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DE RUEHNR #2184/01 2890807
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FM AMEMBASSY NAIROBI
TO RUEHC/SECSTATE WASHDC PRIORITY 1319
INFO RUCPDOC/USDOC WASHDC PRIORITY 3231
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUEHC/DEPT OF LABOR WASHDC PRIORITY
RUEHRC/USDA FAS WASHDC PRIORITY 1858

UNCLAS NAIROBI 002184 
 
STATE PASS USTR CONSTANCE HAMILTON 
 
STATE FOR AF/EPS GABRIELLE MALLORY 
 
TREASURY FOR ANTHONY IERONIMO 
 
COMMERCE FOR KEVIN BOYD 
 
AGRICULTURE FOR DON EVANS AND CATHY MCKINNELL 
 
LABOR FOR SUDHA HALEY AND MAUREEN PETTIS 
 
SIPDIS 
 
E.O. 12958:  N/A 
TAGS: EAGR EAID ECON ETRD EINV ENRG ELAB AGOA PGOV PREL
KE 
SUBJECT: KENYA: AGOA ELIGIBILITY REVIEW 2010 
 
REF: STATE 97769 
 
¶1.  This cable is not/not for internet distribution. 
 
¶2.  Country: Kenya 
 
¶3.  Current Status:  Eligible 
 
¶4.  Country Background Summary:  The population of Kenya is 38.6 
million (mid 2008 estimate), estimated 2008 GDP is $30.4 billion, 
and per capita income is $770.  An estimated 54% of the population 
(an 8% increase over the 2007 figure of 46.1%) lives on less than 
one U.S. dollar per day.  The increase in poverty is largely 
attributable to January-February 2008 post-election violence, global 
economic slowdown, drought, and high food prices.  The economy 
experienced 1.7% growth in 2008, but rebounded with 4% growth in the 
first quarter of 2009 and 2.1% growth in the second quarter.  About 
80% of the country's workforce is employed in the agriculture and 
livestock sectors.  Of an estimated 9.9 million workforce, 2 million 
Kenyans hold jobs in the formal sector while 7.9 million are in the 
informal sector.  About 467,000 new jobs were created in 2008.  The 
Ministry of Labor puts the unemployment rate at over 40%.  Real 
wages dropped heavily in 2008 by 16.2% due to high inflation after 
falling .3% in 2007.  Inflation almost tripled in 2008 to 26.2% from 
9.8% in 2007 and 14.5% in 2006.  Bilateral trade dropped to $786 
million in 2008 from over $900 million in 2007.  U.S. exports to 
Kenya fell to $442.4 million in 2008 from $576.2 million in 2007. 
In 2008, U.S. imports of Kenyan goods totaled $343.5 million, an 
increase over the 2007 figure of $326.1 million.  The U.S. enjoyed a 
trade surplus with Kenya of $99 million.  AGOA duty free and GSP 
imports constituted over $255 million.  Kenya's total foreign trade 
was over $16 billion, up from almost $12.5 billion in 2007. 
Although its exports increased 25% to almost $5 billion, Kenya saw 
its trade deficit jump 28.8% to $6.15 billion.  The Common Market 
for Eastern and Southern Africa (COMESA) is Kenya's biggest export 
market.  Horticulture, both fresh and processed, continued to be the 
primary export earning $1.03 billion.  Agriculture (horticulture, 
tea, and coffee are the main exports) accounts for 23% of GDP while 
the manufacturing, wholesale and retail trade, and transport and 
communications sectors account for approximately 10% each. 
 
Kenya is a constitutional, multiparty democracy.  Following a 
disputed presidential election on December 27, 2007, Kenyans endured 
two months of ethnically motivated political violence which left 
approximately 1,500 dead and 500,000 displaced.  International 
mediation efforts resulted in a late February 2008 power-sharing 
agreement whereby the incumbent president, Mwai Kibaki, retained 
office and the opposition candidate, Raila Odinga, was appointed to 
a newly created prime ministerial position.  With peace restored, a 
Grand Coalition Government with a 42-member Cabinet was formed. 
Throughout the disturbances the military remained apolitical. 
Voters removed over 70% of the sitting parliament in the December 
27, 2007 general elections. This power-sharing agreement also 
outlined an ambitious reform agenda, including land, electoral, 
police, and judicial reform and the drafting and passage of a new 
constitution.  As of October 2009, progress on reforms, as well as 
bringing to justice those responsible for post election violence, 
remained disappointingly slow. 
 
------------------------------------ 
Comments on Eligibility Requirements 
------------------------------------ 
 
------------------------ 
¶I.  Market-Based Economy 
------------------------ 
 
¶A. Major Strengths Identified 
 
--  The Government of Kenya (GOK)generally maintains sound fiscal 
and monetary policy. 
 
--  Kenya has a relatively stable banking sector that was not 
severely affected by the global financial crisis. 
 
--  In 2008, Kenya began 24/7 operations at the Port of Mombasa to 
increase efficiency; Businesses report the improvement has 
significantly decreased the time required to ship their goods. 
 
--  In 2008, he Kenyan Revenue Authority implemented an online 
customs clearance system, further increasing efficiency and 
transparency. 
 
--  The majority of Kenya's AGOA exports are produced in Export 
Processing Zones (EPZs) where total investment increased 5.8% to 
$290.9 million in 2008.  Over 50% of EPZ manufactures enter the U.S. 
market under AGOA provisions.  In 2008, 74 companies operated in 
Kenya's EPZ employing more than 30,000 employees. 
 
--  As a direct result of AGOA, 19 apparel/garment firms operate 
within the EPZs.  These firms employ over 25,000 workers and 
exported $226 million worth of goods to the U.S.  In an effort to 
diversify, the firms exported $2.5 million to Canada, Europe, the 
Middle East, Asia, and Central America. 
 
--  AGOA exports, primarily apparel but also including cut flowers, 
nuts, pineapple, and light manufactures, stayed steady at $255 
million despite the economic slowdown in the U.S. 
 
--  In 2008, horticulture exports stood at $1.03 billion, Kenya's 
largest foreign exchange earner.  Tea exports were a close second at 
$922 million.  Agricultural exports to the United States increased 
to over $65 million. 
 
--  Tourism receipts in 2008 totaled $762 million from 936,000 
tourists. 
 
--  Fresh horticultural exports, cut flowers, fruits and vegetables, 
primarily destined for Europe, stood at $838 million. 
 
--  Despite the economic slowdown in Kenya, the manufacturing sector 
grew 3.8% in 2008 after a 6.5% gain in 2007. 
 
-- Approximately 467,000 new jobs were created. 
 
--  In September 2007, Kenya established a National Codex Council to 
comply with Codex Alimentarius Commission international standards 
and guidelines. 
 
--  The Licensing Act of 2007 has so far eliminated and/or 
simplified 694 licenses.  In 2008, the government also reduced the 
number of licenses to set up a business from 300 to 16 and is 
reviewing another 337 licenses.  The Business Regulation Act of 2007 
established a "Business Regulatory Reform Unit" within the Ministry 
of Finance to continue the deregulation process. 
 
--  In 2009, Kenya launched a national e-Registry to ease business 
license processing and help improve transparency. 
 
--  In 2008, the Anti-Counterfeit Act was signed which establishes 
an agency and a strong legal framework to police counterfeit goods. 
 
--  In addition, the Kenyan Copyright Board was turned into an 
independent watchdog group. 
 
--  In January 2006 Kenya established a "Public Procurement 
Oversight Authority" to minimize graft.  To further ensure 
transparency, in September 2007 Kenya enacted the "Supplies 
Practitioners Management Act." 
 
--  The GOK continues to increase the role of private sector in the 
economy.  Enacted in 2005, the Privatization Act went into effect on 
January 1, 2008.  In 2009, the government plans on divesting 
holdings in Kenya Pipeline Corporation, Kenya Wine Agencies, 
National Bank of Kenya, New Kenya Cooperative Creameries and the 
Kenya Tourism Development Corporation.  In June 2008, it sold 25% of 
its Safaricom (the national cellular network) shares, reducing its 
holdings to 35%.  In 2007 government divested its shares in the 
Kenya Electricity Generating Company, the Mumias Sugar Company, 
Kenya Reinsurance, and Telekom Kenya (the public fixed-line 
telephone monopoly). 
 
--  Kenya is compliant with the WTO Customs Valuation Agreement, a 
member of WIPO, and a Paris (industrial IP) and Berne (copyright) 
Conventions signatory. 
 
¶B. Major Issues/Problems Identified 
 
--  As a result of January-February 2008 post-election violence, 
economic growth slowed to 1.7% in 2008.  The Kenyan economy suffered 
losses totaling $1.5 billion.  Inflation stood at 26.2% for 2008, 
the highest rate since 1994.  Inflation reached an all-time high of 
31.5% in May 2008. 
 
--  Tourism receipts dropped 19.2% in 2008 from 2007 levels, while 
tourist arrivals were off 34%.  Some 20,000 hospitality workers lost 
their jobs. 
 
--  In the past six years, about 40 investors have pulled out of 
Kenya, while 106 companies have closed down, according to the 
Federation of Kenya Employers (FKE).  With the conclusion of the 
Multi-Fiber Arrangement, seven garment factories closed, resulting 
in the loss of over 10,000 jobs.  Several more apparel factories 
closed in early 2008 as a result of the political turmoil. 
 
--  Slow courts, degraded infrastructure, high crime, high power 
costs, and corruption are deterrents to investment.  Electricity 
tariffs rose 65% in 2008. 
 
--  Kenya fell five places to 98 in the 2008 World Economic Forum's 
global competitiveness index.  The issues leading to the drop 
include increasing insecurity, inefficient government, rising 
corruption and insecurity, as well as major health issues. 
 
--  Pirated and counterfeit products mostly from East Asia are an 
impediment to U.S. business.  Infringement of copyright, especially 
on music and films, is pervasive. 
 
--  Parliament's FY08/09 budget projects an overall fiscal deficit 
of approximately $1.7 billion, Kenya's biggest ever at 5.6% of GDP, 
drawing concerns from the IMF that the budget is unsustainable and 
inflationary. 
 
--------------------------------------------- ----- 
II.  Political Reforms/Rule of Law/Anti-Corruption 
--------------------------------------------- ----- 
 
¶A.  Major Strengths Identified 
 
--  On December 27, 2007 Kenyan voters turned out in record numbers 
to vote in multiparty elections for the Presidency, Parliament, and 
local government. 
 
--  In an effort to end two months' post-election violence, Kenya's 
rival political leaders - incumbent President Mwai Kibaki of the 
Party of National Unity (PNU) and Raila Odinga of the Orange 
Democratic Movement (ODM) - agreed to form a Grand Coalition 
Government on February 28, 2008.  Under the auspices of former UN 
Secretary General Kofi Annan and a "Panel of Eminent African 
Persons," the two signed a power-sharing agreement, which provided 
for the establishment of a prime minister (a position assumed by 
Odinga) and two deputy prime ministers (one nominated by the PNU, 
the other by ODM).  It also provided for the division of Cabinet 
posts according to the parties' proportional representation in 
Parliament. 
 
--  On March 18, 2008, Parliament amended the constitution to create 
the position of prime minister and adopted legislation to establish 
the coalition government.  On April 17, 2008, Prime Minister Odinga 
and the new 42-member Cabinet, the largest in Kenya's history, were 
sworn in.  Kibaki retained the presidency for a second five-year 
term. 
 
--  With the Grand Coalition Government in place, the ODM took 
control of the Parliament, holding 105 of 222 seats, with the PNU 
holding 46. 
 
--  The Kenya Anti-Corruption Commission (KACC) became fully 
operational and sufficiently funded in 2005.  However, public and 
parliamentary disappointment with the lack of progress in 
investigations of corrupt high-level public officials led to the 
resignation of the KACC's chairman in September 2009. 
 
--  In late September 2007, President Kibaki vetoed portions of the 
Statute Law (Miscellaneous amendments) Bill of 2007, adopted by 
Parliament, that would have otherwise effectively barred the KACC 
from probing corruption cases committed before it was established in 
2003, namely the Goldenberg and Anglo Leasing Scandals. 
 
--  In August 2008, the Witness Protection Act became law.  No 
witness has yet been enrolled in the program, over which the 
Attorney General has sole control. 
 
--  Parliament effectively forced former Finance Minister Amos 
Kimunya to resign in early July 2008 after Lands Minister James 
Orengo alleged that Kimunya had approved the sale of a 
government-owned property, the Grand Regency Hotel, to a Libyan 
group, without a public tender being executed and then giving 
misleading statements to Parliament about it.  Parliament 
subsequently held public hearings on the matter.  However, President 
Kibaki subsequently appointed Kimunya as Minister of Trade in 
January 2009 after a November 1998 government inquiry cleared him of 
any wrongdoing in the Grand Regency sale. 
 
--  As part of the February 28 power-sharing agreement, the parties 
agreed to appoint an "Independent Review Commission" (IREC) to 
investigate the conduct of the December 2007 elections.  Its report, 
released on September 19, 2008, concluded that allegations of 
vote-rigging related to the presidential election had not been 
proven, but that the conduct of the local, parliamentary, and 
presidential elections was "so materially defective" that the 
results announced by the Electoral Commission of Kenya (ECK) had no 
integrity.  It proposed a series of reforms to strengthen Kenya's 
electoral system. 
 
--  The discredited ECK was disbanded and an Interim Independent 
Election Commission (IIEC) was established in May 2009.  The IIEC 
successfully oversaw two parliamentary by-elections in August 2009. 
However, it has yet to begin a new national voter re-registration 
exercise as required by the power-sharing agreement. 
 
--  The government established a Committee of Experts charged with 
drafting a new constitution, as provided in the power-sharing 
agreement.  The new constitution will need to address land rights 
issues, which fuel inter-ethnic hostility in Kenya, and to 
restructure the government by strengthening institutions to create a 
more equitable distribution of power and a more effective system of 
checks and balances.  The draft, if approved by Parliament, will be 
submitted to a national referendum to be administered by the IIEC. 
 
--  In October 2008, the Commission to Investigate Post-Election 
Violence (CIPEV), commonly known as the Waki Commission after its 
chairman, submitted its 529-page report to Parliament.  In the 
report, the Commission outlined a series of reforms, notably in the 
police and judicial sectors, designed to prevent a recurrence of the 
post-election violence of late 2007 and early 2008.  The Waki 
Commission also handed a sealed envelope identifying chief 
perpetrators and/or financiers of the post-election violence to 
mediator Kofi Annan. 
 
--  The Truth, Justice and Reconciliation Commission (TJRC) was 
established and commissioners were appointed in July 2009.  However, 
the TJRC has not yet formulated its plan of work or held any public 
hearings. 
 
¶B.  Major Issues/Problems Identified 
 
--  As determined by the IREC report, Kenya's electoral system is in 
need of significant reform. 
 
--  Post-election violence left 1,500 dead, thousands injured, and 
500,000 Kenyans displaced.  Most internally displaced persons (IDPs) 
have returned home but some (notably the landless, squatters, and 
former slum residents) remain displaced and have not received 
promised government compensation. 
 
--  None of the Waki Commission's major recommendations for police 
and judicial reform have been implemented.  Further, after the 
government of Kenya failed to act against suspected perpetrators of 
post-election violence, Kofi Annan turned over the confidential list 
of suspects in July 2009 to the International Criminal Court for 
possible indictment and prosecution. 
 
--  Serious human rights problems remain, particularly with regard 
to abuses by the security forces.  Some elements of the security 
forces continued to commit abuses, including extra-judicial killings 
and the torture and beating of detainees, particularly during a 
March-April 2008 sweep of rebels calling themselves the Sabaot Land 
Defense Force in the Mt. Elgon area.  Other security operations in 
the Mandera area of northeastern Kenya in November 2008 and against 
suspected Mungiki members in Central province also gave rise to 
allegations of abuse. 
 
--  According to the 2009 Transparency International-Kenya East 
Africa Bribery Index, Kenyans still consider the police force the 
most corrupt government institution. 
 
--  The government arrested some police officers for abuses; 
however, most police who committed abuses were neither investigated 
nor punished.  There were no successful prosecutions against any 
police officer for abuses. 
 
--  Corruption is endemic.  According to Transparency 
International's 2008 Corruption Perceptions Index, Kenya is one of 
the most corrupt countries in the world.  It ranked 147 out of 188 
countries surveyed with a score of 2.1.    Freedom House's Freedom 
in the World index ranks Kenya "Partly Free". 
 
--  The government commissioned the Kroll Report in 2003 to identify 
and recover the proceeds of corruption and crimes.  Although the 
report was completed in 2004, the government has yet to use its 
findings to prosecute any senior politicians for corruption.  To 
date, there have been no prosecutions of senior government 
officials, despite strong indications of high-level graft. 
 
--  The government has not enacted anti-money laundering 
legislation.  Kenya will continue to remain vulnerable to 
corruption, tax evasion, narcotics trafficking, trafficking in 
persons, and terrorism financing. 
 
--  The judiciary remains subject to executive branch influence and 
corruption. 
 
--  The Attorney General lacks the capacity to handle the volume of 
cases referred to his office and frequently declines to prosecute, 
especially in corruption cases or cases involving politically 
powerful individuals. 
 
--  The KACC does not have prosecutorial powers rendering it at the 
mercy of the Attorney General to prosecute corruption cases.  Only 
74 convictions had been achieved out of 383 files forwarded to the 
Attorney General for prosecution.  No high-level government 
officials have been convicted over the last five years. 
 
--  No convictions or serious prosecutions came out of the two 
massive scandals the past two decades; the Anglo Leasing scandal and 
the Goldenberg scandals, both of which implicated high-level 
officials. 
 
--  Kenya's ranking on the October 2009 Ibrahim Index of African 
Governance fell ten places to 27 based on setbacks in insecurity, 
rule of law, transparency, and corruption. 
 
--  Major scandals worth tens of millions of dollars erupted in 
¶2009.  One scandal involved the illegal re-selling of grain from the 
national food storage system.  Another scandal involved the 
misappropriation of money from the Education Ministry. 
 
--  Drought-related conflicts, especially in arid and semi-arid 
pastoralist regions of Kenya, escalate and increasing food shortages 
and malnutrition, exacerbated by government mismanagement of food 
resources (i.e. maize scandal) require extensive additional food aid 
funded by the international community. 
 
--  The issue of evicting both titled landholders and squatters from 
the protected Mau forest causes intense political conflict and is 
complicated by a lack of a comprehensive national land use policy or 
implementing legislation. 
 
--  Reports of ethnic militias arming or re-arming themselves in 
preparation for further conflict before or during the 2012 elections 
are widespread. 
 
--  The coalition government lacks cohesion and the political will 
to advance the reform agenda; despite the establishment of the TJRC, 
it also fails to undertake any comprehensive government-led 
reconciliation efforts, resulting in continued interethnic mistrust 
on the ground. 
 
---------------------- 
III. Poverty Reduction 
---------------------- 
 
¶A. Major Strengths Identified 
 
--  The Government of Kenya, working closely with its development 
partners - including the private sector -- has made progress in 
recent years toward creating a market-driven enabling environment 
for agricultural sector development. 
 
--  The GOK removed the white maize import tariff through June 2010 
to facilitate commercial imports that have since helped reduce the 
current food deficit and make maize more affordable for Kenya's 
citizens. 
 
--  The GOK, through a third-party, conducted an audit of the 
National Cereals and Produce Board (NCPB) and the Strategic Grain 
Reserve. 
 
--  In addition, the NCPB has begun to engage with the Eastern 
Africa Grains Council (EAGC) to make available some of its 
warehouses for inspection and certification under the EAGC's pilot 
grain warehouse receipts system. Ultimately this partnership could 
lead to more efficient and structured grain trade in the region and 
more effective use of the strategic grain reserve and famine 
mitigation mechanism by NCPB. 
 
--  Kenya has a dynamic, well organized private sector, with 
businesses ranging from cottage industries and "Jua Kali" artisan 
shops in the informal sector to domestic and multinational 
corporations in manufacturing, agro-processing, horticulture, 
fishing, tourism, shipping and commercial transport, 
telecommunications, construction, banking, finance, and insurance in 
the formal sector. 
 
--  Government is initiating new policies to improve informal 
settlements and provide more low cost housing.  One project was 
recently completed which moved 1500 residents of the Kibera slum 
into new low cost housing. 
 
--  The government allocated 2.5% of total revenue collection (about 
$198 million) in the current year to 210 local Constituency 
Development Fund (CDF) accounts throughout the country.  CDFs are 
designed to meet communities' most pressing infrastructural needs. 
These decentralized block grants support the construction of water 
projects, classrooms, roads, and police posts.  A quarter of the 
fund is allocated according to population size, poverty index, state 
of infrastructure, and the desire to improve the local economy to 
match the rest of the country. 
 
--  The government also initiated Youth Enterprise Development Fund 
and Women Enterprise Fund, all geared towards uplifting the 
standards of living of targeted groups.  To date, the government has 
allocated $398 million to support these initiatives. 
 
--  With the implementation of an "Integrated Financial Management 
Information System" and further progress in public enterprise 
reform, business regulation has been streamlined and public 
financial management strengthened. 
 
--  Primary school enrolment increased 2.8% from 8,330,100 to 
8,563,800 students; secondary school enrolment leaped 17.1% from 
1,180,300 to 1,382,211 students. 
 
¶B. Major Issues/Problems Identified 
 
--  Food insecurity was exacerbated this year by severe drought. 
Chronic food insecurity combined with a continued rise in food 
prices (white maize prices remain 70% above the five-year average) 
and poor urban and rural purchasing power has contributed to 
increased malnutrition. 
 
--  Humanitarian agencies estimate that approximately 3.8 million 
(an increase from 2.6 million last year) pastoralists, 
agro-pastoralists, and marginal agricultural households require 
emergency food aid this year. 
 
--  In addition, there are other populations that are chronically 
food insecure including: 1.5 million school children in 
drought-affected areas who require school feeding programs, 2.5 
million persons in urban areas who are unable to meet 50% of their 
daily food requirements, 2 million vulnerable poor in rural areas 
who are affected by HIV/AIDS, and 100,000 persons displaced by the 
post-election crisis whose livelihoods have not fully recovered. 
 
--  According to the UN Children's Fund (UNICEF), more than 200,000 
children five years of age or younger are affected by moderate 
malnutrition and more than 30,000 children five years of age or 
younger are severely malnourished. 
 
--  Kenya remains uncertain about seeking another Poverty Reduction 
and Growth Facility (PRGF) agreement after the one signed on 
November 21, 2003 ended last year.  A mid-2008 IMF mission carried 
out an Ex-Post Assessment (EPA) of the Kenya-IMF PRGF program which 
was presented to the IMF Board in September 2008.  However, the IMF 
disbursed $209 million to Kenya under the Exogenous Shocks Facility 
as a result of the global economic slowdown. 
 
--  Since the outbreak of violence on December 30, 2007, the cost of 
living has risen by 25 to 30% throughout Kenya as prices of all 
basic goods have increased.  The cost of electricity has also risen 
dramatically. 
 
--  The Kenyan government has rhetorically vowed to stamp out graft 
and push ahead with economic liberalization, but entrenched private 
interests and political in-fighting threaten the agenda.  Corruption 
on a grand scale continues to alarm the public and turn away 
potential donors and investors. 
 
--  Relations with major international donors are dependent on the 
government's commitment to its economic and governance reforms and 
its anti-corruption agenda. 
 
--  Greater efforts are needed to improve the legal framework for 
public finance management and to accelerate financial sector 
reform. 
 
--  Garment exports to the U.S. under AGOA are likely to decline if 
Kenyan producers do not enhance their global competitiveness or seek 
niche markets. 
 
--  A July 2008 World Bank assessment concluded that economic growth 
in Kenya is insufficient to reduce poverty.  The World Bank 
estimates that growth in Kenya would need to reach 8% at the current 
population growth figures to reduce poverty.  First projected to 
reach 8% in 2008, economic growth was waylaid by the 
January-February violence and did not reach 2%. 
 
--  According to a September 2007 Adult Literacy survey, 7.8 million 
Kenyans cannot read and write.  Most are women and youth. 
 
--  The Kenya AIDS Indicator Survey 2007 (released in July 2008) 
indicates that 7.4% of Kenyans ages 15-64 are infected with HIV, 
with considerable disparities in prevalence among provinces.  While 
over 220,000 Kenyans are receiving anti-retroviral therapy (ART), up 
from approximately 10,000 in 2003, many of those in need still do 
not receive ART. 
 
-------------------------------------------- 
IV. Workers' Rights/Child Labor/Human Rights 
-------------------------------------------- 
 
¶A. Major Strengths Identified 
 
--  Existing legislation protects workers' rights and rights to 
organize and bargain collectively are well established. 
 
--  During its fall 2007 session, Parliament passed and President 
Kibaki signed five new labor laws, drafted by the Task Force on 
Labor and supported by Kenya's Central Organization of Trade Unions 
(COTU), to improve the status of workers, namely the Labor 
Institutions Act, the Labor Relations Act, the Employment Act, the 
Occupational Safety and Health Act, and the Work, Injury and 
Benefits Act.  These measures establish two weeks' paternity leave 
for fathers, increase maternity leave with full pay from two to 
three months, and compensate both public and private employees for 
work-related injuries and diseases contracted at work, among other 
provisions.  There are continuing court challenges to provisions of 
the new labor law as employers are arguing about the cost 
implementation, particularly the provision regarding workers 
compensation.  The labor bills ensure compliance with ILO core-labor 
standards and better enforcement of occupational health and safety 
standards.   U.S. companies typically meet the new labor 
requirements. 
 
--  The Industrial Relations Charter, executed by the government, 
the Confederation of Trade Unions (COTU), and the Federation of 
Kenya Employers, gives workers the right to engage in legitimate 
trade union organizational activities.  Both the Trade Disputes Act 
and the Charter authorize collective bargaining between unions and 
employers, and wages and conditions of employment are established in 
negotiations between unions and management. 
 
--  Kenya has ratified ILO Conventions 182 on the Worst Forms of 
Child Labor and 138 on Minimum Age. 
 
--  In an effort to reduce child labor, the government collaborates 
with COTU, ILO, and NGOs to eliminate the worst forms of child 
labor.  The Child Labor Division in Ministry of Labor has been 
implementing the "Time Bound Program for the Elimination of the 
Worst Forms of Child Labor" from April 2005- April 2009.  In July 
2008, the government signed an MOU with the ILO to implement a four 
year program, TACKLE, which will combat child labor through improved 
opportunities to acquire a basic education.  In 2009, the U.S. 
Department of Labor announced a four-year project with the ILO to 
combat the worst forms of child labor in three Kenyan districts, 
Kilifi, Kitui, and Busia. 
 
--  The Constitution prohibits slavery, servitude, and forced labor. 
 Additionally, the Children's Act of 2001 prohibits all worst forms 
of child labor as defined by ILO Convention 182.  The Department of 
Children's Services (Office of the Vice President and the Ministry 
of Home Affairs) is responsible for the administration of all laws 
regarding children. 
 
--  On July 14, 2006, Kenya adopted the Sexual Offenses Act, which 
criminalizes rape, defilement of a minor, child pornography, sex 
tourism, sexual harassment, and trafficking for sexual purposes. 
 
¶B. Major Issues/Problems Identified 
 
--  The Ministry of Labor's inspection and enforcement functions are 
weak. 
 
--  Trade unionist complained of labor inspectors routinely 
accepting bribes from employers. 
 
--  Trade unionist reported a trend towards employers sacking 
workers in lieu of casual or contract labor. 
 
--  Kenya has not ratified ILO Convention 87 on the right to 
organize and collective bargaining. 
 
--  The private sector has expressed concerns about the financial 
burden imposed on business by the 96 months of full disability leave 
requirement. 
 
 
--  The ILO has urged repeal of provisions of labor laws that 
contravene ILO conventions on forced labor and is critical of 
legislation not in conformity with ILO conventions governing freedom 
of association. 
 
--  Workers have been fired for participating in trade union 
activities, especially in export processing zones. 
 
--  The law allows employers in some industries to dismiss workers 
regardless of the provisions of their collective bargaining 
agreements. 
 
--  Child labor remains a serious problem in the informal and 
agricultural sectors. 
 
--  Government agents conducted at least three extrajudicial 
killings in 2009, targeting two human rights advocates and one 
journalist.  The government has not investigated nor prosecuted any 
suspects in these three incidents. 
 
--  While the government is taking steps to address trafficking, and 
there are laws that could be used to prosecute various aspects of 
trafficking, Kenya has not yet passed a law defining and prohibiting 
human trafficking.  There have been reports that persons were 
trafficked to, from, and within the country. 
 
--  Abuse and discrimination against women occur frequently and 
include forced marriage. 
 
--  Certain ethnic groups commonly practice female genital 
mutilation (FGM) on young girls, particularly in rural areas. 
 
--  Violent clashes among ethnic groups and vigilante justice were 
problems. 
 
--  The government has attempted to forcibly resettle citizens who 
were internally displaced after the post-election violence. 
 
--  The government has failed to investigate security officers 
suspected of extrajudicial killings, torture, and other human rights 
abuses in Mt. Elgon, the Mandera triangle, and Mt. Kenya. 
 
¶V. International Terrorism/U.S. National Security 
 
¶A. Major Strengths Identified 
 
--  Kenya is an active supporter in the global coalition against 
terrorism. 
 
--  Kenya is a key player and cooperates closely with USG in 
promoting peace and regional stability in neighboring Sudan and 
Somalia. 
 
--  Kenyan forces are frequent participants in UN peacekeeping 
operations. 
 
--  Kenya is a leading participant in U.S. African Contingency 
Operations and Training Assistance (ACOTA) peacekeeping training 
program. 
 
--  Kenya is a major recipient of Anti-Terrorism Assistance (ATA) 
programs. 
 
¶B. Major Issues/Problems Identified 
 
--  The volatile Kenya-Somalia border region sees an increase in 
instability, including successful cross-border kidnapping raids by 
Somali militias and a continued flow of small arms into Kenya. 
Incidence of recruitment efforts by al-Shabaab and other Somali 
militia groups and terrorist organizations (i.e. Al Qaeda East 
Africa) among Kenyan Muslims increased, including in Nairobi, Dadaab 
refugee camp, Isiolo town, and throughout Northeastern Province. 
 
--  The U.S. Travel Warning for Kenya was reissued (addressing 
recent warnings on travel near the porous border of Somalia) on July 
24th, 2009, advising U.S. citizens of ongoing terrorist threats and 
continuing incidents of violent crime.  Violent criminal attacks, 
including armed carjacking and home invasions/burglary, can occur at 
any time and in any location, and continue to be brazen, vicious, 
and often fatal.  Kenyan authorities appear to have limited capacity 
and will to deter and investigate such acts.  Recently, an American 
citizen was kidnapped, transported into Somalia and held for ransom 
by fundamentalists while working in Mandera, Kenya, abutting the 
Somali border. 
 
--  Terrorists and their supporters reside in Kenya as well as in 
neighboring Somalia. 
 
--  Counter-terrorism and Anti-Money Laundering legislation is still 
on the Parliamentary agenda but has not yet been debated or voted 
on. 
 
--  The acquittal and release in June 2005 of seven terrorist 
suspects implicated in the November 28, 2002 attack on the Paradise 
Hotel in Kikambala and attempted downing of an El Al jetliner 
carrying 200 passengers reveal legislative and prosecutorial 
weaknesses.  One suspect was rearrested and charged with being in 
possession of dangerous weapons.  He was eventually convicted and 
sentenced to eight years imprisonment.  On September 14, Ali Saleh 
Nabhan, one of the suspects and influential al Qaeda operative in 
East Africa, was killed in Somalia. 
 
Ranneberger