information transmission • Agriculture/Environment • Need to Educate Farmers on “Best Practices” • Bring Farmers together- spread information, economies of scale • Education • Curriculum change • Streamline education spending to improve efficiency and reallocate resources to other sectors (healthcare)

42. Reasons for Hope • Australian company and China funding search for oil • Fiber optic internet cable • Recent success for Kenya Anti-Corruption Commission • Successful by-elections in May • Nairobi as regional hub • Recent macroeconomic growth, surging bond and stock market