Dr Dev Kambhampati | Doing Business in Kenya - 2014 Country Commercial Guide ...
Kenya country profile
1. Kenya Country Briefing March 2011
Kenya gained independence from Britain in December 1963. Since then, and until late
2007, Kenya was considered one of the most stable countries mostly in East Africa. In
addition, the country’s diversified economy was considered Eastern and Central Africa’s
hub for Financial, Communication and Transportation services. The political violence
that followed the disputed 2007 elections, however, exposed the fragility of the Kenyan
state and led to the deaths of more than a thousand people. The African Union (AU)
mandated mediation team, headed by Kofi Anan, led to the establishment of a power-
sharing agreement in 2008. The agreement, the National Accord and Reconciliation Act,
retained Mwai Kibaki as president and created a post of prime minister with the authority
to coordinate and supervise the execution of government functions for opposition leader
Raila Odinga.
Location and Key Geographical Features
Kenya is situated in the Eastern part of the African Continent. The country lies between 5
degrees north and 5 degrees south latitude and between 24 and 31 degrees east longitude. It
is almost bisected by the equator. Ethiopia and Sudan border it to the north; Uganda to the
west; Tanzania to the south; Somalia to the northeast; and Indian Ocean to the southeast.
Some parts of the country experience an equatorial kind of climate especially the central
highlands, whereas along the coastline it is mainly tropical. Some parts of the country are
Arid and Semi-Arid. The country experiences bimodal rainfall patterns.
Kenya has diverse physical features, which are a major source of tourist attraction. These
include: vast plains which are home to world famous game parks and reserves; the Great Rift
Valley, which runs north to south and whose floor has provided potential for geothermal
power generation; Mount Kenya, the second highest mountain in Africa which is about
5,199m above sea level; Lake Victoria, the largest freshwater lake on the continent and which
supports the fishing industry in the East African region; Lake Nakuru, another tourist
attraction because of its flamingos; Lake Magadi, famous for its soda ash; and a number of
major rivers, including Tana and Athi, Sondu-Miriu, which generate the hydropower
resources of the country; Yala, Nzoia and Mara, the major feeders into Lake Victoria.
POLITICAL ENVIRONMENT
Kenyan political parties have largely struggled to organise nationally, due in large part to
the history of British colonial administration which restricted political organisation to
ethnically defined regions. Also adopted from the British rule is the centralised state with
a dominant executive. Since independence, the executive has presided over a patronage
network that benefits mostly ethnically defined elites. This has played out particularly
regarding land distribution, allocation of lucrative jobs and positions of advantage that
seek to perpetuate the incumbency of the patrons. Thus large sections of the Kenyan
population are excluded from land ownership, are impoverished and marginalised.
Opposition politics in Kenya have tended to lack cohesiveness and universal appeal due
to the parties’ identifying along ethnic fault lines, a fact exploited by erstwhile president
Daniel arap Moi to keep the opposition fragmented and thus eliminated as a threat. A
multi-ethnic party campaigning on a ticket of zero tolerance on corruption came about in
2002, raising hopes of a turning point in Kenya’s history. The party, led by Mwai Kibaki,
proved to be just as corrupt and soon lost credibility and legitimacy to its initial
supporters. In spite of all the above, Kenya does have strong elements for sustaining
2. democracy. There is a large and vibrant civil society, a free and independent media, a
sizeable and influential middle class and competitive politics where no one party
dominates over a long period (Geir Sundet, Scanteam, and Eli Moen, Norad).
POLITICAL PARTIES
At independence Jomo Kenyatta’s party, the Kenya African National Union (KANU),
was the dominant party and was associated with the dominant Kikuyu ethnic group.
Initially it was in an alliance with the Luo ethnic group under Oginga Odinga. The
Kenyan African Democratic Union (KADU) was associated with the Kalenjin and other
marginalised ethnic groups in the Rift Valley. KADU advocated the adoption of a system
of regional federalism, which became known as Majimboism. Kenyatta, using an informal
network of patronage, lured KADU leaders into crossing the floor, plying them with
lucrative jobs, or allocating valuable land in the Rift Valley. KADU merged with KANU
in 1964, making Kenya a de-facto one-party state. This tendency was continued under
Kenyatta’s successor, Daniel arap Moi, a Kalenjin who mastered patronage to weaken
and isolate his political enemies.
Internal and external pressure forced Moi to make way for multiparty democracy in
Kenya in 1992. Opposition parties remained weak and fragmented, however. The Forum
for the Restoration of Democracy (FORD) was formed in 1991 and was at the centre of
the movement pushing for multiparty democracy in Kenya. The party split in 1992 into
Ford-Asili (led by Kenneth Matiba) and Ford-Kenya (led by Oginga Odinga). Further
internal tussles for leadership led to more splits, following which Raila Odinga, son of
Oginga Odinga, formed the National Development Party (NDP). This fragmentation of
the opposition handed Moi victory during the 1992 and subsequently 1997 elections.
Ahead of the 2002 elections, at the end of Moi’s last term in office, Odinga and his party
joined a united opposition, the National Alliance of Kenya, under the National Rainbow
Alliance Coalition (NARC), which nominated as its presidential candidate the leader of
the Democratic Party – Mwai Kibaki. A Memorandum of Understanding was signed
between Odinga and Kibaki, committing to creating a strong Prime Ministerial post for
Odinga. In 2003 a Constitutional Review Committee proposal that provided for a strong
executive Prime Minister post and a quasi-federal system of government, Majimbo, was
revised drastically by the government, which put its own amended proposal to a
referendum in November 2005. A successful campaign was launched against the
government’s proposed amendments, eventually culminating into the formation of the
Orange Democratic Movement (ODM). The ODM itself split into the ODM led by
Raila Odinga and ODM-Kenya, led by Kalonzo Musyoka. Kibaki meanwhile formed the
Party of National Unity. The race for the 2007 elections was between the two ODM
factions and the PNU.
OTHER KEY POLITICAL PLAYERS
Ethnic loyalty and patronage being central in the party system in Kenya, there are no
strong platforms or principles on which to rally support. Political movements tend to
have their origins in a campaign for a public interest issue that later transform into a
political party or coalition that uses their successful campaign as leverage to run for
political office. This has been the case with the movement to pressure the Moi
government to allow for multiparty democracy in the late 1980s and early 1990s. The
coalition led eventually to nominated leader Mwai Kibaki taking office in 2002. The
Orange Democratic Movement (so-called because of the symbol of the orange for the
“Nay” vote, the other being the banana for the “Yay” vote) that campaigned against
3. Kibaki’s government’s constitutional proposal to stall measures to strengthen the office
of the prime minister and introduce a quasi-federal system.
DEMOCRACY
The Rule of Law
While the law prohibits arbitrary arrest or detention without a court order, police are
widely regarded as a law unto themselves, arresting arbitrarily and prone to pressuring
citizens into paying bribes to avoid arrest. Secondly, this law is subverted by Kenya’s
2003 Suppression of Terrorism Bill gives the authorities wide-ranging powers to search
and detain people. Although torture is outlawed, human rights organisations have
documented hundreds of cases of torture, many resulting in death. The judiciary is seen
as an agent of the executive (Bertelsmann Stiftung 2009).
Rights and Freedoms
The freedom of speech is guaranteed in the constitution. The press is largely free
although government has occasionally acted in intimidating ways against the media. The
Kenya Broadcasting Cooperation (KBC) is the only national radio and television
network. There is no government owned or controlled newspaper.
THE ECONOMIC SITUATION
Kenya is the largest economy in East Africa and is a regional financial and transportation
hub. In the years preceding the 2007 post-election violence, Kenya had been
experiencing steady growth that stood at 7% in 2007. The economic effects of the
violence, compounded by the drought and the global recession brought down growth to
2% in 2008. Remittances are Kenya’s single largest source of foreign exchange and a key
social safety net. According to the Central Bank of Kenya, recorded remittances totalled
US$609 million in 2009; however, the actual number may be as high as US$1 billion.
There is a wide gap between the ruling elite and the poor majority, however, with
widespread perceptions of unfair distribution of resources, especially regarding land
ownership.
THE ELECTIONS
The president is elected by popular vote for a five-year term (eligible for a second term).
In addition to receiving the largest number of votes in absolute terms, the presidential
candidate must also win 25% or more of the vote in at least five of Kenya's seven
provinces and one area to avoid a runoff. The last elections were held in 2007 and after a
delay in announcing the results, the Electoral Commission of Kenya announced Kibaki
as victor, with split of results reading: 46% Mwai Kibaki (PNU) 44% Raila Odinga
(ODM), and 9% Kalonzo Musyoka (ODM-Kenya). Although the period leading to the
elections was relatively peaceful; the delayed announcements of the results, which many
observers saw to be in favour of the opposition ODM, and allegations of irregularities
and vote rigging, led to violent clashes and more than a thousand deaths. Although some
of the violence was spontaneous, there was evidence of widespread coordination by
leading politicians across the different factions including the supply of weapons. The
violence also took ethnic undertones. The Coalition government has established an
Interim Independent Electoral Commission (IIEC) to clean up the voters’ roll. The Waki
Commission of Inquiry into the post-election violence recommended the establishment
of a special tribunal to undertake trials at the national level. The next elections are
scheduled for 2012.
4. OPPORTUNIES AND THREATS
Opportunities
Media freedom and a strong and vibrant civil society in Kenya bode well for the
country’s development of a democratic culture. It has been argued that the acceptance of
the founding party (Kenya African National Unity) of the 1992 electoral defeat is
indicative of the country’s level of maturity on its path to democratic consolidation. This
is so in spite of the 2007 electoral violence.
The Kenyan Human Rights Commission has recently drafted a bill designed to help the
police cultivate a culture of respect for human rights, promote accountability and good
working relations between police and the public. The Narc Coalition government had
made some significant strides towards fighting the endemic corruption, although its
political will to deal decisively with the scourge is in question, as the stonewalling and
deliberate frustration of the former Permanent Secretary for Ethics, John Githongo, has
demonstrated.
Threats
Corruption and the ethnicisation of politics and social mobility in Kenya are two
mutually reinforcing threats to stability in the country. Beneficiaries of land distribution
in Kenya are carefully selected ethnic elites who form part of a client network in a
patronage network controlled by the strong executive. This has created conditions where
access to the executive office is considered a zero-sum game where the winner takes their
turn to disburse benefits for favours including self-perpetuation.
The consequences of the post 2007 elections have not been adequately addressed. Firstly,
the 600 000 Internally Displaced Persons (due to the post-2007 elections violence) have
not been relocated; leaving them vulnerable to hostile ethnic environments, and
effectively ignoring their deprivation of their land of origins (from which they escaped).
The AU mediated grand coalition fails to resolve the key issues of constitutional reform
and uneven development, the coalition is likely to disintegrate before the 2012 elections,
creating a high probability that violence will break out again.
HIV-AIDS is the number one Threat facing our country, killing our people and
impairing our development. HIV-AIDS is not just a challenge to our public health
system, it is a challenge to our national security, our economic development, it affects
womenÂ’s rights and above all, it is an enemy to Kenyans in particular and humanity in
general. There is no challenge affecting Kenya’s economy more than HIV-AIDS
epidemic.
References: Bertelsmann Stiftung, BTI 2010 – Kenya Country Report Gütersloh
Gutersloh: Bertelsmann Stiftung 2009
(Geir Sundet, Scanteam, and Eli Moen, Norad)
Ref: Macro Planning Directorate
Office of the Prime Minister
Ministry of State for Planning