VZCZCXYZ0000
RR RUEHWEB

DE RUEHNR #0641/01 0910929
ZNR UUUUU ZZH
R 010929Z APR 09
FM AMEMBASSY NAIROBI
TO RUEHC/SECSTATE WASHDC 9024
INFO RHMFIUU/DEPT OF HOMELAND SECURITY WASHDC
RHMFIUU/FAA NATIONAL HQ WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUEHC/DEPT OF LABOR WASHDC
RUEHRC/USDA FAS WASHDC 1789
RUEHXR/RWANDA COLLECTIVE

UNCLAS NAIROBI 000641 
 
HOMELAND SECURITY FOR TRANSPORTATION SECURITY ADMINISTRATION CONNIE 
HUNTER 
 
STATE PASS USTR FLORIZELLE LISER, CONNIE HAMILTON, PATRICK DEAN 
COLEMAN, AND WILLIAM JACKSON 
 
STATE FOR AF/FO, AF/E, AND AF/EPS ANN BREITER, GABRIELLE MALLORY, 
MARY B. JOHNSON, AND TAWANNA DAVIDSON 
 
STATE ALSO FOR AF/EX SYLVIE MARTINEZ AND SONJA WRAY-BROWN 
 
AF/PD FOR CLAUDIA ANYASO AND TIJAN AYBAR 
 
STATE ALSO FOR EEB/TPP/BTA AMY HOLMAN 
 
STATE PLEASE PASS USAID/EA AND USAID/AFR/SD BRUNO CORNELIO AND JEFF 
MALLICK 
 
TREASURY FOR DAN PETERS AND REBECCA KLEIN 
 
COMMERCE FOR KEVIN BOYD, ALICIA ROBINSON, AND BECKY ERKUL 
 
AGRICULTURE FOR DON EVANS AND CATHY MCKINNELL 
 
LABOR FOR SUDHA HALEY AND MAUREEN PETTIS 
 
SENSITVE 
 
SIPDIS 
 
E.O. 12958:  N/A 
TAGS: ASEC EAIR ECON ETEX ETRD AGOA PGOV KCOR KE
SUBJECT: AUSTR LISER URGES KENYA TO TAKE ADVANTAGE OF AGOA 
OPPORTUNITIES AND TO IMPROVE BUSINESS CLIMATE 
 
This cable is not/not for internet distribution. 
 
¶1.  (SBU) Summary: Assistant United States Trade Representative 
Florizelle Liser encouraged Kenyan Trade Minister Amos Kimunya on 
March 16 to take full advantage of the AGOA framework to seek 
greater exports to the United States.  She also underscored that 
progress on Kenya's reform agenda is fundamental to an improved 
business climate in Kenya and a successful 2009 AGOA Forum.  In 
separate same day meetings with leaders of the Kenya Association of 
Manufacturers and the American Chamber of Commerce of Kenya, AUSTR 
Liser was asked to lobby in favor of an extension of the third 
country fabric waiver past 2012 and a decision to make AGOA a 
permanent trade regime.  Business leaders are anxious for Delta 
Airlines to begin direct service to Nairobi via Dakar.  AUSTR Liser 
and Economic Counselor reminded Minister Kimunya that the Kenya 
Civil Aviation Authority and Kenya Airports Authority are behind 
schedule in making required safety and security upgrades at Jomo 
Kenyatta International Airport that will allow Delta to land here in 
June.  End Summary. 
 
¶3.  (U) En route to the AU Trade Ministerial in Addis Ababa, 
Assistant United States Trade Representative Florizelle Liser spent 
March 16 in Nairobi holding meetings with Kenyan Minister of Trade 
Amos Kimunya and senior members of his staff responsible for 2009 
AGOA Forum preparations; the chairmen of the Kenya Association of 
Manufacturers (KAM) and the American Chamber of Commerce of Kenya 
(ACCK); and business leaders involved in bilateral trade, especially 
under AGOA.  (Ms. Liser also held in-house meetings with Ambassador 
Ranneberger and the mission's AGOA preparatory committee to get an 
update on AGOA Forum preparations.) 
 
------------------------------- 
Seize U.S. Market Opportunities 
------------------------------- 
 
¶4. (SBU) AUSTR Liser reminded Minister Kimunya as well as the Kenyan 
private sector of the tremendous opportunities that still exist 
under AGOA.  She pointed out that despite Kenya's own post-election 
violence and the global economic downturn, Kenya's exports to the 
U.S. were not affected much in 2008.  Ms. Liser noted that there was 
a lot of room for growth in areas such as toys and cut flowers, 
something she hoped would be helped by direct flights from the U.S. 
(see below).  The AUSTR for Africa added that the USG would continue 
to assist Kenyan exporters through the trade hubs to link them up 
with U.S. companies.  Both the Minister and Ms. Liser focused on the 
importance of regional trade and cooperation to Kenya's potential 
for greater success under AGOA. 
 
¶5. (SBU) Minister Kimunya focused on GOK achievements throughout the 
conversation, noting in particular improved efficiency at the Port 
of Mombasa and in the energy sector.  He asserted that other 
improvements to the business climate should allow for U.S. companies 
to do more added value production in Kenya.  Kimunya also pointed to 
infrastructure upgrades in roads and telecommunication as well as 
efforts to expand Special Economic Zones. 
 
------------------------ 
Airport Upgrades Overdue 
 
------------------------ 
 
¶6.  (SBU) Both Kimunya and the corporate executives, notably Jane 
Ngigi, the executive director of the Kenya Flower Council, were 
anxious to learn more about Delta Airlines proposed direct New York 
to Nairobi, via Dakar, service to begin in early June 2009.  AUSTR 
Liser said Delta remains interested but that US civil aviation 
officials are disappointed and exasperated by the failure of the 
Kenya Civil Aviation Authority and Kenya Airports Authority to make 
required safety and security upgrades at Jomo Kenyatta International 
Airport.  ECON/C noted that only 15% of the required improvements 
have been completed.  AUSTR Liser and ECON/C urged both the minister 
and the business leaders to weigh in and lobby for Kenya's prompt 
compliance with DHS/TSA recommendations already presented to senior 
Kenyan civil aviation officials. 
 
---------------------- 
Good Governance a Must 
---------------------- 
 
¶7.  (SBU) AUSTR told Kimunya that improved competitiveness and 
political reform, including action against corruption, are 
fundamental to an improved business climate in Kenya.  The coalition 
government's implementation of reform is now key to a successful 
AGOA Forum in August, she emphasized. 
 
¶8.  (SBU) Himself under a cloud of suspicion for failing to prevent 
a non-tendered sale of a major government property (the Grand 
Regency Hotel) to a Libyan group in April 2008 and then lying to 
Parliament about it while finance minister, Kimunya said he is 
confident Parliament will pass anti-money laundering legislation, 
but otherwise he and his Permanent Secretary, Dr. Cyrus Njiru, 
tended to blame the press for exaggerating episodes of apparent 
corruption involving senior members of the coalition government, 
among them the ministers of agriculture and energy.  Kimunya 
contended the coalition government is grappling with the 1980s-1990s 
neglect of vital infrastructure.  "We are playing catch-up," he 
said, "at a time when the volume of containers (at Mombasa Port) is 
increasing," thus putting added pressure on Mombasa Port, the 
railroad, and the Mombasa-Busia highway to Uganda.  As for the East 
African Community (EAC), he said the trade bloc is "coming on quite 
well."  Trade, he said, is the "new unifier" among nations and he 
said the EAC is aiming to achieve political integration by 2013. 
 
------------------- 
Make AGOA Permanent 
------------------- 
 
¶9.  (SBU) KAM Chairman Vimal Shah and Aga Khan representative Karim 
Dostmohamed, who oversees "Alltex," a major apparel company that 
supplies Dockers, appealed to AUSTR Liser that she push for an 
extension of the third country fabric waiver.  They, along with 
USAID Regional Agricultural Trade Expansion Support (RATES) program 
cotton and textile director Barry Fisher, told the Africa AUSTR that 
the sub-Saharan AGOA-eligible countries will simply not be able to 
produce sufficient cotton and yarn by 2012.  They will have to 
continue importing fabric. 
 
 
¶10.  (SBU) Shah and his organization's executive director, Betty 
Maina, who heads the AGOA Forum private sector sub-committee, also 
asked that the United States consider making AGOA a permanent trade 
regime.  In addition, they urged that the AGOA Forum be arranged in 
such a way that the Kenyans could register these requests with 
senior U.S. officials at the AGOA Forum.  Ms. Liser reassured the 
Kenyans that USTR is interested in ensuring interaction between the 
public and private sectors during the Forum. 
 
¶11.  (SBU) KAM members and Ministry of Trade officials were pleased 
to learn that USDA/APHIS had just approved runner beans and French 
green beans for export to the United States.  But they all expressed 
fears that Kenya's export garment industry is in peril.  KAM apparel 
and textile sector secretariat director Fred Kariuki noted that 
since the end of the Multi-Fiber Agreement on December 31, 2004, the 
local industry has seen a torrent of factory closings and thousands 
of jobs lost.  Once home to over 40 EPZ garment and textile 
factories exporting to the United States under AGOA, Kenya now has 
only 18 in operation and two of them are in trouble.  Shah admitted 
that Kenya must improve its infrastructure and lower energy costs in 
order to keep its apparel industry viable.  That Mombasa port is now 
operating 24/7 has helped matters.  Shah and the other KAM members 
commended various USAID programs, notably the Kenya Horticulture 
Development Program and the East and Central Africa Global 
Competitiveness Hub, for helping link Kenyan producers to American 
buyers.  Kimunya likewise thanked USAID for similar assistance to 
the government's Export Promotion Council. 
 
Ranneberger