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

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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

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GDP Growth
6
Inflation
7
Corruption Perception Index
1 Finland 9.6
20 Belgium 7.3
  Chile 7.3
  USA 7.3
142 Angola 2.2
  Kenya 2.2
  Kyrgyzstan 2.2
  Nigeria 2.2
  Pakistan 2.2
  Sierra Leone 2.2
  Tajikistan 2.2
  Turkmenistan 2.2
160 Guinea 1.9
  Iraq 1.9
  Myanmar 1.9
163 Haiti 1.8
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POLITICS Historical Context

• Colonization
• Arab occupation 8th century
• Portugal in 1498
• Britain in 1895
• Independence 1963
• Multiparty general elections 1992

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Jomo Kenyatta1st President of Kenya 1963-78
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Daniel Toroitich Arap Moi1978-2002
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President Mwai Kibaki2002- ?
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POLITICS Contemporary Problems

• Censorship of media outlets
• Unequal representation of minority groups
• Corruption

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Media Censorship

• 2003 crackdown on unregistered newspapers and
  radio station harassment
• 2006 raid of Standard media group press
• ?Fear within populace and Western donors

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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.

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Corruption

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

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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

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ECONOMY Key Issues

• Corruption
• Infrastructure
• Privatization
• Trade Barriers

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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

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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

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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

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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)

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Foreign Relations

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

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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

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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

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Humanitarian Obstacles to Development

• Health
• Education
• Womens Rights
• Education
• Property Rights

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Health

• HIV/AIDS Pandemic
• Health Care

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HIV/AIDS

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

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Health Care

• 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

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Education

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

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Low Income

• No fees for primary education
• Instead there are funds, books, and clothes
• Families cant afford to send all or any children

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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

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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

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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

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Repercussions

• Low agricultural production, food shortages,
  underemployment, and rural poverty
• Women are asked to fill mens roles without the
  same resources
• Slows development

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Corruption Reduction Key Elements

• Strengthening institutional structure
• Enforcing accountability and transparency
• Educating the populace about corruption

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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

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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

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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

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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

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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

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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)

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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