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P 171322Z MAR 09
FM AMEMBASSY NAIROBI
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INFO RUEHDS/AMEMBASSY ADDIS ABABA 0462
RUEHDR/AMEMBASSY DAR ES SALAAM 6414
RUEHKM/AMEMBASSY KAMPALA 3198

UNCLAS NAIROBI 000544 
 
SIPDIS 
 
DEPARTMENT FOR AF/E 
 
E.O. 12958: N/A 
TAGS: KDEM PGOV PREL ECON KE
SUBJECT: PUSHING FOR IMPLEMENTATION OF ECONOMIC AND 
POLITICAL REFORMS IN KENYA 
 
UNCLASSIFIED -- ENTIRE TEXT. 
 
¶1. The U.S. has a strong interest in seeing the coalition 
government move ahead with both economic and political 
reforms.  They are inextricably linked, especially in view of 
the global economic crisis.  As our reporting has indicated, 
we are pursuing a concerted strategy to achieve this, 
including by energizing civil society, the private sector, 
religious groups, and the media.  Public diplomacy is an 
important part of these efforts. 
 
¶2. As part of efforts to energize the private sector, the 
Ambassador addressed the influential Nakuru Business Council 
in February.  The remarks were well-covered by the media. 
 
¶3. Begin text of remarks: 
 
I am delighted to speak with you today in light of the 
pivotal role that the private sector must play in promoting 
prosperity and driving the agenda for fundamental reform and 
change. I commend you for helping foster reconciliation 
during last year,s violence and your ongoing commitment to 
Kenya,s development, both economically and politically. 
 
Bringing About Fundamental Change 
 
The crisis that Kenya suffered last year was a watershed that 
brought into sharp relief the underlying problems that have 
plagued the country for nearly 50 years:  ethnic politics, 
inequitable distribution of wealth, and the culture of 
impunity that has enabled violence and corruption to 
proliferate.  As a friend and partner of Kenya, we were glad, 
along with others, to stay at the side of the Kenyan people 
at that hour of great need.  But, as I have said before, it 
is the Kenyan people themselves who played the most important 
role in ending the crisis.  Demonstrating a true democratic 
spirit that reflected high expectations, the Kenyan people 
mobilized as never before. Ordinary Kenyans, civil society, 
religious groups, the private sector, and the media all 
played important roles.  The dynamic and vigorous way in 
which Kenyans came together galvanized pressure for the 
creation of a coalition government. 
 
During my travels throughout this country since then, I have 
seen how this vibrant democratic spirit is very much alive. 
The Kenyan people realize that the fundamental problems 
unmasked by the crisis must be addressed through fundamental 
change.  The vehicle for producing that change is the reform 
agenda agreed to by the coalition government.  Kenyans are 
speaking up and are insisting on fundamental reform. 
 
That reform agenda is far-reaching, embracing constitutional 
revision, establishment of an independent electoral 
commission, and creation of a Special Tribunal to investigate 
and, if warranted by the evidence, prosecute those suspected 
of involvement in post-electoral violence.  The reform agenda 
also embraces land reform, police reform, and the fight 
against corruption, among other areas. 
 
Although this is a very ambitious agenda, many Kenyans have 
told me that it can be carried out if leaders demonstrate the 
political will to do so, and if the Kenyan people insist on 
action.  There can be no return to the ways of the past, and 
the culture of impunity must not be allowed to persist.  Half 
measures and window dressing -- whether with respect to 
institutional reforms or to fighting the scourge of 
corruption ) will not be credible to the Kenyan people or to 
the international community.  We stand with the Kenyan people 
who are insisting that the corruption cases which have come 
to light be fully investigated and perpetrators prosecuted. 
It is not a question of rounding up the usual suspects and 
rearranging positions, and then doing business as usual. The 
tragic crisis of last year has opened up an unparalleled 
opportunity to bring about fundamental change -- and I 
believe that nothing less than fundamental change will 
satisfy the Kenyan people. 
 
If carried out, that change will lay the basis for stronger 
democratic institutions and a better future for all Kenyans. 
There is in fact no alternative to the reform agenda, for 
without it Kenya faces the specter of even greater trouble in 
the future, and none of us want to see that. 
 
While Kenyans are impatient for change, I would argue against 
those that might become cynical and those naysayers who see 
the glass as half empty. Let there be criticism, but let it 
be realistic and constructive. The ethnic attitudes and the 
culture of impunity that have prevailed in Kenya cannot be 
 
altered overnight.  However, implementation of the reform 
agenda will launch a process of fundamental change and give 
Kenyans confidence in the future of their great country. 
Although we all want to see more expeditious implementation, 
progress is being made on the reform agenda. 
 
A coalition of ordinary Kenyans, civil society, religious 
groups, the private sector, and the media exerted the 
pressure which helped resolved the crisis last year.  It is 
essential for Kenyans to reconstitute that loose coalition to 
press for rapid full implementation of the reform agenda, and 
to maintain momentum for fundamental change.  You, the 
private sector, have a key role to play.  I urge you to act, 
in concert with others, to help drive this nation toward 
peaceful, fundamental change.  Seize this historic 
opportunity. 
 
Implications of the Global Economic Crisis 
 
While acknowledging the limited progress that has been made, 
we must recognize the enormous challenges ahead and the very 
difficult context in which reforms must be carried out. The 
global economic crisis presents a huge challenge for Kenya. 
As World Bank President Robert Zoellick said, "the financial 
shock waves in the United States and Europe will reverberate 
in the global economy.  The stark reality is that developing 
countries must anticipate and prepare for a drop in trade, 
remittances, and domestic investment." 
 
We are seeing this impact in Kenya, which was already 
suffering from the negative economic effects of the 
post-election violence.  Growth is off, tourism is down, 
horticulture is taking a hit, remittances are down, and 
Kenyan capital markets have slowed to a crawl. 
 
I attended a conference of donors on February 9 in Nairobi, 
and the Prime Minister, Deputy Prime Minister, and Minister 
of Finance all made clear that Kenya,s growth prospects -- 
as the private sector knows better than anyone -- have been 
damaged by the dual shocks of the violence and global 
downturn.  The lack of rainfall and poor agricultural 
policies have exacerbated matters.   Given Kenya,s 2.9% 
population rate, it,s possible that per capita income will 
actually decline in 2009. 
 
Today,s tough economic environment makes Kenya,s quest to 
be competitive worldwide even more urgent.  A flight to 
developed markets has been a hallmark of this global crisis, 
with countries chasing fewer trade opportunities and a 
smaller pool of investment funds. 
 
Competition, both globally and within this region, for 
markets and investment are tougher than ever.   Kenya must 
sell itself as never before as THE location in Africa to come 
and do business.  A focused Kenyan approach can catapult 
Kenya forward as a model of economic and political recovery 
in a way that will attract investors and tourists.  Given the 
country,s huge economic and political challenges, now ) 
more than ever ) Kenya needs reform that will bring about 
sustained peace and prosperity. 
 
Economic Progress and Political Reforms Are Linked 
 
As we consider the impact of the global economic crisis on 
Kenya and the challenging reform agenda that Kenyans must 
implement, it is essential to keep in mind that economic 
progress and the political reform proces are inextricably 
linked.  Implementing fully the reform agenda is key to 
achieving equitable economic growth. 
 
-     Foreign direct investment, especially from the U.S., 
will not grow substantially unless investors are confident 
that Kenya has a stable democratic system. 
-     Decisive actions to end the culture of impunity are 
essential in order to boost investor confidence. 
-     Constitutional change, including provisions for 
devolution of power to the local level; effective actions 
against corruption; and economic reforms are all vital to 
create the framework for equitable economic growth for all 
Kenyans. 
 
The political reform agenda has been much discussed and the 
elements are clear.  Less clear, perhaps, is the agenda for 
economic reforms. 
 
Although a broad range of economic reforms are needed, in our 
view the following steps are vitally needed to stimulate 
investment and economic growth. 
 
 
-     Pass the Anti-Money Laundering Bill. 
-     Quickly and vigorously implement the 
Anti-Counterfeiting Law. 
-     Streamline the foreign investment process by 
establishing an effective one-stop shop for investors to cut 
through bureaucratic red tape. 
-     Implement the security enhancements necessary to enable 
Delta Airlines to land at Jomo Kenyatta Airport , and take 
the additional steps necessary to achieve FAA Category One 
Status, permitting Kenya Airways to fly direct to the U.S. at 
a time of their choosing. 
 
U.S. Assistance: Helping Kenya Help Itself 
 
What the United States wants for Kenya is what Kenya wants 
for itself:  a prosperous democratic future that advances the 
well-being of all Kenyans. 
 
The extent of the partnership between our two countries 
reflects the importance we attach to Kenya. Every year over 
$2.5 billion in resources flow from the U.S. to Kenya from 
public and private sources.   Lest you think this money flows 
into Kenya at a macro level and does not impact the 
grassroots, I want to assure you that we are investing right 
here in Nakuru.  Following the election crisis, the U.S. has 
been supporting Nakuru,s Center for Conflict Resolution in 
its work with youth and women to strengthen traditional 
dispute mechanisms and encourage all citizens of Nakuru to 
live together in peace. 
 
Since the tragic Molo fire, Nakuru Hospital has admirably 
stepped forward to treat a substantial number of the burn 
victims.  We do not want Nakuru's health system to face this 
challenge alone, and today, in partnership with the Church of 
Jesus Christ of Latter Day Saints, we will be donating 95 
boxes of medical supplies to the hospital to assist the 
victims of this tragedy.  This assistance follows $ 45,000 
(355,000 KShs) in U.S. Government assistance to renovate an 
HIV / AIDS clinic at the hospital. 
 
Stepping back to look at our broader assistance programs that 
are of interest to this Council, I would like to highlight 
particularly the African Growth and Opportunity Act (AGOA). 
Under AGOA, $255 million worth of Kenyan exports*including 
agricultural exports produced right here in Nakuru*entered 
the U.S. market duty free. 
 
The annual high-level forum to discuss AGOA is slated to take 
place in Nairobi in August 2009.  The AGOA forum provides 
Kenya with an invaluable opportunity to showcase its trade 
and investment potential.  In order to do this successfully, 
it is essential to have made substantial progress on 
implementing the economic and political reform agendas before 
the AGOA forum convenes.  I am also discussing with the Prime 
Minister how he can accomplish a successful trade mission to 
the United States, perhaps before the AGOA forum.  An 
investment and trade mission will not be successful, however, 
unless substantial progress has first been made on political 
and economic reforms. 
 
Speaking of economic reform and the fight against corruption, 
I want to touch on the current food emergency facing Kenya. 
I know from both Kenyan and American agricultural experts 
that this country is ) with the right policies ) fully 
capable of feeding itself.  Corruption, the retention of 
statist policies long-proven to be inefficient and 
economically unviable, and outdated land polices have caused 
the current crisis.  To assist those in need the U.S. will 
provide $42 million in food assistance by mid-March, but we 
are also insisting that the government immediately takes 
policy steps to alleviate the crisis.  Now that President 
Kibaki has signed the Biosafety Bill, the government should 
move swiftly to develop the implementing regulations to allow 
for the importation of modern disease and pest resistant 
maize so that the hungry can be fed and the crisis 
alleviated. 
 
Kenya needs to increase its competitiveness in the 
agricultural sector by reforming policy to create a 
market-driven enabling environment (with broader involvement 
by the private sector and stakeholders) so that farmers can 
boost production to meet the needs of the growing population. 
 The government must work to rationalize the maize market by 
allowing for the millers and farmers to trade freely, 
eliminate permanently the 50% duty on maize imports, and 
insist upon transparency and accountability in the management 
of the NCPB so that there are fewer opportunities for 
 
middle-men to abuse the system and profit from the country,s 
emergency reserves.  A positive step to that end is the 
government,s decision to outsource management of buying and 
selling grains by the NCPB to an international firm beginning 
in September 2009.  The U.S. supports the efforts undertaken 
by the government thus far, but we know that much more needs 
to be done now to avert a future crisis. 
 
I am pleased to announce that the United States is ready now 
to provide $83 million in credit guarantees for the 
importation of white maize, but only if the importation is 
carried out in a transparent manner. 
 
The U.S.-Kenyan Partnership 
 
The United States has faced several major crises during its 
long history.  Among others, the civil war, the Great 
Depression, and the race riots during the 1960,s stand out. 
The challenge we faced each time was how to seize the 
opportunity for renewal presented to us as a result of those 
crises.  In what were difficult, wrenching processes that 
threatened to tear our country apart, we managed to rise to 
the challenge each time.  In so doing, American emerged with 
a stronger democracy. 
 
I urge Kenyans to seize the opportunity they now havefor 
renewal, and move forward on reform in order to bring about 
fundamental change.  For years, Kenyans have been told that 
reform is coming whether in the form of a new constitution, 
more democratic elections, or an end to corruption on a grand 
scale.  The time for talk is over; the time for concrete 
action is now.  The United States will remain with you every 
step of the way. 
 
With the election of a son of Kenya as President of the 
United States, the partnership between our countries has 
never been closer, so I want to close by citing Obama,s own 
words. In his inaugural address President Obama talked to 
Americans about the necessity for reform and change in order 
to address the problems we face. In thinking about the agenda 
for fundamental change in Kenya, I want to recall what then 
Senator Obama said when he addressed students at the 
University of Nairobi in 2006. 
 
Senator Obama stated that: &In the end, if the people cannot 
trust their government to do the job for which it exists - to 
protect them and to promote their common welfare - all else 
is lost. And this is why the struggle against corruption is 
one of the great struggles of our time." 
 
He went on to say that, based on his observations, "the 
Kenyan people are crying out for real change, and many 
Kenyans seemed to be sending (signals) of dissatisfaction 
with the pace of reform, and real frustration with continued 
tolerance of corruption at high levels.  Ethnic-based tribal 
politics has to stop. It is rooted in the bankrupt idea that 
the goal of politics or business is to funnel as much of the 
pie as possible to one's family, tribe, or circle with little 
regard for the public good . . .  Of course, in the end, one 
of the strongest weapons your country has against corruption 
is the ability of you, the people, to stand up and speak out 
about the injustices you see." 
 
Those words were prescient then and remarkably relevant now. 
While Kenya,s leaders must demonstrate the necessary vision 
and political will, you the Kenyan people must drive 
implementation by exercising your democratic rights in a 
peaceful way.  The private sector must play a major role in 
this process. Insist that your political leaders implement 
the reform agenda because your future -- and the future of 
your children -- depends on it. 
 
End text of remarks. 
RANNEBERGER