Download ECONOMY: Summary Data

KENYA
Pressing Problems and Promising Solutions
Outline
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Overview and Statistical Indicators
Political Issues
Economic Issues
Foreign Relations Issues
Humanitarian Issues
Policy Recommendations
Reasons For Hope
Overview
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Independence: 1963
Population: 37 million (California 36 million)
Population Density: 59 per squared km (US 31)
Government
 Republic
 Unicameral
Legislature
 Multi-Party
 President
 Next
& Legislators serve 5 year terms
election December 27th
Economic Indicators
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Income Inequality
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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
GDP Growth
7
5.8
Real Growth Rate %
6
6.1
5
4
3
2.2
2
1.5
1.5
1
1
0.4
0.8
0
1999
2000
2001
2002
2003
2004
2005
2006
Inflation
Inflation Rate (consumer prices) %
Inflation
12
9.8
10
8
6
10.3
10.5
9
7
6
Inflation
3.3
4
1.9
2
0
1999
2000
2001
2002
2003
2004
2005
2006
Corruption Perception Index
1
20
142
Finland
Belgium
Chile
USA
Angola
Kenya
160
163
Kyrgyzstan
Nigeria
Pakistan
Sierra Leone
Tajikistan
Turkmenistan
Guinea
Iraq
Myanmar
Haiti
9.6
7.3
7.3
7.3
2.2
2.2
2.2
2.2
2.2
2.2
2.2
2.2
1.9
1.9
1.9
1.8
POLITICS: Historical Context
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Colonization
occupation 8th century
 Portugal in 1498
 Britain in 1895
 Arab
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Independence: 1963
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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
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Censorship of media outlets
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Unequal representation of minority groups
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Corruption
Media Censorship
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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
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Political representation
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Unequal distribution of land and resources
 Land
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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
 [see
Perception Index
chart]
 Anti-Corruption
Commission 2003
 http://www.kacc.go.ke/
 Corruption
scandals of 2006
ECONOMY: History
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After Independence, Rapid Growth
 1963-1973:
6.6% GDP growth/year
 Small scale agriculture, FDI
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Stagnation 1974-2002
 1997-2002:
1.5% GDP growth/ year
 Poor agricultural polices, poor credit, import substitution
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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
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Corruption
Infrastructure
Privatization
Trade Barriers
CORRUPTION
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Hurts Foreign Direct Investment
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Aid Agencies Flee
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Aid does not make it to those who need it most
Business Distrust of Government
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Underground Markets distort prices, create economic
inefficiency
Financial Support Not Passed Down
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World Bank, IMF, Foreign Countries delay or cancel loans
Inefficient Markets
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Low Investor Confidence
Government seen as enemy to growth, not facilitator
Creates and Sustains Income Inequality
INFRASTRUCTURE
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Poor Transportation, Communication Infrastructure
 Neglect
of Rural Areas
 Lack of Funding, Investment Development Outside Agriculture
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Agriculture Mis-Practice
 Poor
Land Use Policies
 Little Education about Best Practices
 Overgrazing, Irrigation Issues
PRIVATIZATION
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Import Substitution
 Government
Controlled Business
 Wide-spread Government Regulation of Business
 High inefficiency, Poor Business and Investor Environment
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Move Towards Privatization
 Deregulation
of Railroad, Air Travel, Electricity
 Reduction in amount of Civil Servants, Business Regulation
 Continued Deregulation Needed
TRADE BARRIERS
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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
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Create Regional Stability to Ensure Own Stability
 Worked
in Sudan to stabilize Southern Region
 Provided UN Peacekeepers to African Conflicts in
Somalia
Foreign Relations
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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
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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
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Health
Education
Women’s Rights
 Education
 Property
Rights
Health
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HIV/AIDS Pandemic
Health Care
HIV/AIDS
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Lowers productivity
Treatment is inaccessible and expensive
Women are being forced to fill untraditional roles
as men are lost to the disease
Health Care
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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
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Limited access
Especially for women
Most inaccessible in the North Eastern Province
Low Income
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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
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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
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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
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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
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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
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Strengthening institutional structure
Enforcing accountability and transparency
Educating the populace about corruption
SOLUTIONS: Corruption
•
Case Study: TI Teachers Service Commission May 2006
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TI integrity study recommendations:
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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
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TI integrity study recommendations continued
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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
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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
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Privatization
 Less
Government Control over Business Sector
 Reduced Government Regulation, Red Tape, Reduction
of Civil Servants
 Restructures Incentives in favor of business
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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
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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
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Responsible Management of Aid Organization
Monies
 Encourages
More Aid
 More Sovereignty
SOLUTIONS: Other
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Infrastructure
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Utilize money saved on corruption for investment in
transportation/communication infrastructure
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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
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Education
Curriculum change
 Streamline education spending to improve efficiency and
reallocate resources to other sectors (healthcare)
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Reasons for Hope
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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