VZCZCXRO7142
PP RUEHROV
DE RUEHNR #0855/01 0880942
ZNR UUUUU ZZH
P 280942Z MAR 08
FM AMEMBASSY NAIROBI
TO RUEHC/SECSTATE WASHDC PRIORITY 5289
RUEHLMC/MILLENNIUM CHALLENE CORP
INFO RUEATRS/DEPT OF TREASURY WASHDC
RUCNIAD/IGAD COLLECTIVE

UNCLAS SECTION 01 OF 04 NAIROBI 000855 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR AF/E, AF/EPS, EB/IFD/OMA, AND A/S FRAZER 
USAID FOR AFR/AA KATE ALMQUIST, AFR/EA CARRIE THOMPSON AND 
JULIA ESCALONA 
TREASURY FOR VIRGINIA BRANDON 
LONDON AND PARIS FOR AFRICA WATCHERS 
 
E.O. 12958:  N/A 
TAGS: ECON EAID EFIN PGOV KE
SUBJECT: KENYA'S NATIONAL RECONCILIATION AND EMERGENCY SOCIAL AND 
ECONOMIC RECOVERY STRATEGY. 
 
 
NAIROBI 00000855  001.2 OF 004 
 
 
¶1.  Summary: On March 17, 2005, the Grand Coalition Government of 
Kenya (GCG) unveiled the National Reconciliation and Emergency 
Social and Economic Recovery Strategy.  This strategy paper, which 
has been transmitted as an e-mail attachment to State/AF/E and 
USAID/AFR/EA, presents actions that the GCG will take to ameliorate 
the effects of post election violence on the economy.  The strategy 
will be implemented during March - June 2008 and covers:  (a) 
security, peace building and reconciliation; (b)resettlement of 
internally displaced persons; (c) revitalization of productive 
sectors - agriculture, tourism and business; (d) restoration of 
damaged infrastructure; and (e) positive engagement of the youth. 
The total cost is KSh31.47 billion (approximately $500 million). 
The Government has re-allocated KSh1.25 billion and the current 
shortfall is KSh30.22 Billion.  The GCG is looking to secure funding 
and in-kind support from the private sector, international and 
domestic PVOs/NGOs, and the donor community to fill this financial 
gap. At the meeting, the Ambassador indicated that the U.S. has 
already pledged $25 million in new funding. End summary. 
 
------------------- 
Background/Context 
------------------- 
 
¶2. Kenya held the fourth multiparty general election on December 27, 
¶2007.  The dispute that followed the announcement of the results of 
that election by the Electoral Commission of Kenya (ECK) on December 
30, 2007, quickly degenerated into an unprecedented seven-week long 
spate of violence in Coast, Nairobi, Nyanza, Rift Valley and Western 
Provinces.  The conflict led to an estimated loss of 1,200 lives, 
dislocation of more than 300,000 people or Internally Displaced 
Persons (IDPs), destruction of property, heightened ethnic hatred, 
and a general disruption of social and economic life.  An additional 
50,000 IDPs are estimated to have been dislocated and are housed by 
friends, relatives or have relocated to their ancestral homes. 
 
¶3.  The signing of the National Accord and Reconciliation Agreement 
between President Mwai Kibaki and ODM leader Raila Odinga on 
February 28, 2008 marked a turning point in the post-election 
conflict.  The agreement paved the way for the restoration of peace 
and security in the country and a return to normalcy in all spheres 
of the society and economy. 
 
¶4.  The two leaders established a 10-member committee from PNU 
Coalition and the ODM to look into the political, economic, and 
social challenges facing the country, including post-election 
conflict and recommend policies and programs for economic recovery. 
At its first meeting on March 10, 2008, the Committee adopted the 
name the National Accord Implementation Committee (NAIC). 
 
¶5. The NAIC decided that the development of an emergency recovery 
program would be its first priority.  This program is to be 
implemented in the period to June 30, 2008.  Subsequent activities 
of the Committee were prioritized as development of the GCG policy 
guidelines and formulation of short, medium, and long term 
development strategies. 
 
------------------- 
The Recovery Agenda 
------------------- 
 
¶6.  Kenya has achieved significant economic growth since the 2002 
general elections.  The economic growth rate rose steadily from 0.6 
percent in 2002 to nearly 7.0 percent in 2007.  Progress has also 
been made towards the realization of the Millennium Development 
Goals (MDGs) with poverty declining from 56% in 2000 to 46% in 2006. 
 The introduction of the free primary education in 2003 has led to 
an increase in total primary school enrollment from 6.1 to 7.8 
million. These impressive gains, however, are jeopardized by the 
post-election crisis.  The Government's proposed plan is to expedite 
the implementation of projects under this strategy to minimize 
bureaucratic bottle-necks.  This includes fast-tracking of 
procurement of goods and services without circumventing existing 
laws and regulations. 
 
¶7. The Strategy is divided into four parts that correspond to the 
issues the NAIC agreed would require emergency interventions for 
recovery.  These include: 
(a) National Reconciliation, Peace Building and Security; 
(b) Resettlement of Internally Displaced People; 
(c) Revitalization of Key Economic Sectors; and 
(d) Positive Engagement of the Youth. 
 
--------------------------------------------- ------- 
National Reconciliation, Peace Building and Security 
 
NAIROBI 00000855  002.2 OF 004 
 
 
--------------------------------------------- ------- 
 
¶8. The post-elections conflict severely impacted the economy and 
threatened the momentum of the social and economic gains of the last 
few years.  The disruption of economic activities, especially 
farming, tourism and commerce, have contributed to reductions in 
employment and incomes.  Private and public property (buildings, 
schools, public offices, motor vehicles, roads and railway lines 
were destroyed.  Most importantly, a heightened negative ethnicity 
threatened the survival of Kenya as a nation. 
 
¶9. The GCG is committed to develop a pragmatic and all-inclusive 
national reconciliation and peace building program that will promote 
a renewed harmonious co-existence of Kenyans.  The National 
Reconciliation and Peace Building Program will be national in scope 
with activities in all districts and constituencies.  Civil society 
organizations  and non-state actors will be encouraged to partner 
with the government in developing effective reconciliation and peace 
building programs.  The Government will put in place suitable 
structures to provide the requisite synergy among the key players 
including provincial administration, private sector, civil society, 
media, community based organizations, non-governmental 
organizations, popular artists and musicians, athletes and 
faith-based organizations.  Activities to be implemented include: 
joint reconciliation and peace rallies, music as a tool for 
reconciliation and development, media advertisements and guest 
appearance; legal measures to deter future occurrence; and the 
scaling up safety measures. 
 
--------------------------------------------- ------ 
Resettlement of Internally Displaced Persons (IDPs) 
--------------------------------------------- ------ 
 
¶10.  The post-election crisis threw Kenya into a period of 
unprecedented uncertainty that created a large number of IDPs. 
Government estimates that as of February 19, 2008, there were at 
least 301,000 in camps across the country and additional 50,000 who 
have been housed by friends, relatives, or relocated to their 
ancestral home.  The strategy notes that different categories of 
IDPs will require different interventions that include securing 
abandoned land/house for safe return, survey, demarcation and 
allocation of land, relocation, integration, and compensation. 
 
¶11.  The GCG would like to resettle and reintegrate IDPs as quickly 
as is safely possible.  It plans to establish the Government 
Resettlement and Reintegration Committee within the Ministry of 
State for Special Programs.  Peace building and reconciliation is 
envisioned that will be led by the two key principal leaders(Kibaki 
and Odinga)as well as political and opinion leaders of the affected 
communities, the provincial administration, churches, community 
based organizations, teachers, youth groups, women groups, persons 
with disabilities, etc.  The Resettlement and Reintegration Program 
will include the following components in order of priority: 
security, shelter, food aid, social services, and revitalization of 
economic activities. 
 
-------------------------------------- 
Revitalization of Key Economic Sectors 
-------------------------------------- 
 
¶12. The Agricultural Sector.  Post-election violence impacted 
negatively on the agricultural sector.  The most affected areas are 
Rift Valley, Western and Nyanza provinces where many farmers have 
either been directly or indirectly affected through the destruction 
of food stocks in the stores, crops in the field, displacement of 
farm families and destruction of infrastructure.  Transport services 
were also disrupted thus affecting the delivery of both agricultural 
inputs and outputs.  As a result of the violence, land preparation 
is lagging.  The cost of farm inputs and land preparation has also 
escalated beyond affordable levels.  The Government makes the case 
for short-term assistance to the affective families to mitigate 
future food shortages.  The anticipated assistance will be in the 
form of (a) provision of maize seeds; (b) provision of fertilizers; 
(c) intensification of extension services; (d) assistance for land 
preparation and planting; and (e) rehabilitation of Agricultural 
Society of Kenya (ASK) show grounds in Nakuru occupied by IDPs. 
 
¶13. The Tourism Sector. Since the onset of post-election violence, 
tourism practically collapsed as a result of the negative publicity 
in the global media.  Projections by the Kenya Tourist Board 
indicate that the sector has been loosing KShs 5.5 Billion per month 
for January/February.  Under the first phase of the Strategy, Kenya 
will be re-branded as a safe destination.  The second phase of the 
recovery will be part of a wider marketing campaign to include:  (a) 
 
NAIROBI 00000855  003.2 OF 004 
 
 
re-branding of Kenya in overseas markets; (b) request to countries 
that have imposed travel advisories to remove them; (c) Suspension 
of programmed increment of park fees by the Kenya Wildlife Service 
for the entire; (d) hotels, airlines and tour operators will be 
encourage to offer discounts to attract customers; and (e)security 
will be enhance on critical tours routes such as those leading to 
game parks and tourist police force will be strengthened. 
 
¶14.  Livestock and Fisheries Development.  The post election 
violence has caused losses of K Shs 1.11 Billion - mostly in Nyanza 
and Rift Valley Provinces.  Losses included destruction of 
government and private assets, loss of livestock, non-collection of 
revenue and reduce production and service delivery.  Plans to 
revitalize livestock and fisheries sectors include:  (a) vaccination 
of livestock in affected areas (Rift Valley, Western, North Eastern 
and Nyanza Provinces.); (b) assistance to 4,000 fisher folk (Lake 
Victoria and Lake Naivasha) for losses incurred due to 
destruction/loss of fishing equipment; (c) assistance to livestock 
and poultry farmers in restocking especially in greater Trans Nzoia 
District, Western and Nyanza Provinces; (f) assistance in provision 
of animal feeds to IDPs; and (e) restocking of government breeding 
farms. 
 
¶15. Small Businesses. One of the most affected sectors of the 
economy is the Micro and Small Enterprises (MSEs) that include both 
the formal and informal sub-sectors.  Micro and small businesses 
were burnt, looted and/or destroyed in Nairobi, Eldored, Nakuru, 
Kisumu, Mombasa and Naivasha.  In addition, the post-election 
violence led to displacement of human capital from their work 
stations.  There has also been a disruption of access to raw 
materials and supply of goods and services.  It is estimated that 
business enterprises in urban centers lost about 30 billion shilling 
in the form of property and capital as a result of post-election 
violence.  It is further estimate that business losses in rural 
areas amounted to KShs 60 billion.  The strategy include 
interventions to:  (a) increase security, highway patrols, and 
community policing/reporting mechanisms; (b) Assistance to small 
businesses to re-build business premises, provision of working 
capital for cases not covered by insurance, restock of raw material 
and restoration of supply and distribution networks. 
 
¶16. Infrastructure.  The Government is currently undertaking an 
in-depth review to establish an appropriate rehabilitation budget. 
Emergency funds are, however, needed to repair damaged bridges, 
culverts, railway lines, 
roads, water supplies, and sanitation facilities. 
 
-------------------------------- 
Positive Engagement of the Youth 
-------------------------------- 
 
¶17.  There are 11 million youth between the ages of 18 and 35 years. 
 Youth play a vital role in shaping the present and the future of 
all societies.  The post-election events have shown that having 
large numbers of relatively well educated, but unemployed, youth is 
a serious deterrence to economic growth and a real threat to 
national security.  Those primarily involved in the post-election 
violence were youth. The Government will prioritize immediate 
livelihood needs of the youth particularly those who lost the 
business premises and tools by re-establishing them to back to their 
former status.  The Government will also undertake the following 
initiatives as a means of creating youth employment opportunities: 
(a) construction, maintenance and repair of road in rural areas; (b) 
reconstruction of burnt houses, public utilities and in the 
resettlement of displace people; (c) planting trees under the "Trees 
for Jobs Programme"; (d) environment sustainability through water 
conservation measures; (e) peace building an reconciliation 
initiatives; and(f) additional recruitment of 4000 youth to the 
National Youth Service. 
 
 
-------------------------------------------- 
The Donor Response to the Recovery Strategy 
-------------------------------------------- 
 
¶18.  Individual donor responses vary widely.  In general, there has 
been a strong appreciation that in preparing this document, the GCG 
is being forced to work together for the national good.  The 
exchange between senior PNU and ODM officials at the unveiling was 
very healthy and collegial.  Both sides clearly had a sense of 
ownership of the document and were committed to its realization. 
Given the short preparation time, the document is well-conceived 
comprehensive, and generally consistent with our field-based 
knowledge. The strategy does, however, have some serious flaws. 
 
NAIROBI 00000855  004.2 OF 004 
 
 
First, the document is static rather than dynamic in that it assumes 
resettlement of 350,000 IDPs in the next three months, which is not 
realistic.  While the text of the document notes that the different 
types of IDPs will have different requirements, this is not 
reflected in the budget.  The budget also includes line items that 
may be more appropriately funded within the actual budget as opposed 
to a supplemental request.  Finally, many of the budget parameters 
appear to be unsupported by current costs.  The strategy is also 
limited in that it does not address program implementation 
mechanisms and modalities. 
 
¶19.  For these reasons, the donor community is unwilling to give the 
Government carte blanche to implement the program.  Rather, the 
donors plan to respond as true development partners working in 
collaboration with each other, the government, NGOs and private 
sector partners to facilitate the transition.  The donor community 
notes the time-sensitivity of the resettlement issue, but also 
recognizes that resettlement cannot occur in isolation.  It must be 
linked to addressing the underlying causes of the conflict - 
poverty, inequality, corruption, land injustices, youth unemployment 
and others. Many in Kenya's civil society are concerned that if 
donors respond to the recovery strategy without addressing these 
underlying causes, we will be setting a dangerous precedent that 
provides short-term superficial solutions, which may undermine 
resolution of the underlying issues. 
 
¶20. At the meeting, the Ambassador made clear the U.S. commitment to 
assist Kenya recover from the crisis and to support implementation 
of the political accord. The Ambassador reviewed the support 
humanitarian and other support we are already providing, and 
indicated that the U.S. has pledged $25 million in additional 
support. 
 
------- 
Comment 
------- 
 
¶21.  The National Reconciliation and Emergency Social and Economic 
Recovery Strategy is the Grand Coalition Government's effort to 
accelerate Kenya's recovery process.  While there are significant 
short-comings in the strategy, the Coalition's leadership and 
commitment to nation-building is most welcome.  As we review the 
USG's recovery plans, we find that our plans are fully consistent 
with the interventions proposed within the strategy.  We are also 
confident that we will be able to develop implementation 
modalities/mechanisms in a coordinated fashion that will ensure our 
efforts contribute to the overall objectives of the recovery 
strategy. 
 
¶22.  We share the concern of civil society and some other donors 
that recovery activities cannot be distanced from addressing the 
underlying factors of the conflict.  We will strive to find the 
appropriate balance to ensure that the underlying causes are 
actively addressed while simultaneously encouraging a responsible 
and timely recovery. 
Ranneberger