About the CBI

September 2005
Background Note: Kenya

Flag of Kenya is three equal horizontal bands of black (top), red, and green;
the red band is edged in white; a large warrior's shield covering crossed
spears is superimposed at the center.

PROFILE

OFFICIAL NAME:
Republic of Kenya

Geography
Area: 582,646 sq. km. (224,960 sq mi.); slightly smaller than Texas.
Cities: Capital--Nairobi (pop. 2.1 million). Other cities--Mombasa (665,000),
Kisumu (504,000), Nakuru (1.2 million).
Terrain: Kenya rises from a low coastal plain on the Indian Ocean in a series
of mountain ridges and plateaus which stand above 3,000 meters (9,000 ft.) in
the center of the country. The Rift Valley bisects the country above Nairobi,
opening up to a broad arid plain in the north. Mountain plains cover the
south before descending to the shores of Lake Victoria in the west.
Climate: Varies from the tropical south, west, and central regions to arid
and semi-arid in the north and the northeast.

People
Nationality: Noun and adjective--Kenyan(s).
Population (2002 est.): 30 million.
Annual growth rate (2003 est.): 1.7%.
Ethnic groups: 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%.
Languages: English, Swahili, more than 40 local ethnic languages.
Education: Years compulsory--None, but first 8 years of primary school are
provided through cost-sharing between government and parents. Attendance--84%
for primary grades. Literacy (in English) 65.5%.
Health: Infant mortality rate--115/1,000. Life expectancy--49 yrs.
Work force (1.7million wage earners): Public sector 30%; private sector 70%.
Informal sector workers--3.7 million. Services--45%; industry and
commerce--35%; agriculture--20%.

Government
Type: Republic.
Independence: December 12, 1963.
Constitution: 1963.
Branches: Executive--president (chief of state, head of government, commander
in chief of armed forces). Legislative--unicameral National Assembly
(parliament). Judicial--Court of Appeal, High Court, various lower and
special courts, including Kadhis' (Islamic) courts
Administrative subdivisions: 69 districts, joined to form 7 rural provinces.
Nairobi area has special status.
Political parties: Registered political parties, 41. Ruling party, National
Rainbow Coalition (NARC), coalition of 14 separately registered parties.
Suffrage: Universal at 18.

Economy
GDP (2003): $12.7 billion.
Annual growth rate (2004): 4.3%.
Per capita income: $271.
Natural resources: Wildlife, land.
Agriculture: Products--tea, coffee, sugarcane, horticultural products, corn,
wheat, rice, sisal, pineapples, pyrethrum, dairy products, meat and meat
products, hides, skins. Arable land--5%.
Industry: Types--petroleum products, grain and sugar milling, cement, beer,
soft drinks, textiles, vehicle assembly, paper and light manufacturing.
Trade (2002): Exports--$2.2 billion: tea, coffee, horticultural products,
petroleum products, cement, pyrethrum, soda ash, sisal, hides and skins,
fluorspar. Major markets--Uganda, Tanzania, United Kingdom, Germany,
Netherlands, Ethiopia, Rwanda, Egypt, South Africa, United States.
Imports--$3.2 billion: machinery, vehicles, crude petroleum, iron and steel,
resins and plastic materials, refined petroleum products, pharmaceuticals,
paper and paper products, fertilizers, wheat. Major suppliers--U.K., Japan,
South Africa, Germany, United Arab Emirates, Italy, India, France, United
States, Saudi Arabia.

PEOPLE
Kenya has a very diverse population that includes most major language groups
of Africa. Traditional pastoralists, rural farmers, Muslims, and urban
residents of Nairobi and other cities contribute to the cosmopolitan culture.
The standard of living in major cities, once relatively high compared to much
of Sub-Saharan Africa, has been declining in recent years. Most city workers
retain links with their rural, extended families and leave the city
periodically to help work on the family farm. About 75% of the work force is
engaged in agriculture, mainly as subsistence farmers. The national motto of
Kenya is harambee, meaning "pull together." In that spirit, volunteers in
hundreds of communities build schools, clinics, and other facilities each
year and collect funds to send students abroad.

The six state universities enroll about 45,000 students, representing some
25% of the Kenyan students who qualify for admission. There are six private
universities.

HISTORY
Fossils found in East Africa suggest that protohumans roamed the area more
than 20 million years ago. Recent finds near Kenya's Lake Turkana indicate
that hominids lived in the area 2.6 million years ago.

Cushitic-speaking people from northern Africa moved into the area that is now
Kenya beginning around 2000 BC. Arab traders began frequenting the Kenya
coast around the first century AD. Kenya's proximity to the Arabian Peninsula
invited colonization, and Arab and Persian settlements sprouted along the
coast by the eighth century. During the first millennium AD, Nilotic and
Bantu peoples moved into the region, and the latter now comprises
three-quarters of Kenya's population.

The Swahili language, a mixture of Bantu and Arabic, developed as a lingua
franca for trade between the different peoples. Arab dominance on the coast
was eclipsed by the arrival in 1498 of the Portuguese, who gave way in turn
to Islamic control under the Imam of Oman in the 1600s. The United Kingdom
established its influence in the 19th century.

The colonial history of Kenya dates from the Berlin Conference of 1885, when
the European powers first partitioned East Africa into spheres of influence.
In 1895, the U.K. Government established the East African Protectorate and,
soon after, opened the fertile highlands to white settlers. The settlers were
allowed a voice in government even before it was officially made a U.K.
colony in 1920, but Africans were prohibited from direct political
participation until 1944.

From October 1952 to December 1959, Kenya was under a state of emergency
arising from the "Mau Mau" rebellion against British colonial rule. During
this period, African participation in the political process increased
rapidly.

The first direct elections for Africans to the Legislative Council took place
in 1957. Kenya became independent on December 12, 1963, and the next year
joined the Commonwealth. Jomo Kenyatta, a member of the large Kikuyu ethnic
group and head of the Kenya African National Union (KANU), became Kenya's
first President. The minority party, Kenya African Democratic Union (KADU),
representing a coalition of small ethnic groups that had feared dominance by
larger ones, dissolved itself voluntarily in 1964 and joined KANU.

A small but significant leftist opposition party, the Kenya People's Union
(KPU), was formed in 1966, led by Jaramogi Oginga Odinga, a former Vice
President and Luo elder. The KPU was banned shortly thereafter, however, and
its leader detained. No new opposition parties were formed after 1969, and
KANU became the sole political party. At Kenyatta's death in August 1978,
Vice President Daniel arap Moi became interim President. On October 14, Moi
became President formally after he was elected head of KANU and designated
its sole nominee.

In June 1982, the National Assembly amended the constitution, making Kenya
officially a one-party state, and parliamentary elections were held in
September 1983. The 1988 elections reinforced the one-party system. However,
in December 1991, Parliament repealed the one-party section of the
constitution. By early 1992, several new parties had formed, and multiparty
elections were held in December 1992. Because of divisions in the opposition,
however, Moi was reelected for another 5-year term, and his KANU party
retained a majority of the legislature. Parliamentary reforms in November
1997 expanded political rights, and the number of political parties grew
rapidly. Again because of a divided opposition, Moi won re-election as
President in the December 1997 elections. KANU won 113 out of 222
parliamentary seats, but, because of defections, had to depend on the support
of minor parties to forge a working majority.

In October 2002, a coalition of opposition parties joined forces with a
faction which broke away from KANU to form the National Rainbow Coalition
(NARC). In December 2002, the NARC candidate, Mwai Kibaki, was elected the
country's third President. President Kibaki received 62% of the vote, and
NARC also won 59% of the parliamentary seats (130 out of 222).

GOVERNMENT
The unicameral National Assembly consists of 210 members elected to a term of
up to 5 years from single-member constituencies, plus 12 members nominated by
political parties on a proportional representation basis. The president
appoints the vice president and cabinet members from among those elected to
the assembly. The attorney general and the speaker are ex-officio members of
the National Assembly.

The judiciary is headed by a High Court, consisting of a chief justice and
High Court judges and judges of Kenya's Court of Appeal (no associate
judges), all appointed by the president.

Local administration is divided among 69 rural districts, each headed by a
presidentially appointed commissioner. The districts are joined to form seven
rural provinces. The Nairobi area has special status and is not included in
any district or province. The government supervises the administration of
districts and provinces.

Principal Government Officials
President--Mwai Kibaki
Vice President--Moody Awori
Minister of Foreign Affairs--Chirau Ali Mwakwere
Ambassador to the United States--Leonard Ngaithe
Ambassador to the United Nations--Judith Behamuka

Kenya maintains an embassy in the United States at 2249 R Street NW,
Washington, DC 20008 (tel. 202-387-6101).

POLITICAL CONDITIONS
Since independence, Kenya has maintained remarkable stability despite changes
in its political system and crises in neighboring countries. Particularly
since the re-emergence of multiparty democracy, Kenyans have enjoyed an
increased degree of freedom.

A cross-party parliamentary reform initiative in the fall of 1997 revised
some oppressive laws inherited from the colonial era that had been used to
limit freedom of speech and assembly. This improved public freedoms and
contributed to generally credible national elections in December 1997.

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 in that power was
transferred peacefully from the single party that had ruled the country since
independence to a new coalition of parties

Under the presidency of Mwai Kibaki, the new ruling coalition promised to
focus its efforts on generating economic growth, combating corruption,
improving education, and rewriting its constitution. These promises have only
been partially met, however, as the new government has been preoccupied with
internal wrangling and power disputes. On July 22, 2005, Parliament voted to
adopt a new draft constitution, which will be put to a national referendum in
November 2005.

ECONOMY
After independence, Kenya promoted rapid economic growth through public
investment, encouragement of smallholder agricultural production, and
incentives for private (often foreign) industrial investment. Gross domestic
product (GDP) grew at an annual average of 6.6% from 1963 to 1973.
Agricultural production grew by 4.7% annually during the same period,
stimulated by redistributing estates, diffusing new crop strains, and opening
new areas to cultivation.

Between 1974 and 1990, however, Kenya's economic performance declined.
Inappropriate agricultural policies, inadequate credit, and poor
international terms of trade contributed to the decline in agriculture.
Kenya's inward-looking policy of import substitution and rising oil prices
made Kenya's manufacturing sector uncompetitive. The government began a
massive intrusion in the private sector. Lack of export incentives, tight
import controls, and foreign exchange controls made the domestic environment
for investment even less attractive.

From 1991 to 1993, Kenya had its worst economic performance since
independence. Growth in GDP stagnated, and agricultural production shrank at
an annual rate of 3.9%. Inflation reached a record 100% in August 1993, and
the government's budget deficit was over 10% of GDP. As a result of these
combined problems, bilateral and multilateral donors suspended program aid to
Kenya in 1991.

In 1993, the Government of Kenya began a major program of economic reform and
liberalization. A new minister of finance and a new governor of the central
bank undertook a series of economic measures with the assistance of the World
Bank and the International Monetary Fund (IMF). As part of this program, the
government eliminated price controls and import licensing, removed foreign
exchange controls, privatized a range of publicly owned companies, reduced
the number of civil servants, and introduced conservative fiscal and monetary
policies. From 1994-96, Kenya's real GDP growth rate averaged just over 4% a
year.

In 1997, however, the economy entered a period of slowing or stagnant growth,
due in part to adverse weather conditions and reduced economic activity prior
to general elections in December 1997. In 2000, GDP growth was negative, but
improved slightly in 2001 as rainfall returned closer to normal levels.
Economic growth continued to improve slightly in 2002 and reached 1.4% in
2003; it was 4.3% in 2004.

In July 1997, the Government of Kenya refused to meet commitments made
earlier to the IMF on governance reforms. As a result, the IMF suspended
lending for 3 years, and the World Bank also put a $90-million structural
adjustment credit on hold. Although many economic reforms put in place in
1993-94 remained, Kenya needs further reforms, particularly in governance, in
order to increase GDP growth and combat the poverty that afflicts more than
57% of its population.

The Government of Kenya took some positive steps on reform, including the
1999 establishment of the Kenyan Anti-Corruption Authority, and measures to
improve the transparency of government procurements and reduce the government
payroll. In July 2000, the IMF signed a $150 million Poverty Reduction and
Growth Facility (PRGF), and the World Bank followed suit shortly after with a
$157 million Economic and Public Sector Reform credit. The Anti-Corruption
Authority was declared unconstitutional in December 2000, and other parts of
the reform effort faltered in 2001. The IMF and World Bank again suspended
their programs. Various efforts to restart the program through mid-2002 were
unsuccessful.

Under the leadership of President Kibaki, who took over on December 30, 2002,
the Government of Kenya began an ambitious economic reform program and has
resumed its cooperation with the World Bank and the IMF. The new National
Rainbow Coalition (NARC) government enacted the Anti-Corruption and Economic
Crimes Act and Public Officers Ethics Act in May 2003 aimed at fighting graft
in public offices. Other reforms especially in the judiciary, public
procurement etc., have led to the unlocking of donor aid and a renewed hope
at economic revival. In November 2003, following the adoption of key
anti-corruption laws and other reforms by the new government, donors
reengaged as the IMF approved a three-year $250 million Poverty Reduction and
Growth Facility and donors committed $4.2 billion in support over 4 years.
The renewal of donor involvement has provided a much-needed boost to investor
confidence.

However, the government's ability to stimulate economic demand through fiscal
and monetary policy remains fairly limited while the pace at which the
government is pursuing reforms in other key areas remains slow. The
Privatization Bill is yet to be enacted and civil service reform has been
limited despite the government's assertion that reforms would be undertaken.
The main challenges include building consensus within the loosely bound NARC
government, taking candid action on corruption, enacting anti-terrorism and
money laundering laws, bridging budget deficits, rehabilitating and building
infrastructure, maintaining sound macroeconomic policies, and addressing
structural reforms needed to reverse slow economic growth.

Nairobi continues to be the primary communication and financial hub of East
Africa. It enjoys the region's best transportation linkages, communications
infrastructure, and trained personnel, although these advantages are less
prominent than in past years. A wide range of foreign firms maintain regional
branch or representative offices in the city. In March 1996, the Presidents
of Kenya, Tanzania, and Uganda re-established the East African Cooperation
(EAC). The EAC's objectives include harmonizing tariffs and customs regimes,
free movement of people, and improving regional infrastructures. In March
2004, the three East African countries signed a Customs Union Agreement.

FOREIGN RELATIONS
Despite internal tensions in Sudan and Ethiopia, Kenya has maintained good
relations with its northern neighbors. Recent relations with Uganda and
Tanzania have improved as the three countries work for mutual economic
benefit.

Kenya has hosted and played an active role in the negotiations to resolve the
civil war in Sudan and to reinstate a central government authority in
Somalia. The Sudan peace negotiations have made major progress, resulting in
the signing in Kenya of agreements between the Khartoum government and the
southern Sudan rebels to put an end to the two-decade-long war. On January 9,
2005 a Sudan North-South Comprehensive Peace Accord was signed in
Nairobi. Negotiations in the Somali National Reconciliation Conference
resulted at the end of 2004 in the establishing of Somali Transitional
Federal Institutions (Assembly, President, Prime Minister, and Government).
Until early 2005, Kenya served as a major host both for these institutions
and for refugees from Somalia as well as Sudan. Between May and June 2005,
members of the Somalia Transitional Federal Institutions relocated to
Somalia.

Kenya maintains a moderate profile in Third World politics. Kenya's relations
with Western countries are generally friendly, although current political and
economic instabilities are sometimes blamed on Western pressures.

U.S.-KENYAN RELATIONS
The United States and Kenya have enjoyed cordial relations since Kenya's
independence. More than 5,000 U.S. citizens live in Kenya, and as many as
25,000 Americans visit Kenya annually. About two-thirds of the resident
Americans are missionaries and their families. U.S. business investment is
estimated to be more than $285 million, primarily in commerce, light
manufacturing, and the tourism industry.

U.S. assistance to Kenya promotes broad-based economic development as the
basis for continued progress in political, social, and related areas of
national life. U.S. aid strategy is designed to achieve four major
objectives--health care, including family planning and AIDS prevention;
increasing rural incomes by assisting small enterprises and boosting
agricultural productivity; sustainable use of natural resources; and
strengthening democratic institutions. The Peace Corps has 150 volunteers in
Kenya.

Since 2001, the United States and Kenya have forged close ties and have
strengthened cooperation on the war on terrorism.

Principal U.S. Officials
Ambassador--William M. Bellamy
Deputy Chief of Mission--Leslie Rowe
USAID Mission Director--Stephen Haykin
Public Affairs Officer--Robert C. Kerr

The U.S. Embassy in Kenya is located on UN Avenue, Nairobi, P.O. Box 606,
Village Market, Nairobi (tel. 254-20-363-6000; fax 254-20-363-6157).