Kenya. Country Profile 2005

Transcription

1 Country Profile 2005 Kenya This Country Profile is a reference work, analysing the country s history, politics, infrastructure and economy. It is revised and updated annually. The Economist Intelligence Unit s Country Reports analyse current trends and provide a two-year forecast. The full publishing schedule for Country Profiles is now available on our website at The Economist Intelligence Unit 15 Regent St, London SW1Y 4LR United Kingdom

2 The Economist Intelligence Unit The Economist Intelligence Unit is a specialist publisher serving companies establishing and managing operations across national borders. For over 50 years it has been a source of information on business developments, economic and political trends, government regulations and corporate practice worldwide. The Economist Intelligence Unit delivers its information in four ways: through its digital portfolio, where its latest analysis is updated daily; through printed subscription products ranging from newsletters to annual reference works; through research reports; and by organising seminars and presentations. The firm is a member of The Economist Group. London The Economist Intelligence Unit 15 Regent St London SW1Y 4LR United Kingdom Tel: (44.20) Fax: (44.20) london@eiu.com Website: New York The Economist Intelligence Unit The Economist Building 111 West 57th Street New York NY 10019, US Tel: (1.212) Fax: (1.212) newyork@eiu.com Hong Kong The Economist Intelligence Unit 60/F, Central Plaza 18 Harbour Road Wanchai Hong Kong Tel: (852) Fax: (852) hongkong@eiu.com Electronic delivery This publication can be viewed by subscribing online at Reports are also available in various other electronic formats, such as CD-ROM, Lotus Notes, on-line databases and as direct feeds to corporate intranets. For further information, please contact your nearest Economist Intelligence Unit office Copyright 2005 The Economist Intelligence Unit Limited. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of The Economist Intelligence Unit Limited. All information in this report is verified to the best of the author s and the publisher s ability. However, the Economist Intelligence Unit does not accept responsibility for any loss arising from reliance on it. ISSN Symbols for tables n/a means not available; means not applicable Printed and distributed by Patersons Dartford, Questor Trade Park, 151 Avery Way, Dartford, Kent DA1 1JS, UK.

3 SUDAN ETHIOPIA Lokitaung Mandera RIFT VALLEY Lodwar L. Turkana Moyale UGANDA Marsabit EASTERN Wajir Kitale Maralal KENYA NORTH EASTERN SOMALIA Bungoma Homa Bay Lake Victoria WESTERN Eldoret Isiolo Kakamega Nyahururu Nanyuki Meru Kisumu Londiani Nakuru Kericho Nyeri CENTRAL Embu Kisii Naivasha Muranga NYANZA Main railway Main road International boundary Province boundary Main airport Capital Major town Other town August 2005 Narok RIFT VALLEY Magadi L. Baringo NAIROBI TANZANIA Thika Namanga Kitui Machakos EASTERN Taveta Ath Tana R. i R. Tsavo Voi Galana R. Kwale COAST Garissa Garsen R. Tana Kilifi Mombasa Ungwana Bay Malindi Kipini Lamu Pate I. 0 km miles ' The Economist Intelligence Unit Limited 2005 Pemba Channel INDIAN OCEAN

4 Comparative economic indicators, 2004 Gross domestic product (US$ bn) Gross domestic product per head (US$) Kenya Tanzania Uganda Ethiopia Mauritius Madagascar Rwanda Eritrea Somalia Seychelles Burundi Djibouti Comoros Seychelles Mauritius Djibouti Comoros Kenya Uganda Eritrea Tanzania Madagascar Rwanda Somalia Ethiopia Burundi 8,818 5, Sources: Economist Intelligence Unit estimates; national sources ,000 Sources: Economist Intelligence Unit estimates; national sources. Gross domestic product (% change, year on year) Consumer prices (% change, year on year) Ethiopia Tanzania Uganda Burundi Madagascar Kenya Mauritius Rwanda Djibouti Comoros Somalia Eritrea Seychelles Eritrea Somalia Madagascar Rwanda Kenya Burundi Mauritius Comoros Tanzania Seychelles Uganda Ethiopia Djibouti Sources: Economist Intelligence Unit estimates; national sources Sources: Economist Intelligence Unit estimates; national sources. Country Profile The Economist Intelligence Unit Limited 2005

5 Kenya 1 Contents Kenya 3 Basic data 4 Politics 4 Political background 5 Recent political developments 9 Constitution, institutions and administration 10 Political forces 12 International relations and defence 15 Resources and infrastructure 15 Population 16 Education 17 Health 18 Natural resources and the environment 18 Transport, communications and the Internet 21 Energy provision 22 The economy 22 Economic structure 24 Economic policy 29 Economic performance 31 Economic sectors 31 Agriculture 34 Mining and semi-processing 35 Manufacturing 36 Construction 36 Financial services 38 Other services 39 The external sector 39 Trade in goods 40 Invisibles and the current account 41 Capital flows and foreign debt 43 Foreign reserves and the exchange rate 45 Regional overview 45 Membership of organisations 53 Appendices 53 Sources of information 55 Reference tables 55 Population 55 Labour force 55 Transport and communications 56 National energy statistics 56 Government finances

6 2 Kenya 57 Government revenue and expenditure 57 Money supply 57 Interest rates 58 Gross domestic product 58 Nominal gross domestic product by expenditure 59 Gross domestic product by sector 59 Consumer prices 59 Average wage earnings per employee 60 Agricultural production 60 Forestry and fishing 61 Minerals production 61 Industrial production 61 Construction statistics 62 Banking statistics 62 Tourism statistics 62 Import and export prices 63 Exports by value 63 Main exports by volume 64 Imports by value 64 Main trading partners 65 Balance of payments, IMF series 66 External debt, World Bank series 66 Net official development assistance 67 Foreign reserves 67 Exchange rates

7 Kenya 3 Kenya Basic data Land area Population Main towns Ethnic groups Climate Weather in Nairobi (altitude 1,820 metres) Languages Measures Currency Fiscal year Time Public holidays 569,259 sq km 28.7m (1999 national census), 31.9m (2003 mid-year estimate) Population in 000, 1999 census Nairobi (capital) 1,346 Mombasa 465 Kisumu 185 Nakuru 163 African Kikuyu 21%, Luhya 14%, Luo 13%, Kalenjin 11%, Kamba 11%, Kisii 6%, Meru 5%. Non-African Asian, European, Arab 1%. Religions: Indigenous beliefs 10%, Protestant 40%, Roman Catholic 30%, Muslim 20% Tropical Hottest month, February, C; coldest month, July, C; driest month, August, 24 mm average rainfall; wettest month, April, 266 mm average rainfall English, Swahili and more than 40 local ethnic languages Metric system Kenya shilling (KSh)=100 cents. KSh20=1 Kenya pound (K ). Average exchange rate in 2004: KSh79.2:US$1. Exchange rate on 22nd August 2005: KSh75.7:US$1 July 1st-June 30th 3 hours ahead of GMT January 1st; Good Friday; Easter Monday; May 1st; June 1st; Eid ul Fitr; Christmas holiday, December 25th-26th

8 4 Kenya Politics Kenya s political environment was transformed by the landslide victory of Mwai Kibaki and his National Rainbow Coalition (NARC) in the presidential and legislative elections held on December 27th The Kenya African National Union (KANU) was pushed into opposition for the first time since independence in 1963, and Daniel arap Moi s 24-year reign was brought to a close. The elections were described as largely free and fair, with little of the violence and intimidation that marked the previous two polls in the 1990s. This bodes well for Kenya s future elections. Mr Kibaki and his NARC government have confronted major political and economic challenges, including ethnic divisions, weak and corrupt institutions, a run-down infrastructure and a stagnant economy. Government performance has been severely hampered by in-fighting within NARC, particularly over the proposed new constitution, and Mr Kibaki was obliged to bring members of the opposition into government in mid-2004 in order to maintain his majority in parliament. Despite the political divisions, initial economic reforms have been enacted and the economy is responding. Kenya s next presidential and legislative elections are scheduled to take place in December Political background Before independence Early years of independence The coastal region of what is now modern Kenya has developed through more than five centuries of Indian Ocean trade, evolving into a sophisticated Swahili culture with strong Arabic influences. In the mid-19th century trade to the interior opened up the tribal lands of the Kikuyu, Luhya, Luo, Kalenjin and Kamba, which remain the five largest ethnic groups. Kenya was declared a British protectorate in 1895 and white settlement started in the early 1900s. The first genuine African nationalist movement, the Kenya African Union (KAU), was established in 1944, with Jomo Kenyatta, a Kikuyu, as its president. He was jailed in 1953; a year after the Mau Mau a secret society made up largely of Kikuyu launched a guerrilla campaign against white settlers. Many thousands died during the Mau Mau rebellion, which lasted until 1956, although fewer than 50 were white settlers. A constitutional conference was held in London in 1960, leading to a transitional constitution permitting the formation of political parties and giving Africans a comfortable majority on the Legislative Council. KANU was formed, dominated by the Kikuyu and the Luo. Other politicians, wary of Kikuyu-Luo hegemony, formed the Kenya African Democratic Union (KADU). Mr Kenyatta was released in August 1961, led KANU to victory in the legislative election of May 1963, and was appointed prime minister. A formal declaration of independence followed in December Kenya became a republic in December 1964, with Mr Kenyatta as its first president. The entire KADU membership had earlier defected to KANU, thus turning Kenya into a de facto one-party state. Mr Kenyatta was elected unopposed for a third presidential term in September He died in August 1978 at the age of 82. The presidency passed to Daniel arap Moi, a Kalenjin from the Rift Valley region. A constitutional amendment in 1982 turned

9 Kenya 5 Kenya into a de jure one-party state. A coup attempt led by air-force personnel, apparently with strong Luo backing, was foiled later that year. Moi era During the 1980s Mr Moi s government became increasingly intolerant of political dissent, and constitutional amendments substantially increased the president s powers. In 1988 Mr Moi was re-elected for a third term, but widespread voting irregularities helped to discredit the one-party system, and calls mounted for a return to a multiparty system. Following strong pressure from donors and popular protests in Nairobi the government relented, and in December 1991 parliament scrapped the constitutional amendment making Kenya a one-party state. However, despite widespread initial support for the new opposition parties, Mr Moi took advantage of growing rivalry between them. Combined with his control over the state-run media and the electoral commission, he managed to win the 1992 and 1997 elections with relative ease. The opposition vote, although large, was hopelessly split. Recent political developments KANU splits in the run-up to the 2002 election The constitution barred Mr Moi from standing again in 2002, but his attempt to dictate the KANU succession weakened the party and contributed to its defeat. Mr Moi negotiated the merger of KANU and the opposition National Democratic Party (NDP), led by Raila Odinga, in March 2002, to broaden its appeal. However, in August 2002 Mr Moi alienated the NDP and other KANU factions by appointing Uhuru Kenyatta, the inexperienced, 41-year-old son of the country s first president, as KANU s presidential candidate. The NDP walked out of KANU, taking with it many KANU stalwarts, to form the Liberal Democratic Party (LDP). At the same time, several opposition parties united under the banner of the National Alliance of Kenya (NAK), led by Mwai Kibaki. The LDP joined with the NAK to form the National Rainbow Coalition (NARC) and confirmed Mr Kibaki as its presidential candidate. However, a secret Memorandum of Understanding between the two NARC segments purportedly guaranteed the LDP an equal share of power and responsibility in the new government. Mr Kibaki s supposed failure to fulfil this promise fuelled a bitter dispute between the two NARC partners, which has never been fully resolved. Presidential election, Dec 2002 (% of vote) Emilio Mwai Kibaki (National Rainbow Coalition) 62.2 Uhuru Kenyatta (Kenya African National Union) 31.3 Simeon Nyachae (Forum for the Restoration of Democracy-People) 5.9 James Orengo (Social Democratic Party) 0.4 David Ng ethe (Chama Cha Uma) 0.1 Sources: Daily Nation. Opposition secures an overwhelming election victory Mr Kibaki won a landslide victory in Kenya s December 2002 presidential election, while NARC had a similarly convincing win in the parliamentary poll. Not only did this end the stagnant and corrupt presidency of Mr Moi, but it also gave Kenya a new ruling party for the first time since independence in Mr Moi s decision to stand down after electoral defeat, rather than subvert

10 6 Kenya the will of the people, partly helped to restore his image, and he has been ignored subsequently rather than pursued for his past crimes. Mr Kibaki, beaten into second place in the previous two elections, gained 3.65m votes double the number for KANU s Uhuru Kenyatta and NARC took 125 of the 210 directly elected seats in parliament, compared with KANU s 64 seats. Some 60% (over 10m) of registered voters cast a ballot. Despite some reports of irregularities, the poll was described as mostly free and fair by local and international observers, and, unlike the previous two elections, was not marred by widespread political violence and intimidation. Parliamentary election, Dec 2002 (seats) Directly elected Appointed Total National Rainbow Coalition Kenya African National Union Forum for the Restoration of Democracy-People Safina 2 2 Sisi Kwa Sisi 2 2 Forum for the Restoration of Democracy-Asili 2 2 Shirikisho 1 1 Ex-officio 2 Total Sources: Daily Nation. The new president faces many challenges NARC factions disagree about the proposed new constitution The main challenge facing Mr Kibaki has been to fulfil NARC s manifesto commitments to making primary-level education free, beating corruption, adopting a new constitution and reviving the economy, all while holding the coalition together. NARC is an unprecedented alliance of diverse interests (by Kenyan standards), which cuts across the boundaries of ethnicity and ideology. The main spur to unity was the electoral defeat of Mr Moi, but once this had been achieved the forces acting on NARC have tended to promote fragmentation rather than unity. It soon became clear that NARC was seriously divided between the largely pro- Kibaki NAK (the original opposition grouping) and the LDP, under its de facto leader, Mr Odinga, which had defected from KANU. The two factions profoundly disagree over the proposed new constitution, and in particular over whether Kenya should stick with a presidential style of government, as has been the case since independence the NAK view or switch to a primeministerial system, as favoured by the LDP. Kenya does not currently have a prime minister, but the final draft constitutional proposals that emerged from the National Constitutional Conference (held at Bomas, a town outside Nairobi) in March 2004 call for the creation of such a position, with strong executive powers. The LDP s stance is partly motivated by the belief that it is owed the prime-ministership under the terms of the pre-election Memorandum of Understanding. The NAK opposed a powerful presidency during the Moi era, but is now keen to preserve Mr Kibaki s authority. The Kibaki camp believes that having twin centres of power would be a recipe for conflict and confusion. Mr Kibaki had originally promised a new constitution within 100 days of being elected, but this was a forlorn hope and the deadline has been extended

11 Kenya 7 several times. Under the latest plan a new constitution is due by the end of 2005, although further delays are possible (see Constitution, institutions and administration). There is also division about the nature of the coalition Mr Kibaki brings opposition elements into government LDP MPs return to the fold NARC factions are also divided over whether the coalition should merge into a single entity or retain its separate components. Mr Kibaki wishes to create a single NARC entity (with himself as leader), but the LDP is strongly opposed, as are some elements in the NAK, such as the Forum for the Restoration of Democracy-Kenya (Ford-Kenya) and Charity Ngilu s National Party of Kenya (NPK): they all have strong regional bases and fear losing their identity within a single national organisation. The Kibaki camp called for grassroots NARC elections in February 2005, but shelved the issue owing to opposition from other factions, including a court challenge. The LDP also planned its own elections in June 2005 but has postponed them for fear of exacerbating divisions within the party. Exactly what NARC is and who can claim the name remains an open question, and will become clearer only in the build-up to the 2007 election. Coalition in-fighting over the constitution, the Memorandum of Understanding and the future of NARC has spawned a climate of political uncertainty and made it more difficult for the president to push forward his legislative agenda, hindering the drive towards improved governance. Mr Kibaki, confronted by defections from the LDP ranks, reshuffled his cabinet in June 2004, bringing in elements from the opposition. The influx comprised the Forum for the Restoration of Democracy-People (Ford-People) and individual KANU members of parliament (MPs), but it can hardly be described as a government of national unity, as the regime has sought to do. Mr Kibaki demoted, but did not sack, several LDP ministers, but despite this snub the party opted to remain in NARC (as it has consistently done). The reshuffle confirmed that Mr Kibaki would not implement the pre-election Memorandum of Understanding with the LDP, although some LDP ministers have clearly moved into the Kibaki camp. The reshuffle achieved its main aim of restoring the president s parliamentary majority, thereby giving him far greater (though not total) control over the legislative agenda. Another feature of the reshuffle was the relative victory of the old guard over the young Turks. There are now several ministers over 70 years old, including the president himself, but whether or not the experience they offer is a positive force is a moot point. Although the reshuffle strengthened Mr Kibaki s position, tension between his supporters and the LDP continued to mount in 2005 and it seemed as if the long-mooted formal NARC split would finally happen, particularly when the LDP was largely excluded from the new parliamentary select committee on the constitution (PSCC) that was named in March However, in a surprise move, LDP MPs announced in June 2005 that they were returning to the government fold and that the rebel MPs would switch back to the government benches after a year away. The LDP was reluctant to lose its association with the NARC name (which still seems to have some resonance with voters), and was fearful that pro-government LDP ministers would desert the party. Although the LDP promises to play a more constructive role in government, it still remains far away from the Kibaki camp over the constitution, however. The

12 8 Kenya rapprochement may only be temporary: Mr Odinga described it as a tactical retreat. Important recent events December 2002 Mr Kibaki s landslide victory in Kenya s December 2002 presidential election accompanied by a similarly convincing win for the National Rainbow Coalition (NARC) in the parliamentary election signals a major shift in Kenya s political environment. January 2003 The new government quickly meets its manifesto commitment to providing free primary-level education. March-October 2003 NARC takes initial action against corruption by appointing the Goldenberg Commission of Inquiry into funds looted from the Central Bank of Kenya, passing two anti-corruption laws and sacking almost half the top judges. November 2003 The IMF awards Kenya a new poverty reduction and growth facility (PRGF), worth US$252m over three years, which unlocks other forms of multilateral and bilateral funding. Donors in the consultative group pledge over US$4bn in support of the economic recovery programme. March 2004 The National Constitutional Conference releases its final zero draft, based on a separation of executive powers between the president and a putative prime minister. Those within NARC who are loyal to the president, Mwai Kibaki, oppose the zero draft, although the Liberal Democratic Party (LDP) supports it. The constitutional court rules that any new constitution must be subject to referendum. June 2004 Mr Kibaki reshuffles his cabinet, demoting LDP ministers and bringing in members of the opposition in order to build a new majority in parliament. The move is successful, but the situation remains volatile and the parliamentary arithmetic uncertain. August-December 2004 The EU and the IMF defer budget support because of worries about ongoing corruption. The EU suspension remains in place, although the IMF endorsed the first year of the PRGF in December 2004 and released promised funds. January 2005 Uhuru Kenyatta is confirmed as leader of the Kenya African National Union (KANU) after internal elections, but these prove divisive and fuel an ongoing row with the loser, Nicholas Biwott. April 2005 At the latest Consultative Group (CG) meeting, donors confirm that promised funds are still available, but only if the government takes firm action on corruption.

13 Kenya 9 May 2005 Revised GDP data show the economy growing much faster than expected, providing a boost to the government, whose record on fulfilling its manifesto has been patchy. June 2005 The LDP ends its rebellion within NARC, and rebel members of parliament return to the government benches, but the rapprochement may be only temporary, particularly given the ongoing dispute over the constitution. July 2005 The consensus bill on the constitution is adopted, giving parliament the power to amend the zero draft. It is likely that many presidential powers will be preserved. The Kenyan public will give their final verdict in a referendum due by the end of the year. Constitution, institutions and administration The president has wideranging powers Constitutional reform proves controversial and slow moving Under the current constitution a president can serve for two five-year terms only. The constitution was drawn up at independence and draws heavily on English law, although it has been amended more than 30 times. The constitution gives the president extensive powers and is not well adapted to multiparty politics, despite the repeal in December 1991 of Section 2a, which had formalised the one-party state. Under Mr Moi and his predecessor, Mr Kenyatta, the constitutional powers of the presidency were sharply increased: government policy was directed almost exclusively through the office of the president, which had the largest departmental budget and direct control of key areas of security and defence. Moreover, the president appoints judges, and the judicial system was hampered by widespread interference from the executive during the KANU era. There has been some improvement under Mr Kibaki, including a purge of half the country s top judges in October 2003 because of corruption allegations. There is widespread agreement that Kenya needs a new constitution, but the path to devising one has been long and arduous, and has still not reached a conclusion. In 2000, under pressure from donors, the opposition and civil society, Mr Moi appointed an academic, Yash Pal Ghai, to chair the Constitution of Kenya Review Commission (CKRC), a body charged with devising a new constitution. Furthermore, a National Constitutional Conference (NCC), comprising 629 delegates, including all MPs and a broad swathe of civil society, was convened at Bomas. A first draft constitution, dating from September 2002, contained several controversial proposals, including the creation of the post of executive prime minister. Following NARC s election victory in December 2002, the constitution soon emerged as one of the main issues dividing the constituent parties of the ruling coalition. The Kibaki camp, despite seeking to weaken the presidency while in opposition, now opposes the loss of presidential powers, but the LDP (and most of civil society) favours such a change. Attempts to find common ground proved fruitless, and the final zero draft that emerged from Bomas in March 2004 was not backed by the Kibaki camp. Apart from calling for the

14 10 Kenya transfer of executive powers to a prime minister, the zero draft included other controversial proposals, including the devolution of powers to district level; the creation of a second, upper chamber of parliament; and the granting of constitutional recognition to Islamic kadhi courts, which is opposed by the Christian churches. Shortly after the zero draft was produced, the constitutional court ruled that any new constitution must first be subject to a referendum. Mr Kibaki wins support for a consensus bill Mr Kibaki subsequently moved to build support in parliament in favour of amending the zero draft, and the mid-2004 reshuffle played a key part in this process. A new Constitution of Kenya (Amendment) Bill, allowing parliament to amend controversial parts of the zero draft, was endorsed by the legislature in December 2004, despite a walkout by KANU and the LDP. The president gave his assent to the legislation in January 2005 and, after parliament reconvened in March 2005 (following a long seasonal break), took effective control over the PSCC, charging it with devising a new consensual constitution (meaning one that is favoured by the Kibaki camp). The PSCC s revision the so-called Kilifi draft was presented to parliament for debate in July 2005 and was passed by a 102:61 margin. It retains most of the president s powers, rejects the creation of an upper house of parliament and weakens plans for devolution. The attorney-general is due to publish a final draft at the end of August. With the president having sufficient support in parliament, there are few routes left for those opposed to his tampering with the zero draft. There have been protests organised by civil society, some of which have turned violent, but their power has been limited. The LDP and KANU will probably call for a no vote in the referendum, but the Kibaki camp will campaign equally hard for a yes vote, and will benefit from its control over the state machinery. At present, a referendum is planned for November 2005, but the legal challenges surrounding the new constitution are almost as daunting as the political ones. Further guidance from the courts will probably be needed and further delays are possible. It is not so much the delay that has been destabilising, but the uncertainty. Political forces Politics is characterised by shifting allegiances Kenya s political environment was dominated by KANU for almost 40 years ( ) while the opposition remained fractured. However, within this context the political map was constantly being redrawn as political factions formed a succession of temporary alliances, sometimes joining KANU and sometimes leaving it. Ethnicity has long played a key role in Kenyan politics, and the drive by successive governments to win the support of the country s main tribes, particularly in the run-up to elections, has been a major factor behind such party-hopping. Personal ambition has also played a part, but ideological reasons are seldom the cause. As a result, most opposition leaders have served under a KANU administration at some stage. The only fixed and certain feature was the all-powerful president. That Kenya remains riven by factions, often though not exclusively based on ethnic or regional identity, is obvious from the wrangling that has bedevilled the new NARC administration. The political balance shifted yet again in June 2004, when Mr Kibaki brought

15 Kenya 11 members of the opposition into his cabinet, ending his reliance on the NAK s coalition partner, the LDP (see Recent political developments). Further shifts in allegiance and the composition of government can be expected in the run-up to the scheduled 2007 elections. KANU elects a new leader but is divided KANU, formed in 1960, entered a period of self-examination after the 2002 election defeat. The ex-president, Daniel arap Moi, stepped down as chairman in early 2004, to be replaced on an acting basis by Uhuru Kenyatta. The party finally held long-awaited grassroots elections in January 2005 (15 years after the last ones) but the process proved highly divisive, with Nicholas Biwott, one of Mr Moi s former henchmen, challenging Mr Kenyatta for the leadership. Although Mr Kenyatta beat Mr Biwott by a 5:1 margin at a party conference in late January, Mr Biwott alleged fraud and has continued to campaign against the result. When Mr Kenyatta named his shadow cabinet in July 2005 (two-anda-half years after the election), Mr Biwott named an alternative team. Mr Biwott has threatened to break away from KANU, and held talks with the Kibaki camp about joining the government (although these came to nothing in the end), but for the moment he remains a divisive force within KANU, weakening the opposition s effectiveness. Mr Biwott s power partly stems from his strong support base within the Kalenjin ethnic group. KANU currently appears in no position to take advantage of NARC s internal problems or to mount an effective challenge at the next election, but the party remains a large national organisation and it may one day lead the government again. Main political figures Emilio Mwai Kibaki (aged 73) Mr Kibaki, a trained economist, rose to high office in the Kenya African National Union (KANU) government in the 1980s, but moved into opposition under the banner of his own Democratic Party after the restoration of multiparty democracy in the early 1990s. Mr Kibaki, like Kenya s first president, Jomo Kenyatta, is from the dominant Kikuyu tribe (unlike Mr Moi, who is a Kalenjin). Mr Kibaki remains broadly popular but has been criticised for his laid-back leadership style and apparent reluctance to control his squabbling ministers. The president also suffers from poor health, especially after a serious road accident in the run-up to the 2002 election. Arthur Moody Awori (aged 78) Mr Awori was appointed vice-president in September 2003, following the death of his predecessor, Michael Wamalwa. Mr Awori, like Mr Wamalwa, is a member of the Luhya tribe, Kenya s second largest. Mr Awori is respected as an elder statesman (hence his nickname of Uncle Moody ) and is one of the few Liberal Democratic Party (LDP) ministers who remains close to the president. Raila Odinga (aged 58) Mr Odinga commands considerable support among Luo voters. He is highly ambitious and has switched party allegiance several times. After leading the LDP into the National Rainbow Coalition (NARC), he and his party fell out with the president on a range of issues. Mr Odinga feels that he is owed the putative post of executive prime minister (proposed in the zero draft constitution).

16 12 Kenya David Mwiraria (aged 64) Mr Mwiraria, a close associate of the president, took over the Ministry of Finance after NARC s election victory. An economist by training, he has handled his docket well, but his reputation has been tarnished by the exposure of new corruption in the awarding of state contracts. Kiraitu Murungi (aged 57) Mr Murungi, a human rights lawyer and long-term Moi opponent, heads the Ministry of Justice and Constitutional Affairs, with overall responsibility for the office of the attorney-general, the judiciary and the Electoral Commission. Although Mr Kibaki retained Amos Wako a Moi appointee as attorney-general, the position is no longer of cabinet rank. Kalonzo Musyoka (aged 51) Mr Musyoka is one of the defectors from KANU who helped to form the LDP in the run-up to the 2002 election. He returned to the Ministry of Foreign Affairs, which he had headed between 1993 and He was demoted to natural resources minister in June 2004 but hopes to be the LDP s presidential candidate in Simeon Nyachae (aged 72) Mr Nyachae, a former finance minister in the Moi era, leads the Forum for the Restoration of Democracy-People (Ford-People), the third-largest party in parliament. He returned to the cabinet as energy minister in the mid-2004 reshuffle and has impressed donors and the private sector with his commitment to reforms. Uhuru Kenyatta (aged 43) Mr Kenyatta, the leader of the former ruling party, KANU, and son of Kenya s first president, Jomo Kenyatta, is a successful businessman in his own right. He was KANU s losing candidate in the 2002 election, but won internal KANU elections in January 2005 and is set to stand for the presidency again in International relations and defence The EAC is revitalised Kenya seeks peace in Somalia and Sudan The East African Community (EAC), which broke up in 1977 mainly because of personal and ideological differences between the heads of state of its members, Kenya, Uganda and Tanzania was officially relaunched on January 15th The EAC s long-term plan calls for the creation, in order, of a customs union, a currency union and a political federation. The first major step was taken in January 2005 with the implementation of a customs union. This aims to eliminate all tariff and non-tariff barriers to internal trade within five years, and sets a common external tariff (see The external sector: Trade in goods). EAC heads of state have also agreed to fast-track full political federation by 2010, but this may be an overambitious target. EAC membership is also likely to be extended to Rwanda and Burundi. Kenya has played a key mediating role in Somalia, which has been without a central government since 1991, and in Sudan, where the civil war between North and South that has been ranging for more than 20 years may finally be coming to an end. However, the peace processes in both countries are still fragile and could come unstuck. Kenya has been hosting Somalia s parliament-

17 Kenya 13 in-waiting, and in October 2004 delegates elected Abdullahi Yusuf as the nation s new president. Somalia has long been acknowledged as a hotbed for terrorism, and Kenya views its return to normality as a vital ingredient for regional security. Kenya backs the global war on terror No threat from the Kenyan security forces Kenya has wholeheartedly backed the US-led war on terror since the September 11th 2001 attacks on the World Trade Centre. Kenya too has directly suffered from Islamic terrorists operating under the al-qaida banner. The list includes the bombing of the US embassy in Nairobi in 1998 (which killed about 250 people), the suicide bomb attack on the Paradise Hotel near Mombasa in November 2002 (which left 13 dead) and the failed attempt at the same time to bring down an Israeli airliner using shoulder-launched missiles. Security risks were again highlighted in May 2003, when warnings of further attacks led to a six-week suspension of commercial flights from the UK and negative travel advisories by several Western countries. The advisories were withdrawn later in the year, except for the one issued by the US, although its language has been softened. The US has also pledged US$40m to help to upgrade Kenya s aviation infrastructure and enhance airport security, and the two countries resumed their annual military exercises in Kenyan defence forces have also been co-operating with the 2,000-strong US Horn of Africa task-force, created in 2002 and based in Djibouti. According to US military sources, the task-force has undertaken joint operations with Kenya along the long border with Somalia. In an attempt to improve regional security, Kenya opened a new National Counter-Terrorism Centre, the first of its kind in Africa, in January It aims to co-ordinate information from throughout the East Africa region. In September 2004 the South African-based Institute of Security Studies listed Kenya (along with Algeria, Uganda, Ethiopia and South Africa) as the countries in Africa best equipped to deal with terrorism. Apart from an attempted coup by the air force in 1982, Kenya s armed forces have not sought to dictate to politicians. In addition to the regular armed forces the government can call on a special security force, the 5,000-strong General Service Unit, which it frequently does in order to control demonstrations and political rallies. Regular military forces, mid-2004 Army 20,000 Navy 1,620 Air force 2,500 Total 24,120 Source: International Institute for Strategic Studies, The Military Balance, 2004/05.

18 14 Kenya Security risk in Kenya Terrorism Islamic terrorists operating under the al-qaida banner have launched three attacks in Kenya: the car-bombing of the US embassy in Nairobi in 1998 (which left 250 dead, mostly Kenyans), the suicide bombing of the Paradise Hotel near Mombasa in November 2002 and the simultaneous attempt to bring down a civilian airliner using shoulder-launched missiles. Warnings of possible terrorist activity in May 2003 led to a six-week suspension of commercial flights from the UK and the issuing of negative travel advisories by several Western countries. Most were withdrawn within months, although the US one remains in place but its language has been softened. Kenya remains particularly vulnerable to Islamic terrorism because of its long, porous border with Somalia, where the rule of law is weak and the fundamentalist presence strong. A recent UN report has noted that the terrorist attacks in Kenya in 2002 had been planned and prepared in neighbouring Somalia, and warned that the proliferation of arms in Somalia, mainly smuggled in from Yemen in violation of the UN arms embargo, represented a serious threat to neighbouring states, and that further attacks in East Africa could be in the offing. More positively, Kenya has played a key role in peace negotiations between Somalia s factions and hosts the country s government-in-waiting. Kenya has suffered no further terrorist attacks, but foreign firms and visitors are advised to check the UK government s Foreign Office websites for the most recent advice on security and safety. Crime Crime has been a serious and growing problem in Kenya, particularly in Nairobi, in recent years. Total crimes rose by 8.4% to 83,841 in 2004, with the number of assaults, the most common crime, rising by 17.3% to 15,715. Although much crime is opportunistic and low level, serious attacks have risen, including daytime carjackings at traffic lights in central city areas, group raids on houses and, on occasion, direct armed attacks on businesspeople, including foreigners, at their workplaces. To help to stem the rise in crime, the president, Mwai Kibaki, appointed a new police chief in April 2004, an ex-army officer, Brigadier Mohammed Hussein Ali. This move has improved police effectiveness, and bank robberies have been virtually eliminated, for example, although armed criminals have moved on to easier pickings, placing businessmen and officials at risk. The sheer number of illegal guns in the country (many having crossed from lawless Somalia) has fuelled the problem. Kenya plans major investment in the police force over the next five years, to create a modern, professional institution, but funding will be a problem. Ethnic violence Kenya continues to suffer from regular bouts of inter-ethnic conflict, and about people have been killed in several incidents in 2004 and Some clashes relate to cattle-rustling, some to disputes between pastoralists and arable farmers, and some to a spillover of clan wars in neighbouring Somalia; all have been exacerbated by the recent poor rainfall levels and the proliferation of small arms. Election-related violence was common in the 1990s, but the 2002 election was largely peaceful, which bodes well for future polls. The latest murderous attack, in Marsabit District (in the north, towards the Ethiopian border), was one of the worst to date. In July 2005 armed raiders from the Borana ethnic group killed about

19 Kenya Gabras, many of them schoolchildren on their way to Turbi primary school, in a clan conflict linked to cattle rustling. The central government has vowed to act but struggles to impose its will in isolated rural areas with poor transport links. Some 2,000 elite troops have been dispatched to the area to try to catch the killers and prevent revenge attacks. Poor infrastructure Perhaps the greatest threat to foreign businesspeople arises from car use. Kenya has the highest rate of road accidents in the world, with 510 fatal accidents per 100,000 vehicles, largely owing to poor roads and transportation. Second-ranked South Africa has 260 fatal accidents per 100,000 vehicles; the UK figure is just 20. By comparison, the terrorist threat is negligible. In February 2004, in an attempt to improve its appalling record, Kenya obliged matuta (minibus) owners to install new safety equipment on their vehicles. This has led to a sharp rise in fares, to the detriment of consumers, but has cut road fatalities. Ongoing investment in road projects will also help in the coming years. Resources and infrastructure Population Population indicators, 2003 Population (mid-year; m) 31.9 Population growth rate (%)a 2.3 Life expectancy (years)b 44.6 Urbanisation (%) 36.3 Projected population in 2025 (m)c 50.2 a ; b 2002; c UN Development Programme, Human Development Report projection. Source: World Bank, African Development Indicators, 2005; UN Development Programme, Human Development Report, Population growth has slowed Wide regional and income disparities Kenya formerly had one of the fastest-growing populations in the world, although the rate of increase slowed from 3.8% in to 3.1% in and 2.3% in The decline reflects the success of earlier family-planning campaigns, but also, more recently, the impact of the HIV/AIDS pandemic, which was declared a national disaster in Kenya s population was estimated to be 31.9m in mid-2003, according to the World Bank. Future growth will be slowed because of HIV/AIDS: current estimates suggest that the population will rise to 43m in 2020, whereas without HIV/AIDS it would have reached 48m. Kenya s population is heavily concentrated in the central and western regions, which contain the most fertile agricultural areas. Kenya is also a mix of many tribes, the largest being the Kikuyu (20.8%), the Luhya (14.4%), the Luo (12.4%), the Kalenjin (11.5%) and the Kamba (11.4%). In addition, Kenyan society is characterised by wide income disparities. In the poorest 20% of the population received only 6.0% of national income, while the richest 20% took 49.1%.

20 16 Kenya Distribution of population, 2000a Province 000 % of total Rift Valley 6, Eastern 4, Nyanza 4, Central 3, Western 3, Coast 2, Nairobi 2, North-eastern Total 28, a Provisional estimates. Source: Ministry of Planning and National Development, Population Census Report. The UNDP highlights the country s decline The stagnation of the economy and the rise in poverty was highlighted by the latest Human Development Report of the UN Development Programme (UNDP), which ranked Kenya 148th out of 177 countries. Kenya s score on the Human Development Index (HDI) an amalgam of figures for life expectancy, adult literacy, school enrolment and GDP per head has fallen steadily in recent years, from 0.52 in 1995 to 0.49 in The report also ranked Kenya as one of the six worst performers in terms of infant mortality, with the rate jumping from 99 to 122 per 1,000 live births between 1990 and The fall in the country s ratings is not surprising given the lack of investment in health and education, and the decline in income per head. The number of people living below the poverty line (of US$1 per day) is estimated to have increased from 11.3m (48.4% of the population) in 1990 to 17.1m (55.4% of the population) in As well as the low GDP growth rates of recent years, other factors driving the fall in the HDI ranking were the country s poor health and education services and its HIV/AIDS crisis. Prospects are brighter in the medium term, provided that the government implements the Economic Recovery Strategy for Wealth and Employment Creation (ERSWEC), unveiled in mid Development indicators, 2002 Country HDI rank a HDI index a Life expectancyb Adult literacy c GDP per headd Norway ,600 UK ,150 South Africa ,070 Uganda ,390 Kenya ,020 Tanzania a Human Development Index of the UN Development Programme. b At birth in years. c % of population aged 15 and above. d US$ at purchasing power parity. Source: UN Development Programme, Human Development Report, Education Higher spending improves access to education Official data show that rising spending on education, especially under the government of Mwai Kibaki, is helping to reverse the decline in educational standards. In particular, the new government reintroduced free primary-school education in January Charges had been brought in during the 1990s,

21 Kenya 17 leading to a decline in pupil numbers. Primary-school enrolment leapt by 16% in 2003, to 7.1m, and rose by an additional 4% in 2004, to 7.4m. The initiative has been expensive but popular. Secondary-school enrolment is also rising, up by 7% in 2003 to 880,000 and 5% in 2004 to 913,000. In addition, Kenya had 91,500 university students in 2004/05, about 9,500 higher than the previous year, the bulk of whom attended the six main public institutions. There are also private universities. Other forms of tertiary education include technical training institutions (43,000 students in 2004) and teacher training institutions (22,000 students in 2004). Literacy rates have risen over time, from 71% in 1990 to 79% in 1997 and 84% in Health Healthcare proves problematic AIDS remains a serious problem The government spent 1.7% of GDP on healthcare in 2001 and the private sector 6.2% of GDP, according to the UN. Healthcare provision, particularly by the public sector, weakened in the 1990s owing to the downturn in government finances, leading to investment by the private sector, although most of the population are too poor to afford private care. The government has prioritised social sectors, including healthcare, under the ERSWEC, but the proposal of the health minister, Charity Ngilu, for a new health insurance scheme to offer universal free care was dismissed in late 2004 on the grounds of cost. The number of healthcare institutions rose by 4.6% to 4,767 in 2004 and the number of beds climbed by 4% to nearly 66,000. In Kenya, as in most African countries, HIV/AIDS is a serious problem. The rapid spread of the disease poses grave health problems and will have damaging macroeconomic consequences, such as reduced savings, falling labour productivity and the loss of experienced workers. The national healthcare system is being increasingly overstretched, as HIV/AIDS patients now occupy a significant majority of hospital beds; there were 150,000 deaths from the disease in HIV/AIDS has also played a key role in the decline in life expectancy, which fell from 57 years in 1990 to just 45 years in However, the number of those thought to be infected was cut from over 2m to 1.2m (6.7% of the adult population) in 2003 following a large-scale household survey. Previous estimates had been derived from antenatal clinics. However, the two figures are calculated using different methodologies, both of which have strengths and weaknesses. Despite the apparent improvement, HIV/AIDS remains a very serious problem, and the key question of whether the number of those infected is rising or falling remains unanswered. Regional evidence suggests that it may have peaked at about 14% in Nyanza on the Ugandan border, but may rise further in Nairobi (9%) and the Coast (6%), Central (5.9%), Rift Valley (5.2%) and Eastern (4.1%) districts. Despite the curse of HIV/AIDS, malaria remains the nation s number one killer.

22 18 Kenya Natural resources and the environment Kenya has rich agricultural land and abundant wildlife Kenya is not well endowed with mineral resources but has rich agricultural land and abundant wildlife, a key draw for the tourism industry. However, in the past three decades the country has suffered from accelerating deforestation, soil erosion, poaching, and domestic and industrial pollution. A particular problem in the coming years is likely to be a shortage of water. Output from the fishing and forestry sectors in particular has declined substantially because of resource degradation. As a consequence, the government is giving greater priority to policies that encourage sustainable resource use. Kenya s forests are diminishing fast. Overexploitation during the past 30 years has reduced the country s timber resources by one-half. At present only 3% of the land is forested and it is estimated that 5,000 ha of forest are lost each year, not only to provide wood fuel but also as a result of clearance for agriculture, construction, tourism and industrial activities. An increase in soil erosion is affecting agricultural productivity and contributing to the silting of dams. The gradual conversion of land use to agriculture and other economic activities is also rapidly reducing the country s wide biodiversity. There are many unique or rare species of animals, plants and micro-organisms in Kenya, some of which could yield substantial economic benefits. Water resources are under pressure owing to overuse, not only for agricultural and domestic consumption but also for hydroelectric power. Ecological disruption of inland lakes, particularly Lake Victoria, is a major concern for the fishing industry. Pollution, overfishing and the use of unauthorised fishing equipment have led to falling catches and have endangered local fish species. Transport, communications and the Internet The road network Kenya has a 64,000-km road network, connecting most parts of the country, but only 9,000 km is paved (and therefore all-weather), while years of underinvestment and corruption in the awarding of contracts have left the network in a poor state of repair. Despite its faults, however, the road network carries the vast bulk of domestic and foreign trade. The Kibaki government and donors have prioritised the rehabilitation of the road infrastructure as a key part of the country s development strategy. In April 2004 the World Bank approved funding of US$207m to support the Northern Corridor Transport Improvement (NCTI) project, 80% of which is to be spent on roads. The northern corridor, which runs from Mombasa to Nairobi and on to Malaba on the Ugandan border, is not only Kenya s most important transport route but is also a vital artery for other countries in the region. The EU is separately funding improvements to another section of the road. The government also hopes to attract private investment to rehabilitate other northern corridor segments and for long-term road maintenance. However, the construction of new roads is moving slowly, impeded by cumbersome procurement procedures.