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Note: This document may not always reflect the actual appropriations determined by Congress. Final budget allocations for USAID's programs are not determined until after passage of an appropriations bill and preparation of the Operating Year Budget (OYB).

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KENYA

FY 1998 Development Fund for Africa	. . . . . . . . . . . . . . . . .	$20,000,000
FY 1998 P.L. 480 Title II	. . . . . . . . . . . . . . . . .	$5,000,000

Introduction

Despite the current difficult political transition, Kenya continues to maintain a stable, pro-Western government and a free-market economy with a vibrant private sector. As a regional financial center, Kenya is an economic engine for the region and a growing African market for U.S. investors. Continued economic assistance to Kenya serves the U.S. national interest through: 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 and promotion of economic opportunity. 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 bulk of the United States relief and development goods to the neighboring countries of Uganda, Rwanda, Somalia, the southern portion of Sudan and eastern Zaire flows through the Kenya port, road and railway network. Thus, political and economic stability in Kenya remains a key U.S. goal.

The Kenya family planning program is a success story for Africa today. Only twelve years ago in Mexico City, the Kenya family planning program was cited as being extremely desperate; today, the country's population growth rate has fallen from one of the highest in the world to one of the lowest in the region. The Kenya Health Care Financing Program has set an example that nine other African countries are now emulating as they design their own strategies to cope with health care financing issues.

The Mission has broken new ground on microenterprise lending and is assisting a local non-governmental organization (NGO) in its efforts to become the first self-sustaining bank in the region. USAID's agriculture program has developed the best agricultural research and training institutions in sub-Saharan Africa, and Egerton University and the Kenya Agricultural Research Institute are participants. These are successes in which USAID has played a key role. However, like many other sub-Saharan African countries, Kenya faces many long-term developmental challenges. Thus, the gains so far realized will need continued support to protect and extend them.

Kenya's economy has grown at the rate of nearly 5% over the last two years and has the potential in both human and natural resources to regain its former development status. Kenya is currently in a transitional stage making progress towards improving democratic governance following the multi-party elections in December 1992.

The Development Challenge

Kenya's macroeconomic environment is relatively stable and has greatly improved since 1993. The government continues to maintain sound macro-economic 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. The improved macroeconomic policies have stimulated a resumption of economic growth. Exchange control restrictions have been eliminated, virtually all trade restrictions have been removed, and 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.

The Government of Kenya (GOK) 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 in constructive policy dialogue while maintaining effective donor coordination in pressuring for accelerated reforms (both economically and politically). The United States will work toward improving the political environment while continuing to address longer-term development challenges, including population, health, and broad-based economic growth.

While economic and political change in Kenya since 1991 has been significant, it can not be characterized as irreversible. Many of the positive steps Kenya has taken have been the result of pressure from outside. For meaningful, sustainable development to come to Kenya as it heads into the 21st century, the pressure for change must come from the Kenyan people themselves. The more immediate challenge is the 1997 general elections, providing support to a wide array of players in the political arena who are pressing for fundamental changes in key institutions and the electoral process. Additionally, as the Mission implements the current Country Strategic Plan, major challenges still remain in the three focus sectors; namely, democracy and governance, economic growth, and population and health.

Political reform and progress in accountability and governance are a major challenge for the USAID program. USAID/Kenya recognizes that political change is a difficult long-term process and setbacks in the short term occur. Nevertheless, there is an increasingly vibrant civil society that is creating public awareness and debate on various democratic governance problems. This new awareness in Kenyan society is now challenging the political leadership at all levels.

A major challenge for donors is to ensure that all elections are sufficiently free and fair. While this is certainly not an easy task, donors will be pressing for a level playing field in the upcoming general elections for all the parties involved. USAID is working, in consultation with the U.S. Embassy, other donors, the GOK and NGOs, to ensure open, free and fair competition in the elections.

Kenya has made significant progress in policy reform, especially in the macroeconomic and agricultural sectors. The country has moved from a relatively controlled economy to a fairly free market economy over the last two to three years. While more remains to be done, the full impact of these policy changes can only be realized if the private sector takes advantage of the evolving opportunities to increase productivity and growth. The main development challenge for the economic growth sector, therefore, is to facilitate the growth of an efficient private sector that delivers quality products, goods and services to farmers and consumers at the most competitive prices. This will, in turn, spark significant economic growth that will effectively reduce unemployment and improve food security barring drought not only in Kenya but in the Greater Horn of Africa region.

Kenya's national family planning program has made outstanding progress in recent years, achieving one of the most precipitous declines in fertility ever recorded, from an average of 8.1 births per woman in the late 1970s to 4.9 in 1995. Population growth rates during the same period declined from over 4% per year to 2.7%. As a major family planning donor in Kenya, USAID has for many years played a critical role in these achievements, with emphasis on strengthening and expanding access to services.

Despite past achievements, some formidable challenges remain. As a result of the high fertility rate in the late 1970s, an ever increasing number of young people enter the reproductive ages annually. This means that more clients must be served annually just to maintain a status quo. The 1993 Kenya Demographic and Health Survey found that less than half of the current demand for family planning is being met. Family planning services will need to increase significantly in order to assist Kenya to complete its demographic transition. Human Immunodeficiency Virus/Acquired Immune Deficiency Syndrome (HIV/AIDS) presents yet another major challenge, and continues to be a confounding factor in Kenya's social and economic development. National seroprevalence is estimated to be 7.5%,representing over one million people infected. Since HIV/AIDS disproportionately affects young, working age adults, the economic, health and social welfare costs will be enormous. Within the decade, HIV/AIDS is likely to become Kenya's most serious health problem. USAID supports the GOK's HIV/AIDS prevention strategy through numerous programs to decrease high risk behavior; promote condom use; and improve the diagnosis, treatment and prevention of sexually transmitted diseases. However, USAID's ability to impact population/family planning and HIV/AIDS prevention trends in Kenya will steadily decline if current downward trends in USAID funding in Kenya continue. Increased support from other donors, as well as additional GOK funding for the health sector as a whole, will be crucial.

Several of USAID's activities cut across the five Agency goals, particularly those of environment and democracy/governance. Poverty and rapid population growth may be threatening the biodiversity resources of Kenya more than any other problem. These two interrelated problems are causing extensification 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 encouraging 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 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. Kenyan 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.

At the end of 1995-1996 financial year, Kenya's external debt was about US$6 billion. The number represents 76% of the gross domestic product (GDP) . The number reflects substantial and consistent decline from the high level of 147% which prevailed in 1992 to 1993. Government medium term projections suggest further declines in debt burden. By 1998, external debt should represent a lower 68% of the GDP. The U.S. Government suspended all debt relief to Kenya in 1990. Currently, there are no plans of debt relief for Kenya. Kenya has the ability to graduate early in the 21st century if the commendable economic growth of 5% is sustained over the next few years. The current Country Strategic Plan reflects the year 2010 to be the exit time frame.

Other Donors

USAID/Kenya coordinates closely with other donors. Donors that complement the USAID program include: Japan (the largest bilateral donor for the period 1992-1996), the World Bank (the largest multilateral donor for the period 1992-1996), the World Food Program, Germany, Belgium, Denmark, the United Kingdom, Sweden, the European Union, the United Nations, the International Monetary Fund, and the African Development Bank. Currently, U.S. bilateral assistance to Kenya is 6% of the total donor aid, and it is ranked as the sixth bilateral donor and is ranked ninth in the total aid flow to Kenya, including multilaterals.

FY 1998 Program

USAID/Kenya has adopted a strategy over the next five-year period (1996-2000) which focuses on the immediate and long-term needs of Kenya, one of USAID's oldest development partners in Africa. The goal of the USAID/Kenya program is "broad based sustainable economic growth in Kenya contributing to crisis prevention in the Horn of Africa," and the Mission's sub-goal is "increased food security in Kenya."

The goal and sub-goal are supported by the following three strategic objectives:

Create Effective Demand for Sustainable Political, Constitutional and Legal Reform;

Increase Commercialization of Smallholder Agriculture and Natural Resources Management; and

Reduce Fertility and the Risk of HIV/AIDS Transmission through Sustainable, Integrated Family Planning and Health Services.

Through 1997, the Mission will be working with NGO to encourage peaceful political liberalization in Kenya, i.e., a relaxation of government controls and its monopoly on political power. This should encourage greater political expression and association. This strategy, which USAID/Kenya is addressing under its first strategic objective on democracy and governance, has been designed to strengthen civil society and to stimulate the liberalization of the electoral environment. This should improve the chances of elections that will be free and broadly representative of the will of the people.

USAID's strategic approach is to concentrate its resources in two areas: in support of nongovernmental civic organizations that can build constituencies for providing effective voices for political liberalization; and, to increase the ability of the country to run free and fairer elections. This approach will also help prepare the ground rules for the longer democratization process, including constitutional reform and the capacity-building of democratic institutions such as the judiciary, parliament and political parties.

Political liberalization and democratization can only be meaningfully sustained in a larger context of improving living standards for the average Kenyan. Democracy can be best sustained with high literacy, a healthy population, a responsive civil service, and a middle class capable of supporting a reasonable tax base. That is the rationale for the second aspect of the USAID/Kenya program.

To improve Kenya's economic growth, USAID/Kenya concentrates on assisting smallholder agriculture and management of Kenya's natural resources under its second strategic objective. The majority of the poor, a great many of them women, are concentrated in the agriculture sector. Development, in smallholder agriculture, and the microenterprises which support it, has the greatest potential in terms of the impact on job creation, poverty reduction, increased economic opportunity for women and biodiversity conservation. Environmental concerns are factored into all activities. Consequently, the Mission's strategic approach is to transform subsistence agriculture to market-oriented production and commercialization, while simultaneously stimulating small and microenterprise development. This will help increase income for farmers, while creating jobs off the farm.

However, to sustain improvement in the living standards of the poor, the Mission is also required to focus on their health. Under the third strategic objective, USAID/Kenya is addressing three key areas of public health and family planning services: population growth; the HIV/AIDS epidemic; and major preventable diseases affecting child survival. Under the last strategic plan, USAID can directly claim credit for significant results in service delivery.

Agency Goal: Building Democracy

The USAID/Kenya 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. The program focuses on two areas: 1) strengthening civil society, with an emphasis on women's participation, and 2) developing a more transparent and fair electoral process. USAID will focus resources on developing civil society groups and working with the NGOs in an effort to make elections reflective of the will of the people. Over the past year, we have funded 19 grants to politically active civil society groups. The building of civil society capacity is also an element of the Mission's other two strategic objectives.

Strategic Objective 1: Create Effective Demand for Sustainable Political, Constitutional and Legal Reform

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 in the next decade. 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/Kenya's strategy in achieving economic growth. The Mission's strategic objective of commercializing smallholder agriculture is based on strengthening private sector participation and competitiveness in agricultural markets in Kenya. Past commercialization reform work in the cereals market has resulted in the GOK reducing control over grain marketing. Farmers now receive an estimated 80% of the market price compared to less than 70% in 1992. Maize meal consumers in Nairobi alone are saving up to US$12 million annually as they shift from highly refined meal to more nutritious whole meal due to reforms.

Improving efficiencies in agricultural markets alone, will not necessarily improve food security in Kenya. Efforts are also being focussed on improving consumers' incomes through increasing marketing and employment opportunities for rural people. USAID/Kenya's 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 grew at rates of at least 10% in recent years, compared to only 5% to 6% in other sectors.

Strategic Objective 2: Increase Commercialization of Smallholder Agriculture and Natural Resources Management

Agency Goal: Stabilizing World Population Growth and Protecting Human Health

Of the total funding requested in FY 1998 for the population and health strategic objective, $6,100,000 is planned for population activities, and $5,500,000 is planned for health activities, including HIV/AIDS, emerging diseases, and child survival.

Sustainable development in Kenya must be grounded in a human resource base that is healthy and growing at a rate that the economy can support. Major challenges are presented by the HIV/AIDS epidemic, which affects the most productive segments of the adult population. High population growth rates mean that health, education, social and economic resources will continue to decline on a per capita basis. USAID's strategic objective, which aims to reduce fertility and the risk of HIV/AIDS transmission directly addresses these challenges, and directly supports the Agency's goal of stabilizing world population growth and protecting human health.

Major health care financing activities will provide resources to enable both the public and private sector to manage their programs more efficiently and effectively. Technical assistance to enhance the national service provider training system, national drug and logistics systems, and support decentralization will strengthen Kenya's ability to manage its health sector. Innovative efforts to improve the health status of people in malaria-stricken areas, through cost-effective prevention programs, will further improve the health status of Kenyans. Support for sustainable strategies is aimed toward making Kenya independent of donor funds for vaccines. Social marketing of condoms and information/education campaigns to promote AIDS awareness and prevention also directly support the Agency's goal.

It is clear that continued reductions in Kenya's population growth rate will facilitate broad-based economic growth and poverty alleviation by reducing the numbers of people entering the workforce each year, and by enabling the government to increase per capita investments in education and health. A smaller population base means higher per capita income. The stress on Kenya's fragile natural resource base and limited arable land will also be reduced if population growth is slowed.

USAID, as a major donor in population and AIDS programs, has contributed significantly to a substantial decrease in the fertility rate from 8.1 in 1978 to 4.9 in 1995. Condom promotions and sales are thought to have averted over 120,000 HIV infections. USAID assistance has enabled the GOK to increase its financial resource base for curative and primary/preventive health, and family planning services by $20 million over the past five years.

* Strategic Objective No. 3:

Reduce Fertility and the Risk of HIV/AIDS Transmission through Sustainable, Integrated Family Planning and Health Services

Agency Goal: Humanitarian Assistance

USAID's P.L. 480 Title II program is aimed at alleviating both short-term and long term food needs. The program is channeled through three non-governmental organizations: Catholic Relief Services (CRS), Food for the Hungry International, and World Vision Kenya. The activities of these organizations are designed to achieve long-term food security and improve the economic well-being of communities in food-deficit areas by providing food to workers. CRS activities in maternal and child health has been aimed each year at reaching 35,000 children below 36 months of age through a targeted growth monitoring program that 1) provides a food ration of 15 kilograms per month per child/mother, and 2) to bring about behavioral change in health and nutrition practices. Food for the Hungry International activities, which help to increase food while maintaining the land base and raising women's welfare in three targeted communities, have enabled farmers to adopt efficient land preparation practices and improved farming methods. The World Vision Kenya activities provides agricultural extension services and promotes environmental conservation and agroforestry practices.

Strategic Objective 2:

Increase Commercialization of Smallholder Agriculture and Natural Resources Management

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KENYA

FY 1998 PROGRAM SUMMARY

	Encouraging Broad-based Economic Growth	Stabilizing World Population Growth & Protecting Human Health	Protecting the Environment	Building Democracy	Providing Humanitarian Assistance	TOTALS
USAID Strategic Objectives
1. Effective Demand for Sustainable Political, Constitutional and Legal Reform Created - Dev. Fund for Africa	---	---	---	2,100,000	---	2,100,000
2. Increase Commercialization of Smallholder Agriculture and Natural Resources Management - Dev. Fund for Africa - P.L. 480, Title II	5,500,000 ---	--- ---	800,000 ---	--- ---	--- 5,000,000	6,300,000 5,000,000
3. Reduce Fertility and the Risk of HIV/AIDS Transmission through Sustainable, Integrated Family Planning and Health Services - Dev. Fund for Africa	---	11,600,000	---	---	---	11,600,000
Totals - Dev. Fund for Africa - P.L. 480, Title II	5,500,000 ---	11,600,000 ---	800,000 ---	2,100,000 ---	--- 5,000,000	20,000,000 5,000,000

USAID Mission Director: Dr. George Jones

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ACTIVITY DATA SHEET

PROGRAM: KENYA

TITLE AND NUMBER: Effective Demand for Sustainable Political, Constitutional and Legal Reform Created, 615-S001

STATUS: Continuing

PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1998: $2,100,000 DFA

INITIAL OBLIGATION: FY 1995 ; ESTIMATED COMPLETION DATE: FY 2000

Purpose: To create effective demand for sustainable political, constitutional and legal reform. This will be achieved through strengthening of civil society organizations, with emphasis on the participation of women and working towards a more transparent and fair electoral process.

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 tension 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/Kenya has designated the democracy and governance program as a strategic objective, which will emphasize strengthening civil society and working towards a more transparent and fair electoral process.

There are several external constraints which might impede achievement of this strategic 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 towards a full and open democratic system has been slow. The most immediate challenge is whether donors collectively can successfully work with the Government of Kenya and civil society organizations to ensure that the 1997 elections will be fair and representative of the people's will.

USAID Role and Achievements to Date: Under the democracy and governance strategic objective, USAID/Kenya will implement the Strengthening Democracy and Governance Project, the Private Voluntary Organization (PVO) Co-Financing activity, and the Democracy and Human Rights Fund. During the past year, USAID/Kenya has supported civic organizations engaged in projects ranging from rural civic education, press freedom, women in politics, to human rights awareness. These projects have had a significant impact on Kenyan civil society in the following ways: benefiting rural areas in terms of civic information; enhancing freedom of information; promoting women political empowerment; and promoting of human rights awareness. The PVO Co-financing will build on the achievement of PVO Co-Financing I activity (1985-95), which strengthened the capacity of 27 non-governmental organizations (NGOs) and promoted their networks. USAID will continue to support these important efforts.

Description: This activity will focus on two intermediate results: (1) strengthening civil society, with emphasis on women's participation; and (2) an electoral process more transparent and fair. USAID will advocate suspension of laws restricting party competition and build technical know-how for legal and constitutional reform through support for NGO-based legal reform working groups. This activity will increase capacity to administer free and fair elections through civic education activities, and through assistance to NGO-based monitoring during campaign periods and elections. In addition, we will work with local organizations to diminish the risk 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 toward 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. In terms of funds channelled through civil society NGOs, the United States is the leading donor. Otherdonors include Finland, Austria, Germany, Switzerland, Denmark, Netherlands, Sweden, Norway and Ford Foundation.

Beneficiaries: The people of Kenya, through USAID's (with over 30 local grantees) work with the politically active NGO community, e.g. the Institute for Education in Democracy, the International Federation of Women Lawyers and the Kenya Human Rights Commission, the NGO Council), and the Institute for Policy Analysis and Research will be beneficiaries of this project.

Principal Contractors, Grantees or Agencies: To the extent possible, USAID will 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. Currently the Mission has awarded 30 grants to local NGOs active in the Democracy and Governance sector. The major grantees are: the Kenya Human Rights Commission, Institute of Policy Analysis and Research, International Commission of Jurists, International Federation of Women Lawyers-Kenya Chapter, National Commission of Status of Women and the Public Law Institute.

Major Results Indicators:

Baseline Target

Number of active NGOs providing 10 (1996) 25 (2000)

civic education

Percent of parliamentary seats 3% (1996) 6% (2000)

held by women

Number of NGO coalitions formed 1 (1996) 10 (2000)

to promote conflict prevention/resolution

Percent of election results published 20% (1996) 95% (2000)

on time

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ACTIVITY DATA SHEET

PROGRAM: KENYA

TITLE AND NUMBER: Increase Commercialization of Smallholder Agriculture and Natural Resource Management, 615-S002

STATUS: Continuing

PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1998: $6,300,000 DFA; $5,000,000 P.L. 480, Title II

INITIAL OBLIGATION: FY 1995; ESTIMATED COMPLETION DATE: FY 2000

Purpose: To increase productivity and incomes of smallholders in agriculture and improve natural resource management.

Background: Poverty and joblessness remain major development challenges for Kenya, which require accelerated economic growth. The key to such growth lies with agriculture which dominates the economy. The sector employs more than 70% of the country's work force, contributes 60% of the export earnings, and 45% of government revenue. A transformation of smallholder farmers' production, which accounts for more than 70% of total agricultural production from a relatively subsistence-orientation to a market orientation, will be necessary to accelerate economic growth.

USAID Role and Achievement to Date: USAID support for economic growth includes efforts to increase agriculture production, employment, income, and foreign exchange earnings. Between 1972 and 1993, agriculture investments by USAID in areas such as research, policy reform, education, grain storage, and non-traditional agricultural exports contributed significantly to Kenya's economic growth. Agriculture productivity in Kenya has grown at a rate nearly double the average country in sub-Saharan Africa. Likewise, horticulture exports have been increasing annually more than 10% in recent years. Creating new markets for agriculture and providing jobs for surplus agriculture labor requires attention to microenterprise development, an activity integrally linked to economic growth strategy. 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.

Description: USAID's strategic objective will result in: 1) stronger and more competitive agricultural markets, 2) off-farm job opportunities for smallholders through microenterprise development and natural resource management related businesses, and 3) 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, our 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, our policy analysis and reform dialogue will facilitate regional trade. Our 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. In following highly successful models in Asia and Latin America, we will assist in making the NGO sustainable while dramatically increasing its outreach. These efforts will 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 directly affect economic growth, employment creation, and income opportunities for all Kenyans. In the more marginal areas, Mission investments in community wildlife development and P.L. 480 projects will help move those communities from relief dependency to sustainable development.

Host Country and Other Donors: The World Bank is the major donor for agriculture. In addition, the United Kingdom, the Netherlands, Germany, the European Union and USAID support applied agricultural research, agricultural policy analysis, infrastructure development, macroeconomic stabilization, and biodiversity conservation. In microenterprise, USAID, British Overseas Development Assistance, and the Netherlands are the principal donors and closely coordinate investments.

Beneficiaries: Approximately 3.0 million smallholder farmer households, who constitute 80% of Kenyan households and account for 75% of total agriculture production, will be the main beneficiaries of this program.

Principal Contractors, Grantees or Agencies: USAID will implement the activity through U.S. universities, private and public non-profit organizations, and U.S. and host country NGOs. The major grantees and contractors include Food for the Hungry, Catholic Relief Services, World Vision, Development Alternative, Inc., Technoserve, Fresh Produce Exporters of Kenya, Kenya Rural Enterprise Program, Kenya Management Assistance Program and American Breeders Service.

Major Results Indicators:

Baseline Target

Percentage of smallholder maize 35% (1996) 50% (2000)

production marketed

Percentage of maize/milk sales 45%/40% (1995) 15%/25% (2000)

to state corporations

Employment in micro-and small- 1.2 (1994) 1.7 (2000)

enterprises (millions)

Non-traditional export 22% (1995) 35% (2000)

earnings as a percentage

of total export earnings

P.L. 480 Title II Program Objectives:

Many smallholder farmers living in marginal agricultural zones in Kenya fall victim to cyclical droughts which occur every seven to eight years. Left unassisted, these communities represent potentially volatile populations that can spill over to neighboring regions and cause conflict. During the non-drought years, USAID/Kenya assists this group of smallholder farmers through P.L. 480 Title II development projects in an effort to make them more food-secure. These development projects are aimed at moving these communities, on a sustainable basis, from relief to development activities. They will also increase the potential of transition communities to produce and/or sell agricultural products as they are brought more and more into the commercial agriculture mainstream. During the drought periods, these farmers become beneficiaries of P.L. 480 Title II humanitarian relief (emergency) food distribution through our Private Voluntary Organization (PVO) partners.

The P.L. 480 program is therefore directed at two agency goals; namely, "broad-based economic growth" and "providing humanitarian assistance." P.L. 480 Title II program activities also directly contribute to the accomplishment of the mission's sub-goal of "increased food security".

Specific activities include: pilot programs for smallholder agriculture, income generation projects, community development activities such as water and sanitation, and environmental restoration or small-scale infrastructure development. Monetization of Title II commodities by PVO partners will continue to be the main source of funding for P.L. 480 Title II development projects.

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ACTIVITY DATA SHEET

PROGRAM: KENYA

TITLE AND NUMBER: Reduce Fertility and the Risk of HIV/AIDS Transmission Through Sustainable, Integrated Family Planning and Health Services, 615-S003

STATUS: Continuing

PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1998: $11,600,000 DFA

INITIAL OBLIGATION: FY 1995; ESTIMATED COMPLETION DATE: FY 2000

Purpose: To reduce high fertility and the risk of HIV/AIDS transmission through sustainable, integrated family planning and health services.

Background: Kenya's population has grown from 8.7 million people at independence in 1963 to an estimated 28 million in 1996. Although notable progress has been made in recent years to reduce fertility (from 8.1 births per woman in the late 1970s to 4.9 in 1995), the current population growth rate, estimated at 2.7%, is still unacceptably high. Current projections show that even if contraceptive prevalence continues to grow quickly, Kenya's population will increase to 42 million by the year 2020, simply because of the large numbers of people already born and just now entering their early stages of reproductive life. AIDS may somewhat slow the population growth rate, but the overall population will increase by at least 50% by 2020.

Kenya has the highest numbers of officially reported AIDS cases in Africa. At least one million people in Kenya are already infected with HIV, and 1.8 million may be infected by the year 2000. HIV rates among prenatal clinic attenders in some urban areas are as much as 30% HIV positive. AIDS will also impede Kenya's progress to improve child survival. Without strong HIV/AIDS interventions, over 250,000 people, many of them children, will develop AIDS every year in Kenya. Within the next 10 years, Kenya's gross domestic product may be 14% smaller than it would have been without AIDS; per capita income is projected to be reduced by 10% and life expectancy will drop by 9.4 years, from 66 to 55.6.

USAID Role and Achievements to Date: Between 1984 and 1995, USAID was the lead donor to the Kenya national family planning program. Its financial and technical assistance has contributed to an increase in modern method contraceptive prevalence among women of reproductive age, from 9% in 1984 to 30% in 1995; a decrease in the fertility rate from one of the highest in the world -- 8.1 births per woman in 1977-78, to one of the lowest in sub-Saharan Africa -- 4.9 in 1995; and a decrease in the population growth rate from over 4% in 1980-85 to 2.7% in 1995.

USAID supports major health sector cost sharing reform efforts, as well as the development of policies to revamp national health insurance. A final evaluation of the Kenya Health Care Financing Project conducted in May 1996 showed that the Kenya cost-sharing program is one of the most mature, most comprehensive, and most successful public sector non-tax revenue enhancement programs in sub-Saharan Africa. The cost-sharing program, which the government has successfully implemented has thus far generated some $21 million, far exceeding the $14.9 million investment that USAID made under the Kenya Heath Care Financing Project. USAID has promoted major changes in health insurance and other health critical policy areas.

The Mission was instrumental in promoting a more integrated approach to contraceptive and essential drug logistic systems. At the national level, contraceptive supply is now more than 80% reliable and USAID logistics support to the Ministry of Health was singled out for praise and supplemental funding by the World Bank. USAID expanded high quality surgical contraception services to a total of 124 service delivery sites in 1996, a doubling of the number of sites from 1993. In the area of HIV/AIDS, prevention and awareness programs have been set up in 14 companies which have a total of 21,400 employees. Assistance to the Kenya AIDS NGO Consortium has been provided to over 150 organizational members to strengthen their anti-AIDS activities. Actual use of condoms has increased,with numbers of men who currently use condoms, increasing from 3% in 1989 to over 12% by 1996. Condoms sold through the social marketing project have increased to almost 500,000 a month, improving access to this critical AIDS prevention measure.

Description: Through its AIDS, Population and Health Integrated Assistance umbrella activity, USAID provides financial support to key implementing institutions and offers expert technical assistance in such areas as advocacy and policy change; commodity management and logistics; training health workers in clinical contraception; operations research, special studies and national surveys; public education and communications for behavior change; community-based service delivery; and commercial marketing of condoms (social marketing). Another aim of the project is to help public and private sector implementors build their capacity to independently sustain their health and family planning services, thereby reducing their reliance on foreign aid. A series of endowments to selected NGOs will be developed and granted to help them establish a financial resource base. The project will continue to give specialized technical assistance to both government and NGOs to help them more efficiently and effectively manage resources from cost sharing, insurance and other sources. In addition, USAID will help the GOK to establish revolving funds for purchases of vaccines and contraceptives.

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 National Population Fund, the United Kingdom (Overseas Development Assistance provides contraceptives and technical assistance), Sweden, Germany and the World Bank. Under the United States/Japan Common Agenda, Japan International Cooperation Agency and USAID are exploring areas of collaboration in the health sector. In the area of HIV/AIDS and sexually transmitted infections, donors include the United Kingdom, Belgium, Japan, Finland, the United Nations Development Program (UNDP) and the European Union. The World Bank has provided a $40 million credit for a project targeting sexually transmitted infections. The United States is ranked 5th in this sector.

Beneficiaries: Women and men of reproductive age and children under five. The actual figures are: men - 7,935,000 and women - 6,733,000. Children under the age of five are estimated at 4,741,000.

Principal Contractors, Grantees or Agencies: USAID implements activities through the Government of Kenya, 13 international private voluntary organizations/universities and 10 Kenyan NGOs. The major ones are Family Planning Association of Kenya, Christian Health Association of Kenya, the National Women's Organizations and the Church of the Province of Kenya.

Major Results Indicators:

Baseline Target

Cost-sharing revenue in the $6.7 million/year (1996) $9.0 million/year

public sector

Contraceptive supplies 80% of required supplies 90% of required

maintained at service supplies on hand at 60% supplies on hand at

delivery points of service delivery points 80% of service

(1996) delivery points (2000)

Private sector condom sales 500,000/month (1996) 1 million/month (2000)

External grant and loan 35% of total grants/ 50% of total grants/

resources available for loans from non-USAID loans from non-USAID

family planning and sources (1996) sources (2000)

HIV/AIDS activities (other

donor assistance)

Modern contraceptive 28% (1996) 31% (2000)

prevalence rate (all women)

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