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FY 1997 Development Fund for Africa: $23,013,359
P.L. 480 Title II: $ 4,228,000
Introduction.
Kenya has the potential to be one of the best economic performers in Africa. After a series of significant reforms, the economy posted a 3% gain in 1994 and a 5% gain in 1995. After having embarked on a major economic reform program, Kenya is currently in a transitional stage. While progress in democratization has not been satisfactory, with attendant problems of human rights violations and official corruption, Kenya continues to maintain a stable, pro-western government and a relatively free market economy with a vibrant private sector. As a regional financial center, Kenya is an economic engine for the region. Continued economic assistance to Kenya serves the U.S. national interest through: promotion of economic opportunity; prevention of humanitarian and other complex crises; enhancement of peace and stability in the Greater Horn of Africa; and protection against such global dangers as rapid population growth. The Mission goal of promoting "broad-based sustainable economic growth in Kenya contributing to crisis prevention in the Horn of Africa" directly reflects these interests. Kenya is pivotal in any effort to prevent future crises in the region. It is one of the few east African countries which has not faced a major internal conflict in the last 20 years. The cost of such a conflict in Kenya would be astronomical and would sharply increase the costs of relief and development to the neighboring countries of Uganda, Rwanda and the southern portion of Sudan. The bulk of trade and aid to these countries flows through the Kenya port, road and rail network. Thus, political and economic stability in Kenya remain key U.S. goals.
The Development Challenge.
Significant progress was made over the last two years in economic liberalization and structural reforms: the Kenya Government has recently reached agreement with the International Monetary Fund/World Bank on the latest Policy Framework Paper. However, the challenge is to consolidate the economic gains accomplished to date and to commit the government to reforms in democracy and governance. The immediate challenge is for the United States to engage a reluctant Government of Kenya (GOK), with questionable political will, in constructive policy dialogue while maintaining effective donor coordination in pressuring for accelerated reforms in democracy and governance. The United States will work toward improving the political environment while continuing to address longer-term development challenges, including population, health, and other broad-based economic growth.
Kenya's macroeconomic environment is relatively stable and has greatly improved since 1993. The Government has, to date, maintained sound macroeconomic policies. Strong efforts in fiscal management have resulted in a substantial reduction in the budget deficit, good revenue performance and, for the most part, better expenditure controls. This has helped reduce the fiscal deficit to an estimated 2% of the gross domestic product in FY 1995 from 10.4% only two years ago. Inflation has been brought under control, to a single digit for the first time since 1987. Improved macroeconomic policies have stimulated resumption of economic growth.
Kenya has also made significant strides in implementing structural reforms. Exchange control restrictions have been eliminated and virtually all trade restrictions have been removed. Price controls have been abolished. Although Kenya has achieved some degree of success in macroeconomic management over the past two years, the reforms are still fragile and could suffer reversals, especially if evidence of corruption and economic mismanagement is not dealt with transparently and through an objective judicial process. A major challenge for Kenya is to maintain macroeconomic stability while continuing to make progress in civil service and parastatal reforms.
Kenya offers an emerging family planning success story. USAID is the key donor contributing to this success. The fertility rate has fallen from one of the highest in the world to one of the lowest in sub-Saharan Africa. As a result, the population growth rate is now estimated to be below 3%. This makes it more likely that Kenya will be able to make sustainable gains in per capita income. The USAID-financed Kenya Family Planning Program is serving as a model for countries in the region as they develop their own strategies to meet family planning and health care financing challenges.
Political reform and progress in accountability and governance are a major challenge for the USAID program. USAID recognizes that political change is a difficult, long-term process, and setbacks in the short- term occur. Nevertheless, there is increased public awareness and debate on various democratic governance problems. This new awareness in Kenyan society is challenging the political leadership. USAID recently commissioned a Democracy and Governance Assessment to assist the United States and other donors in engaging the government in a dialogue on advancing the process of good governance and democratization. The study found that the degree of openness by the government to change is low. It recommends assistance to civil society to build demand for the reforms among citizens, while the U.S. Government urges repeal of oppressive laws and harassment of opposition parties. It also recommends-- in consultation with other donors--working with the government to permit open, free and fair elections in 1997. When conditions improve, the United States could work with the government to promote constitutional and legal reforms.
Several of USAID's activities cut across the five Agency goals, particularly those of environment and democracy/governance. On environment, no problem may be threatening the biological resources of Kenya more than poverty and rapid population growth. These two interrelated problems are causing intensification of agriculture through farmer migration into forest and other fragile areas, particularly around Kenya's economically important national wildlife parks. USAID's environment initiative is using community groups around the parks to become engaged in decision-making about how best to develop these buffer zones. Enterprise activities, such as eco-tourism, are being supported by USAID. Other USAID activities also cut across the Agency's democracy/governance goal. USAID is counting on civil society organizations to extend USAID-supported microenterprise lending, where USAID is a leading donor. Business organizations assisted by USAID are increasingly important and effective advocates for encouraging legislation and policy reforms that serve their members. In addition, good governance has been promoted through insistence on rigorous, transparent, and fair tendering of contracts for USAID-financed farm-to-market roads.
Other Donors.
USAID coordinates closely with other donors. Other donors that complement the USAID program include Japan (the largest bilateral donor for the period 1992-1994), the World Bank (the largest multilateral donor for the period 1992-1994), the World Food Program, Germany, the United Kingdom, Sweden, the European Union, the United Nations, the International Monetary Fund, and the African Development Bank.
FY 1997 Program.
Kenya was classified as a limited assistance program due to concerns in the area of democracy and governance. The USAID Mission currently has 12 U.S. direct hire employees; this presence will soon be reduced by roughly one-half. Given declining resource levels, Kenya's new Strategic Plan has analyzed how best to consolidate strategic objectives. USAID's Country Strategic Plan for FY 1996-2000 includes the following special objective and two strategic objectives:
Agency Goal: Building Democracy
The USAID democracy program seeks to increase civic participation by creating effective demand for sustainable political, constitutional and legal reform. This program directly supports the Agency's goal of building sustainable democracies. Our program will focus on two areas: 1) strengthening civil society, with an emphasis on women's participation, and 2) developing a more transparent and egalitarian electoral process. USAID will focus resources on civil society groups and the Electoral Commission in an effort to make the upcoming 1997 elections reflective of the will of the people. Over the past year, we have funded 16 grants to politically active civil society groups. The building of civil society capacity is also an element of USAID's other two strategic objectives. USAID conducted a thorough assessment of the democracy and governance situation in Kenya as well as an assessment of the potential for civil conflict in the country (e.g., ethnic clashes, electoral violence, etc.). Despite Kenya's move toward a multi-party system, Kenya continues to struggle with the transition to democracy and remains fragmented by political and ethnic strife that undermines movement toward increased democratic reform and economic sustainability.
Agency Goal: Encouraging Broad-based Economic Growth
To accelerate broad-based economic growth, Kenyans will have to make their economy grow by 7% a year. The key to economic growth in Kenya lies with the agriculture sector which is dominated by smallholder farmers. Thus, agriculture remains a primary focus of USAID's strategy in achieving economic growth. The Agency's objectives which support this goal include two areas in which we intend to invest: "Strengthened Markets" and "Expanded Access and Opportunity for the Poor." Commercialization of smallholder agriculture is based on strengthening the private sector and the competitiveness of markets. Our work with the cereals market has resulted in the GOK reducing control over grain marketing. Farmers are now receiving an estimated 80% of the market price compared to less than 70% in 1992. Improving efficiencies in the market alone, both domestic and within the Greater Horn of Africa, will not necessarily improve food security in Kenya. We are also focusing efforts on improving consumers' incomes through increasing employment. Our analyses indicate that the most effective way to maximize employment opportunity in the near future will be to focus our resources in the microenterprise sector. In 1993, more than half of the new jobs created in Kenya were in microenterprises. USAID, other donors and GOK efforts have continued to emphasize microenterprise growth as the major strategy for reducing poverty and thereby improving food security. A recent survey shows that total employment in micro-and small-enterprises (MSE) grew at rates of at least 10% in recent years, compared to only 5%- 6% in other sectors.
Agency Goal: Stabilizing World Population Growth and Protecting Human Health
A healthy and stable population is critical for sustainable development in Kenya. Despite encouraging achievements in improving health care and reducing the population growth rate, Kenya faces major challenges. High population growth is one of the significant impediments to sustainable development. USAID's strategic objective to increase the sustainability of family planning and HIV/AIDS service delivery systems will be achieved through activities which aim to reduce high fertility and risk of HIV/AIDS transmission. It will also improve health and enhance the ability of the Kenya family planningprogram to become financially and programmatically sustainable. These objectives directly support USAID's goal of stabilizing world population growth and protecting human health. Continued reduction in Kenya's population growth rate will facilitate broad-based economic growth and poverty alleviation mainly by reducing unemployment, increasing per capita investments in education and health, and increasing income per capita. Stabilizing population growth will lessen the degradation of Kenya's natural resources and maximize the attendant economic benefits. USAID, as the lead donor in the population and health sector, has contributed to a substantial decrease in the fertility rate from 8.1% in 1978 to 5.3% in 1993, and averted an estimated 110,000 HIV infections. USAID assistance has increased Kenyan financial resources for Government curative and primary/preventive health and family planning services by an average of $3 million a year through Kenya's national health care financing program.
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Environment |
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| USAID Strategic Objectives | ||||||
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SPO1. Effective Demand for Sustainable Political, Constitutional and Legal Reform Created - Dev. Fund for Africa |
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2,128,800 |
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1. Increase Commercialization of Smallholder Agriculture and Natural Resources Management - Dev. Fund for Africa - P.L. 480, Title II |
6,177,520 |
1,238,467 |
4,228,000 |
7,415,987 |
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2. Reduce Fertility and the Risk of HIV/AIDS Transmission through Sustainable, Integrated Family Planning and Health Services - Dev. Fund for Africa |
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13,468,572 |
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Totals - Dev. Fund for Africa - P.L. 480, Title II |
6,177,520 |
13,468,572 |
1,238,467 |
2,128,800 |
4,228,000 |
23,013,359 4,228,000 |
USAID Mission Director: George Jones
PROGRAM: KENYA
TITLE AND NUMBER: Effective Demand for Sustainable Political, Constitutional and Legal Reform Created, 615-SP01
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1997: $2,128,800 DFA
INITIAL OBLIGATION: FY 1995 ; ESTIMATED COMPLETION DATE: FY 2000
Purpose: To create effective demand for sustainable political, constitutional and legal reform.
Background: Although Kenya in recent years has moved toward a multi-party system, the country continues to struggle with the transition to democracy. Political and ethnic strife fragment society and undermine democratic reform and economic sustainability. To achieve sustainable economic growth, Kenya will need to develop a political system which is fair, equitable, and transparent, and which offers an effective voice to all Kenyans, including women. USAID has designed the democracy and governance program as an exploratory "special strategic objective" which will emphasize strengthening civil society and working towards a more transparent and egalitarian electoral process.
There are several external constraints which might impede achievement of this special objective. Kenya's political system is fragile, unintegrated, and dominated by the governing Kenya African National Union Party. Since the inception of multi-party politics in 1991, progress toward a full and open democratic system has been unacceptably slow. The issue is whether donors collectively can successfully work with the Government of Kenya and civil society to assist in conducting the 1997 elections fairly.
USAID Role and Achievements to Date: Under the democracy and governance special objective, USAID will implement the Strengthening Democracy and Governance Project, the private voluntary organization (PVO) co-financing activity, and the Democracy and Human Rights Fund. USAID supports paralegal training, journalist training programs, an independent public policy research institute, and civic education and human rights awareness projects which have benefitted over 4,000 Kenyans in the last three years. It is still too early to determine the impact of this support. The PVO co-financing activity will build on the achievement of PVO Co-Financing I (1985-95), which strengthened the capacity of 27 non-governmental organizations (NGOs) and promoted NGO networks. USAID will continue to support these important efforts.
Description: This activity will focus on two intermediate results: (1) civil society strengthened, with emphasis on women's participation; and (2) an electoral process more transparent and egalitarian. USAID will advocate the suspension of laws restricting party competition and build technical know-how for legal and constitutional reform through support for NG0-based legal reform working groups. This activity will increase capacity to administer free and fair elections through civic education activities, involving local churches, and by assisting NGO-based monitoring during the campaign period and the election. In addition, USAID will work with local organizations for prevention of ethnic clashes and other social conflicts.
Host Country and Other Donors: Approximately 12 principal foreign donors and international NGOs contribute resources to democracy and governance activities in Kenya. Many of these donors look to USAID for coordination and leadership in policy dialogue and resource allocation. The World Bank contributes $1.4 million for support to the Registrar General and Attorney General's Chamber; and the United Nations Development Program provides $6.7 million to assist constitutional reform matters. Other donors include Finland, Austria, Germany and Switzerland.
Beneficiaries: The people of Kenya, through USAID's work with the politically active NGO community (e.g., the Law Society of Kenya, the International Federation of Women Lawyers and the Kenya HumanRights Commission), the NGO Council, the Institute for Policy Analysis and Research and the local churches, will be beneficiaries of this project.
Principal Contractors, Grantees or Agencies: To the extent possible, USAID will continue to implement this project through Kenyan NGOs. U.S. PVOs will be encouraged to enter into partnership with local NGOs in order to enhance the capacity of local NGOs and promote sustainability.
Major Results Indicators: Indicators which will measure project progress will include:
Baseline Target
Number of active NGOs providing 10 (1996) 25 (2000)
providing civic education
Percent of parliamentary 2% (1996) 5% (2000)
seats held by women
Number of NGO coalitions 1 (1996) 10 (2000)
formed to promote conflict
prevention/resolution
Percent of election results 20% (1996) 95% (2000)
published on time
Percent of voters knowledgeable 5% (1996) 20% (2000)
on voting procedures
PROGRAM: KENYA
TITLE AND NUMBER: Increase Commercialization of Smallholder Agriculture and Natural Resources Management, 615-S001
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1997: $7,415,987 DFA; $4,228,000 P.L. 480, Title II
INITIAL OBLIGATION: FY 1996; ESTIMATED COMPLETION DATE: FY 2000
Purpose: To increase commercialization of smallholder agriculture.
Background: The key to economic growth in Kenya lies with agriculture, which dominates the economy, providing employment for 70% of the country's work force and accounting for over one-fourth of gross domestic product. The commercialization of smallholder farmers, which comprises most of Kenya's agriculture, will require a transformation from a relatively subsistence-orientation to a market orientation.
USAID Role and Achievement to Date: USAID support for economic growth includes increased agricultural production, employment, income, and foreign exchange earnings. Between 1972 and 1993, agricultural investments by USAID in areas such as policy reform, research, education, grain storage, and non-traditional agricultural exports has contributed to growth in this predominantly agriculture-based economy. Total factor productivity in agriculture averaged 0.6% per year, a notable achievement when compared with the average for sub-Saharan Africa of 0.38% per year. Likewise, horticulture exports have been increasing annually at about 10% in recent years. USAID has been and continues to be a lead donor in microenterprise development, a sector that provides more opportunities for rural and urban labor than any other sector in Kenya. The P.L. 480, Title II food program was "suspended" in FY 1996 due to the Government of Kenya's assessment of duties and taxes on imports. We anticipate that the program will be reinstated in FY 1997, and that food assistance to the needy will continue.
Description: USAID's strategic objective will result in: increased strength and competitiveness of agricultural markets, increased services and labor opportunities for smallholders through microenterprise development, and increased growth of non-traditional agricultural exports. These results will contribute significantly to key Agency initiatives, particularly in the Greater Horn of Africa and microenterprise development. For example, USAID investments in markets and high-yielding inputs will support Kenya's role as a regional model for research and source of improved seed varieties. In addition, USAID's policy analysis will facilitate regional trade. USAID investments in non-governmental organizations (NGOs) that provide services to microenterprises include assistance to the first African microenterprise-lending NGO to become a viable banking facility, thus making it sustainable while dramatically increasing its outreach. These efforts will, in turn, contribute directly to increasing food security in Kenya and in the region. As smallholder agriculture is commercialized, agricultural productivity will increase, thereby stimulating positive growth in the agriculture sector. Such growth will, in turn, directly affect economic growth, employment creation, and income opportunities for all Kenyans.
Host Country and Other Donors: The Government of Kenya's role is to: ensure a policy/regulatory environment for growth, maintain/improve infrastructure, and develop and transfer agriculture technology. Other donors, such as the World Bank, the United Kingdom, and the European Union, will support applied agricultural research, agricultural policy analysis, sustainable financial institutions for microenterprise lending, infrastructure development, and macroeconomic stabilization.
Beneficiaries: Smallholder farmer households, who constitute 80% of Kenyan households and account for 75% of total agriculture production.
Principal Contractors, Grantees or Agencies: USAID will implement the activity through private and public non-profit organizations, and U.S. and host country NGOs.
Major Results Indicators:
Baseline Target
Percentage of smallholder maize
production marketed 35% (1996) 50% (2000)
Percentage of maize/milk sales
to state corporations 45%/40% (1995) 15%/25% (2000)
Employment in micro-and small-
enterprises (millions) 1.2 (1994) 1.7 (2000)
Increase Non-Traditional Export
earnings as a percentage
of total export earnings 22% (1995) 35% (2000)
PROGRAM: KENYA
TITLE AND NUMBER: Reduce Fertility and the Risk of HIV/AIDS Transmission through Sustainable, Integrated Family Planning and Health Services, 615-S002
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1997: $13,468,572 DFA
INITIAL OBLIGATION: FY 1995; ESTIMATED COMPLETION DATE: FY 2000
Purpose: To reduce high fertility and the risk of Human Immunodeficiency Virus/Acquired Immunodeficiency Syndrome (HIV/AIDS) transmission through sustainable, integrated family planning and health services.
Background: Kenya has the highest number of officially reported AIDS cases in Africa. The AIDS death toll in Kenya to date is estimated to be about 100,000 people and 2.7 million more people are expected to die from AIDS and related diseases during the next 10 years. AIDS will also impede Kenya's progress in improving child survival. Without strong HIV/AIDS interventions, we could expect a quarter of a million people to develop AIDS every year in Kenya. Within the next 10 years, the epidemic could reduce per capita income by 10% due to a staggering increase in AIDS-related health care costs, a decline in savings and a decline in formal sector employment.
The Kenyan population has grown from 8.7 million people at independence in 1963 to an estimated 27.5 million by mid-1995. Although notable progress has been made in recent years in reducing fertility, the current population growth rate, estimated at just under 3%, is still unacceptably high. Should family planning programs stall, by the year 2020 there could be 8.2 million more people to feed, educate and employ (a total projected population of 49.6 million). AIDS will likely have a significant impact on population size, but under the worst case AIDS scenario, the population growth rate would still be 1.7% per year in the year 2005.
Constraints which may impede achievement of this strategic objective include: declining public health sector resources per capita, particularly for preventive health care; demand for family planning greater than the supply of services; a lack of coordinated and comprehensive HIV/AIDS prevention programs; a dearth of cost-effective solutions to the worsening malaria problem; the persistence of significant geographic disparities in health and fertility status; inability of young adults to access information and services in order to protect themselves from unwanted pregnancies, sexually transmitted diseases (STDs) and HIV; the Government of Kenya's (GOK) high degree of dependence upon external assistance to meet public health needs; inadequate attention to sustainability; less than optimal coordination of external resources; and the existence of serious procurement and accountability problems which impede the effective use of external resources by the GOK.
USAID Role and Achievements to Date: Since 1984, USAID has been the lead donor to the Kenyan national family planning program, accounting for over one-half of annual program expenditures. USAID's financial and technical assistance has contributed to an increase in the modern method contraceptive prevalence rate among women of reproductive age -- from 9% in 1984 to 21% in 1990-1993; a decrease in the fertility rate from one of the highest in the world -- 8.1% in 1977-1978, to one of the lowest in sub-Saharan Africa -- 5.35% in 1990-1993; and a decrease in the population growth rate from 4.1% in 1980-1985 to just under 3.0% in 1994. Kenya has benefitted from USAID's technical expertise in family planning in the areas of policy; quality assurance; logistics; training; information, education and communication; research; management; clinical contraception and community-based service delivery. Since 1989, USAID has also been a lead donor to Kenya's national HIV/AIDS prevention program, providing an average of $2.8 million annually for a private sector condom social marketing project, a public sector condom program and other AIDS prevention interventions implemented by various U.S. cooperating agencies and grantees. USAID continues to be the single most important donor to Kenya's widely-acclaimed health care financing program. Throughthis national policy reform initiative, more than $12 million has been generated for public sector facilities and primary health care services. This USAID-funded initiative serves as one of the Ministry of Health's most successful attempts to increase local level control and participation in health services.
Description: Under this program, resources will focus on two pre-eminent health challenges: stabilizing population growth and controlling AIDS. The activities to be supported by this project include policy dialogue, service delivery, training, limited commodities procurement and expert technical assistance. These activities are intended to: (a) expedite opportunity for replication of Kenya's successes in family planning and health care financing programs throughout Africa; (b) achieve people-level impact in HIV/AIDS prevention and disseminate the success story regionally; (c) improve child survival through targeted programs in family planning, AIDS control and malaria prevention; (d) assist selected Kenyan non-governmental organizations (NGOs) to become self-sustaining and encourage the rational growth of private sector services and insurance; (e) meet the immediate needs of over 1.5 million Kenyan women who want to protect themselves from unwanted pregnancies and sexually transmitted diseases (STDs)/AIDS; and (f) support the recent implementation of progressive GOK health policies designed to improve the efficiency, impact and sustainability of family planning and health services.
Host Country and Other Donors: There are about 15 donors active in Kenya's health and population sector. In addition to USAID, the major donors engaged in family planning activities are the United Nations Population Fund, the United Kingdom, Sweden, Germany, and the World Bank. In the area of HIV/AIDS and sexually transmitted diseases, donors include: the United Kingdom, Belgium, Japan, Finland, the World Bank, the United Nations Development Program and the European Community.
Beneficiaries: Beneficiaries under the USAID program include women of reproductive age, children under five and men.
Principal Contractors, Grantees, or Agencies: USAID implements activities through the Government of Kenya, 25 international private voluntary organizations and 17 Kenyan non-governmental organizations.
Major Results Indicators: Indicators which will measure project progress will include:
Baseline Target
Cost-sharing revenue in the $3.6 million/year (1996) $7.2 million/year (2000)
public sector
Contraceptive supplies 80%-required supplies 90% of required supplies
maintained at service on-hand at 60% of on-hand at 80% of
points delivery points (1996) delivery points (2000)
Private sector condom sales 500,000/month (1996) 1 million/month (2000)
External grant and loan 35% (1996) 50% (2000)
resources available for
family planning and HIV/AIDS
activities (other donor assistance)
Modern contraceptive prevalence 23% (1996) 31% (2000)
rate using modern methods