VZCZCXYZ0000
RR RUEHWEB

DE RUEHNR #1036/01 1420751
ZNR UUUUU ZZH
R 220751Z MAY 09
FM AMEMBASSY NAIROBI
TO RUEHC/SECSTATE WASHDC 9617
INFO RUCPDOC/USDOC WASHDC 3216
RUEHRC/USDA FAS WASHDC 1808
RUEATRS/DEPT OF TREASURY WASHDC
RUEHC/DEPT OF LABOR WASHDC
RUEHXR/RWANDA COLLECTIVE
RUEHBS/USEU BRUSSELS

UNCLAS NAIROBI 001036 
 
STATE ALSO FOR AF/E AND AF/EPS 
 
STATE PASS USAID/EA 
 
STATE PASS USITC FOR ALAN TREAT AND PHILIP STONE 
 
TREASURY FOR REBECCA KLEIN 
 
COMMERCE FOR BECKY ERKUL AND USPTO OFFICE OF ENFORCEMENT 
 
LABOR FOR INTERNATIONAL LABOR AFFAIRS 
 
SIPDIS 
 
E.O. 12958:  N/A 
TAGS: ECON ELAB ECPS EINV EFIN ETRD KIPR PINR KE
SUBJECT:  KENYA ECONOMIC NOTES: MAY 2009 
 
REF: Nairobi 992 
 
This cable is not/not for internet distribution. 
 
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TABLE OF CONTENTS 
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¶1.  Leading Indicators Suggest Negative Per Capita Growth 
¶2.  Kenya Tourism Shows Signs of Life 
¶3.  USG-Sponsored IPR Conference Raises Awareness 
¶4.  Export Processing Zones (EPZ) Fared Well in 2008 
 
¶1.  Leading Indicators Suggest Negative Per Capita Growth 
 
Annual inflation measured from April '08-April '09 climbed 26% on 
higher food and medical/consumer good prices.  A recent U.S. Foreign 
Agricultural Service assessment indicates continuing white maize 
shortfalls, keeping pressure on both prices and the need to import. 
Remittances, a key social safety net and past driver of residential 
construction, fell 9% in Q1 2009 compared to Q1 2008.  Liquidity 
remains tight, and the Kenyan shilling has appreciated some 30% 
against the Ugandan shilling in the last four months, making Kenyan 
exports less competitive in its largest foreign market. 
Horticultural exports declined 33% in Q1 2009.  The Nairobi Stock 
Exchange's benchmark index is down 27% for the year.  In another 
sign of sluggish economic times, the region's largest cement company 
reports a 25% percent drop in FY09 earnings compared to the same 
period last year.  We continue to expect cuts in public sector 
expenditures due to rising budget deficits. 
 
Kenya's economy grew by only 1.7% in 2008 due to fallout from 
post-election violence and the global economic slump.  The IMF 
projects Kenya's GDP will grow by 2.4% in 2009, representing 
negative per capita growth given the country's 3% population rate. 
 
 
¶2.  Kenya Tourism Shows Signs of Life 
 
In a positive sign, however, tourism rebounded (relatively) in Q1 
¶2009.  Kenya welcomed 228,713 foreign arrivals January-March, up 
from 139,255 during the same period last year - albeit when Kenya 
was in the midst of post-election violence.  The Q1 2009 numbers are 
over 45,000 tourists short of the Q1 2007 figure of 273,909.  Kenya 
Tourist Board Acting Managing Director Marianne Ndegwa and other 
industry leaders attribute the rebound in large part to Barack 
Obama's election as U.S. President.  "The election of Obama played a 
significant role in putting Kenya on the world map," Ndegwa said in 
mid-May. The Kenya Tourist Board hopes 840,000 tourists will visit 
Kenya in 2009.  Kenya surpassed the one million mark for the first 
time in 2007 (1,048,732 tourists).  Tourism employs an estimated 
410,000 Kenyans and accounts for roughly 8% of GDP. 
 
¶3.  USG-Sponsored IPR Conference Raises Awareness 
 
Prime Minister Raila Odinga told attendees at his third private 
sector roundtable meeting (May 13) that the GOK would not tolerate 
continued dumping of counterfeit and substandard products into the 
market.  He vowed to take stern action (including dismissal) against 
any Kenya Revenue Authority Customs Service or immigration officer 
discovered to have abetted trade in counterfeit wares. 
 
The PM's comments were well-timed as some fifty government officials 
from Kenya, Uganda, Tanzania, Rwanda, and Ethiopia attended the May 
19-21 "East Africa Regional Seminar on Copyright Enforcement in the 
Internet Era."   (Post appreciates the U.S. Patent and Trade 
Office's support for this event.)  Attendees included MPs from 
Uganda, the head of Rwanda's Customs and Compliance Division, the 
chief of Tanzania's Counterfeit Department in the Fair Competition 
Commission, Ethiopia's copyright director, the executive director of 
the Kenya Copyright Board, and the director of Kenya's judicial 
training institute.  Judges, prosecutors, law enforcement officers, 
and representatives from the entertainment industry were also on 
hand. 
In her welcoming remarks, DCM Pamela Slutz noted the seminar's 
timeliness given the approaching advent of fiber optic 
communications to the region (reftel), portending new opportunities 
for African innovators in software, internet applications, and 
telecommunications technology.  Greater awareness and enforcement of 
intellectual property rights, she stressed, would help ensure that 
their discoveries and adaptations are safeguarded and rewarded.  The 
defense of copyright and other intellectual property, she continued, 
would go beyond rewarding innovators, inventors, and creative 
artists; it would also protect Africa's unique cultural patrimony 
and folkloric knowledge.  Noting that IPR enforcement serves to 
protect consumers, the DCM cited instances where adulterated 
knock-off "medicines" had damaged the health and cost the lives of 
thousands of Africans.  She emphasized that for all these reasons 
"East Africa needs a strong intellectual property rights regime." 
 
¶4.  Export Processing Zones (EPZ) Fared Well in 2008 
 
EPZ apparel firms, which produce 80% of all garment exports to the 
U.S. under AGOA provisions, experienced surprising growth in 2008, 
according to a recent survey.  The number of pieces exported 
increased by 13% from 59.2 million to 67.2 million pieces while 
export earnings grew by 10.7% from $203.9 million to $225.8 million 
in 2008 -- notwithstanding two months' post-election violence and 
the effects of the global financial crisis. 
 
As a result of a few uncompetitive firms closing down, the EPZ total 
employment level actually declined by 12.7% from 34,318 to 29,957 in 
¶2008.  EPZ contacts tell us the firms which excelled targeted high 
end consumers, integrated the value chain, and diversified their 
product lines.  EPZ firms are looking to the August 4-6 AGOA Forum 
in Nairobi as an excellent opportunity to promote their wares. 
 
 
RANNEBERGER