KENYAPressing Problems and Promising Solutions

Outline

Overview and Statistical Indicators Political Issues Economic Issues Foreign Relations Issues Humanitarian Issues Policy Recommendations Reasons For Hope

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

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

GDP Growth

Inflation

Corruption Perception Index

1 Finland 9.620 Belgium 7.3  Chile 7.3  USA 7.3142 Angola 2.2

  Kenya 2.2  Kyrgyzstan 2.2  Nigeria 2.2  Pakistan 2.2  Sierra Leone 2.2  Tajikistan 2.2  Turkmenistan 2.2160 Guinea 1.9  Iraq 1.9  Myanmar 1.9163 Haiti 1.8

POLITICS: Historical Context

Colonization Arab occupation 8th century Portugal in 1498 Britain in 1895

Independence: 1963

Multiparty general elections: 1992

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

Daniel Toroitich Arap Moi[1978-2002]

President Mwai Kibaki[2002- ? ]

POLITICS: Contemporary Problems Censorship of media outlets

Unequal representation of minority groups

Corruption

Media Censorship

2003 crackdown on unregistered newspapers and radio station harassment

2006 raid of Standard media group press

Fear within populace and Western donors

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.

Corruption

Corruption Perception Index [see chart]

Anti-Corruption Commission 2003 http://www.kacc.go.ke/

Corruption scandals of 2006

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

ECONOMY: Key Issues

Corruption Infrastructure Privatization Trade Barriers

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

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

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

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)

Foreign Relations

Create Regional Stability to Ensure Own Stability Worked in Sudan to stabilize Southern

Region Provided UN Peacekeepers to African

Conflicts in Somalia

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

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

Humanitarian Obstacles to Development

Health Education Women’s Rights

Education Property Rights

Health

HIV/AIDS Pandemic Health Care

HIV/AIDS

Lowers productivity Treatment is inaccessible and expensive Women are being forced to fill

untraditional roles as men are lost to the disease

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

Education

Limited access Especially for women Most inaccessible in the North Eastern

Province

Low Income

No fees for primary education Instead there are funds, books, and

clothes Families can’t afford to send all or any

children

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

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

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

Repercussions

Low agricultural production, food shortages, underemployment, and rural poverty

Women are asked to fill men’s roles without the same resources

Slows development

Corruption Reduction: Key Elements Strengthening institutional structure Enforcing accountability and

transparency Educating the populace about corruption

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

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

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

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

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

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)

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