VZCZCXYZ0001
PP RUEHWEB

DE RUEHNR #0598/01 0370607
ZNR UUUUU ZZH
P 060607Z FEB 07
FM AMEMBASSY NAIROBI
TO RUEHC/SECSTATE WASHDC PRIORITY 7251
INFO RUEHXR/RWANDA COLLECTIVE PRIORITY
RUEHGV/USMISSION GENEVA 4107

UNCLAS NAIROBI 000598 
 
SIPDIS 
 
SENSITIVE 
 
DEPT FOR AF/E, AF/RSA, AF/EPS, AND DRL/IL 
DEPT ALSO PASS TO DEPT OF LABOR FOR SUDHA HALEY, PATRICK WHITE AND 
MAUREEN PETTIS 
GENEVA FOR LABOR ATTACHE CHAMBERLIN 
 
SIPDIS 
 
E.O. 12958:  N/A 
TAGS: ELAB ECON KE
SUBJECT: Kenyan Implementation of Decent Work Agenda 
 
SENSITIVE BUT UNCLASSIFIED 
 
¶1. (U) Summary: The Government of Kenya (GOK) is working with the 
ILO to develop an action plan to implement the Decent Work Program 
included in the September 9, 2004 African Union declaration in 
Ouagadougou on employment and poverty alleviation.  The GOK hopes 
its new Ksh 1 billion (USD 14.5 million) Youth Enterprise 
Development Fund will reduce widespread unemployment, but effective 
implementation may prove difficult.  The Labor Ministry claims the 
Cabinet has approved the four labor reform bills intended to update 
Kenya's labor regime and harmonize it with its East African 
Community (EAC) partners. End Summary 
 
Alleviating Poverty, Promoting Employment and Decent Work 
--------------------------------------------- -------- 
¶2. (U) Permanent Secretaries from Kenya's Ministry of Labor and 10 
other Ministries, the Employers Federation and the Union Federation 
agreed to focus on three priorities in their efforts to implement 
the Decent Work Program included in the September 9, 2004 African 
Union declaration in Ouagadougou on employment and poverty 
alleviation.  The International Labor Organization (ILO) first 
announced the Decent Work Agenda in 1999, calling for members to 
integrate four strategic objectives into their general economic and 
social policy making process: rights at work, 
employment, social protection, and social dialogue.  After a two-day 
workshop with the tripartite social partners, ILO East Africa Rep 
Schwettmann informed LabAtt the ILO will assist Kenya in developing 
a country program to: 
 
¶A. Promote youth employment and eliminate child labor by putting 
child laborers in school and replacing them with unemployed workers, 
16 years or older. 
 
¶B. Extend social protection to the informal sector and rural areas 
and combat HIV/AIDS in the workplace through provision of basic, 
inexpensive health insurance. 
 
¶C. Strengthen the institutional capacity of the social partners to 
play a more effective role in the GOK's policy formulation process, 
including its Vision 2030 growth strategy, and discussions with the 
World Bank (WB) and IMF on macro-economic policy, structural 
adjustment and privatization. 
 
¶3. (U) Concerning theme A, the ILO Rep noted the Ministry of Youth 
Affairs (MOYA) had briefed on the GOK's plan to distribute Ksh 1 
billion (USD 14.5 million) in the first half of 2007 for the new 
Youth Enterprise Development Fund (YEDF). MOYA reported the economy 
absorbs only about 25 per cent of the young people joining the labor 
market annually. The fund is aimed at creating employment in the 
informal sector and is the Kibaki government's main effort to redeem 
its campaign promise to create 500,000 jobs/year. Ksh 1 million 
(about US$14,493) will be distributed to each of the 210 
Constituencies, where Divisional Social Development Committees 
(DSDC) will be established to lend up to Ksh 50,000 (about US$725) 
to selected youth groups for a 5% administrative fee.  Ksh 100 
million (about US$1.5 million) will be used to provide 
entrepreneurial training, create business linkages with larger 
enterprises, facilitate the marketing of youth enterprise products, 
and develop foreign employment opportunities.  The remaining Ksh 690 
million (just under US$1 million) will be given to 15 microfinance 
institutions, credit cooperatives and banks for onward lending at an 
interest of between seven and eight per cent. MOYA estimates that 
200,000 youth will benefit. The GOK had previously announced 
separate plans to rehabilitate a minimum of one youth polytechnic 
school in each Constituency. 
 
¶4. (SBU) Schwettmann expressed skepticism about the plan's likely 
effectiveness.  Based on his experience with a similarly designed 
reconstruction project in Germany, he warned that without risk, 
lenders lacked incentive to select borrowers with the best-prepared 
business plans and coach them towards success. 
 
¶5. (U) Concerning point B, the GOK has already made a start.  In 
October 2006, National Health Insurance Fund (NHIF) CEO Richard 
Kerich announced a new medical insurance scheme to include informal 
sector workers and people past retirement age.  Under the new 
scheme, people would pay a minimum Sh160 (about US$ 2.3) a month - 
Ksh 1,920 (about US$28) a year - to receive full and comprehensive 
coverage at government hospitals for maternity and diseases, 
including surgery.  At most mission hospitals and small private 
hospitals, the scheme offers full coverage, except for surgery, 
where patients would have to pay part of the fee. 
 
¶6. (U) Concerning point C, ILO Program Officer Rutabanzibwa stated 
the Labor Ministry needed to better explain and document its efforts 
to carry out its functions and national policies to the Ministry of 
Finance in order to obtain larger budget allocations.  The Ministry 
and Kenya's trade unions also need resources and capacity building 
to play an effective role and maintain emphasis on employment issues 
in the GOK's development of macro-economic and structural adjustment 
policies.  LabAtt agreed the Ministry is starved for the resources 
needed to fight child labor, carry out safety inspections, and 
enforce the labor laws.  He suggested that investment in IT would 
also help the Ministry, whose website is outdated, and whose e-mail 
usually does not function. 
 
Promoting Decent Work Agenda 
---------------------------- 
 
¶7. (SBU) In November, the African branch of the International 
Confederation of Free Trade Unions (ICFTU-AFRO) and the Central 
Organization of Trade Unions - Kenya (COTU) agreed to participate in 
the January 2007 World Social Forum (WSF) in Nairobi.  Their goal 
was to promote the Decent Work agenda and highlight other broader 
issues affecting workers in the African continent.  In his meeting 
with LabAtt, AFRO SG Kailembo made it clear that he and COTU SG 
Atwoli had worked hard to prevent more radical elements in the labor 
movement and their allies in the WSF from hijacking the trade union 
agenda. 
 
Employment Policy 
----------------- 
 
¶8. (U) ILO Rep Schwettmann also discussed developing an employment 
policy with the Ministry.  LabAtt pointed out that the formal sector 
accounts for only about 10% of Kenya's employment.  Any employment 
policy should focus on strengthening the informal sector, commonly 
known as Jua Kali, and vocational and business training, rather than 
worrying about job losses from privatization of parastatals. 
Capital at reasonable interest rates for small and medium 
enterprises is desperately needed.  LabAtt warned that the same 
barriers of high crime, corruption, a dysfunctional judicial system, 
and poor infrastructure that inhibit formal sector investment and 
job creation also constrain job creation in the informal sector. 
The GOK calculates that informal sector employment grew by 6.9% in 
2005 to reach 6.4 million, creating 414,400 new jobs, whereas formal 
sector job growth was only 44,000, restricted mainly by the 
continuing decline in public sector employment. 
 
¶9. (U) The Labor Ministry told the ILO representative the four labor 
reform bills drafted by the ILO in 2004 under the DOL-funded 
Strengthening Labor Relations in East Africa (SLAREA) project had 
been approved by the Cabinet, and had been sent to Parliament. 
LabAtt explained that the bills had to be published (gazetted) 
before being sent to Parliament, and this would have to wait until 
Parliament returned to session in March.  The bills were drafted to 
bring Kenya's labor laws into closer compliance with ILO norms, and 
to harmonize Kenya's, Uganda's and Tanzania's labor laws before the 
East African Community (EAC) allowed free movement of labor.  Labor 
Commissioner Kavuludi told the press Parliament would debate the 
labor bills after it completed work on an unnamed bill not passed in 
an earlier session. 
 
Comment 
------- 
¶10. (SBU) Kenya's social partners are making some progress in 
implementing the ILO Decent Work Agenda as elements of the 
Ouagadougou Declaration and Action Plan on employment and poverty 
alleviation, 30 months after the conference.  Critics of the YEDF 
dismiss it as an election year ploy, but the project has been under 
development for at least a year.  It is encouraging that the GOK 
decided not to give MPs control over distribution of the funds, 
relying mainly on financial institutions to tap their experience. 
Creating Divisional Social Development Committees (DSDC) to 
distribute Ksh 1 million (about US$14,493) in each district may 
reduce MPs' control over the funds.  However, it seems likely the 
DSDC's will repeat the uneven levels of transparency and 
effectiveness experienced by the Constituency Development Fund 
Committees over the last few years. 
 
RANNEBERGER