VZCZCXYZ0000
RR RUEHWEB

DE RUEHNR #0119/01 0211456
ZNR UUUUU ZZH
R 211456Z JAN 09
FM AMEMBASSY NAIROBI
TO RUEHC/SECSTATE WASHDC 8279
INFO RUCPDOC/USDOC WASHDC 3166
RUEATRS/DEPT OF TREASURY WASHDC
RUEHC/DEPT OF LABOR WASHDC
RULSDMK/DEPT OF TRANSPORTATION WASHDC
RUEHRC/USDA FAS WASHDC 1740
RUEHXR/RWANDA COLLECTIVE
RUEHBS/USEU BRUSSELS
RHMFIUU/FAA NATIONAL HQ WASHDC
RHEFHLC/HOMELAND SECURITY CENTER WASHDC

UNCLAS NAIROBI 000119 
 
STATE ALSO FOR AF/E AND AF/EPS 
 
STATE PASS USTR PATRICK COLEMAN 
 
STATE PASS USAID/EA 
 
STATE PASS USITC FOR ALAN TREAT, RALPH WATKINS, AND ERLAND 
HERFINDAHL 
 
STATE PASS TO DEPT OF TRANSPORTATION FOR CORNELIA HUNTER 
 
TREASURY FOR REBECCA KLEIN 
 
COMMERCE FOR BECKY ERKUL 
 
AGRICULTURE FOR US FOREST SERVICE 
 
TSA FOR JILLENE MACCREERY, CARLOS DE LA TORRE, AND MIRIAM MOSES 
 
FAA FOR DONNA KRIMSKI 
FAA REPRESENTATIVE DAKAR 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON SENV EAGR ELAB EINV EFIN ETRD EAID BEXP PINR
EAIR, ASEC, PTER, KCOR, KE 
SUBJECT:  KENYA ECONOMIC HIGHLIGHTS: JANUARY 2009 
 
REF: Nairobi 82 
 
This cable is not/not for internet distribution. 
 
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TABLE OF CONTENTS 
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¶1.  (SBU) IMF SEES SLOW GROWTH/RECESSION IN 2009 
¶2.  (SBU) TEACHERS STRIKE; POLICE MAKE ARRESTS 
¶3.  (SBU) CIVAIR LEADERSHIP UP IN THE AIR 
 
¶1.  (SBU) IMF SEES SLOW GROWTH/RECESSION IN 2009 
 
We met January 21 with IMF Country Director Scott Rogers to discuss 
his economic forecast.  Rogers said he expected only 2% CY2008 GDP 
growth due to the double whammy of post-election violence and the 
global downturn.  Because of ongoing recessions in much of the 
developed world, Rogers anticipates that Kenya's economy will expand 
by only about 3% (half its potential) in CY2009.  Given Kenya's 2.9% 
population rate, he suggested the country would essentially 
experience a recession in 2009.  Indicators for slow growth include 
falling remittances (down 33% in November) and sluggish demand for 
key exports tourism, cut flowers, tea and coffee.  The IMF also 
expects foreign direct investment to fall in the coming months. 
 
Rogers reported that Kenya has expressed interest in pursuing 
financing through the IMF's Exogenous Shocks Facility, designed to 
help developing countries weather the global economic crisis. 
Rogers thought Kenya could meet the Facility's "light" 
conditionality and access $100 million.  The proceeds would likely 
help subsidize maize prices, which have doubled since last year. 
Rogers said the Fund would not be speaking out against the current 
maize and oil scandals (septel), as fighting corruption lies outside 
the Fund's mandate/programs. 
 
¶2.  (SBU) TEACHERS STRIKE; POLICE MAKE ARRESTS 
 
As planned, the Kenya National Union of Teachers (KNUT) began to 
strike January 19 demanding an immediate pay increase for its 
approximately 200,000 members (reftel).  While KNUT and the 
government reached agreement on the size of a pay hike 
(approximately 25%), the government insists on phasing in the raise 
over three years.  According to media reports, the police arrested 
dozens of teachers across the country, including KNUT officials, for 
participating in the illegal strike.  The government continues to 
threaten to replace the teachers if they don't return to work.  The 
strike has frozen primary education for millions of Kenyan 
children. 
 
¶3.  (SBU) CIVAIR LEADERSHIP UP IN THE AIR 
 
Big questions remain about the future leadership of both the Kenya 
Airports Authority (KAA) and Kenya Civil Aviation Authority (KCAA). 
KAA's managing director, George Muhoho, will reportedly step down 
once his contract expires in two months.  Muhoho was recently 
implicated in a government probe into the mishandling of 
infrastructure contracts; he is a close friend of President 
Kibaki's.  Since Chris Kuto's retirement as managing director of 
KCAA in December 2008, the government has struggled to find a 
suitable replacement.  This gap has left air operators anxiously 
pushing government to quickly name and install Kuto's successor. 
Given U.S. interest in both Kenya's achievement of FAA Category 1 
and a smooth launch for Delta Airlines in June 2009, we will closely 
follow developments surrounding these positions. 
 
 
 
RANNEBERGER