Why we need to know ?

      Kenya is a country in Eastern Africa bordering the Indian Ocean and Lake Victoria. Neighboring countries include Ethiopia, Somalia, South Sudan, Tanzania, and Uganda. Unique Kenyan physiography, from highlands to glaciers, supports abundant and varied wildlife of scientific and economic value. The government system is a republic. The chief of state and head of government is the President. Kenya has a mixed economic system in which the economy includes a variety of private freedom, combined with centralized economic planning and government regulation. Kenya is a member of the African Union (AU), African Economic Community (AEC), and Common Market for Eastern and Southern Africa (COMESA).

  POLITICAL CONDITIONS
        Until potentially destabilizing, widespread violence erupted following the disputed December 2007 presidential elections, Kenya had, since independence, maintained considerable stability despite changes in its political system, localized violence surrounding elections, and crises in neighboring countries. This had been particularly true since the re-emergence of multiparty democracy and the accompanying increase in freedom (including freedom of speech, the press, and assembly).

         In December 2002, Kenyans held democratic and open elections, which were judged free and fair by international observers. The 2002 elections marked an important turning point in Kenya's democratic evolution as the presidency and the parliamentary majority passed from the party that had ruled Kenya since independence to a coalition of new political parties. The government lost a referendum over its draft constitution in November 2005. This vote too was widely accepted as free, fair, and credible.

         Under the first presidency of Mwai Kibaki, the NARC coalition promised to focus its efforts on generating economic growth, improving and expanding education, combating corruption, and rewriting the constitution. The first two goals were largely met, but progress toward the second two goals was limited. President Kibaki's cabinet from 2002-2005 consisted of members of parliament from allied parties and others recruited from opposition parties who joined the cabinet without the approval of their party leaderships.

            In early 2006, revelations from investigative reports of two major government-linked corruption scandals rocked Kenya and led to resignations, including three ministers (one of whom was later reappointed). In March 2006, another major scandal was uncovered involving money laundering and tax evasion in the Kenyan banking system. The government's March 2006 raid on the Standard Group media house conducted by masked Kenyan police was internationally condemned and was met with outrage by Kenya media and civil society. The government did not provide a sufficient explanation. No one has been held accountable.

           The December 2007 elections were marred by serious irregularities, and set off a wave of violence throughout Kenya. Following the February 2008 signing of a power-sharing agreement, incumbent President Kibaki retained the presidency and opposition candidate Raila Odinga was given a newly created position of Prime Minister. A new coalition cabinet was sworn in April 2008. The 42-member cabinet became the largest in Kenya's history, including new ministries for cooperative development, Northern Kenya development, and Nairobi metropolitan development. Several ministries were also subdivided, creating a number of new cabinet positions.

       Constitutional reform that addresses the structure of government to create a more effective system of checks and balances is a key element of the reform agenda agreed as part of the power-sharing agreement. Following the process for producing a new draft constitution that was set out in the December 2008 Constitutional Review Act, Kenyans went to the polls on August 4, 2010 to vote on the new constitution. Reflecting broad support for fundamental change, 66.9% of those who voted endorsed it. The new constitution retains Kenya's presidential system but introduces additional checks and balances on executive power and greater devolution of power to the sub-national level. Fully implementing the new constitution will require passage of several dozen pieces of legislation over a 5-year period. The 2013 national elections will be the first conducted under the new constitution.

        The International Criminal Court summoned six Kenyans (five high-ranking government officials and one radio executive) to The Hague on charges of crimes against humanity for their alleged roles in the 2007-2008 post-election violence. They appeared at The Hague in April 2011 to be informed of the charges. Confirmation of Charges hearings were held in September 2011, and in January 2012 the pre-trial chamber of the Court confirmed charges against four of the individuals for allegedly committing crimes against humanity: Uhuru Kenyatta, Frances Muthaura, William Ruto, and Joshua Sang. The next step is for the Court to set a trial date.

 Risk Assessment

Continuation of government stimulus programme
Economic growth slowed in 2011 as a result of the drought, which wrought havoc from April (2.4 million people receiving humanitarian aid). Moreover, power failures and the scale of inflationary pressures also contributed to the economic slowdown. Economic activity will continue to be driven in 2012 by expansionary fiscal measures and by structural business reforms under the aegis of the IMF. The rebound of agricultural production and investment in infrastructures will also contribute to the dynamism of the economy. The start up of the Seacom submarine cable allowing rapid and economical Internet access will spur the growth of the services sector, particularly through the relocation of call centers. However, production capacity will continue to suffer from an erratic electricity supply while the growth of domestic demand, sustained by the surge of the middle class, will be restrained by the tightening of monetary policy. Finally, strong population growth will compromise efforts to reduce poverty and expose the economy further to exogenous shocks (drought, volatility of raw materials prices).

Tensions on the foreign exchange markets

After worsening in 2011, as a result of the rise in the cost of fuel imports and the contraction in tea imports (20% of exports), the current account deficit is expected to narrow as a result of the recovery of regional external demand (East African Community). However, financing the current account deficit will be compromised by the contraction of the country’s main sources of foreign exchange. Tourism revenues and NGO contributions are expected to decline in line with the worsening security situation, as are transfers from the Kenyan diaspora due to the crisis in advanced countries. Despite IMF support ($500 million credit facility obtained in January 2011), which should make it possible to obtain further aid from the international community, corruption, inadequate governance and persistent insecurity will continue to discourage foreign investors. Moreover, Central Bank interventions aimed at supporting the domestic currency will eat into foreign exchange reserves (3.6 months of imports). With loans essentially short term, the Kenyan economy will remain exposed to a sharp downturn in investor confidence.

The fiscal deficit will remain significantly high in 2012 (6% of GDP) with the continuation of expansionary fiscal measures. The state’s financing needs will be covered thanks to healthy growth, better tax collection and borrowing at favorable interest rates from international backers. National debt is expected to stabilize at around 50% of GDP, while foreign debt will remain contained (25% of GDP).

Risk of social tensions on the eve of presidential elections

2012 will be marked by the holding of presidential elections in August and the retirement of President Mwai Kibaki from political life, the latter being debarred by the constitution from seeking a third term. The consensual politics followed by the coalition government of President Mwai Kibaki’s Party of National Unity (PNU) and the Orange Democratic Movement of Prime Minister Raila Odinga are expected to continue until the coming elections. The electoral campaign carries significant risks of a resurgence of violent inter-ethnic confrontations. The nature of these events would be such as to further delay the implementation of constitutional reform adopted in August 2010 providing for power sharing between the federal state and the regions. Finally, despite the deterioration of relations with Somalia, Kenya will continue to strengthen its regional economic stature through greater involvement in the East African Community.

Strengths

 Membership of the largest African common market, the EAC (East African Community)

 Diversified agriculture (maize, tea, coffee, horticulture)

 Good telecommunications and financial services

 Dynamic demographics and emergence of a middle class

 Adoption of a new constitution

 

Weaknesses

 Agricultural production highly dependent on weather conditions

 Inadequate infrastructures for absorption of economic development

 Widespread poverty

 Governance improving but corruption still

 Latent risk of political excesses

 Kenya shares with neighboring countries a high threat of terrorism. Muggings and armed attacks are prevalent, particularly in Nairobi and Mombasa. Sexual harassment for women travelling alone is common. Vehicle security, personal security, corruption, gunfire, checkpoints, armed robberies, general travel, navigation, off road driving, building / office security, hot weather injuries, personal hygiene, sanitation / sterilization, clothing & equipment, emergency first aid, cultures / customs, communications, emergency shelters. Safer in main tourist places like the wildlife parks, etc.