KENYA'S NATIONAL RECONCILIATION AND EMERGENCY SOCIAL AND

UNCLAS SECTION 01 OF 04 NAIROBI 000855

SIPDIS

SIPDIS

DEPT FOR AF/E, AF/EPS, EB/IFD/OMA, AND A/S FRAZER
USAID FOR AFR/AA KATE ALMQUIST, AFR/EA CARRIE THOMPSON AND
JULIA ESCALONA
TREASURY FOR VIRGINIA BRANDON
LONDON AND PARIS FOR AFRICA WATCHERS

E.O. 12958: N/A
TAGS: ECON EAID EFIN PGOV KE
SUBJECT: KENYA'S NATIONAL RECONCILIATION AND EMERGENCY SOCIAL AND
ECONOMIC RECOVERY STRATEGY.


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1. Summary: On March 17, 2005, the Grand Coalition Government of
Kenya (GCG) unveiled the National Reconciliation and Emergency
Social and Economic Recovery Strategy. This strategy paper, which
has been transmitted as an e-mail attachment to State/AF/E and
USAID/AFR/EA, presents actions that the GCG will take to ameliorate
the effects of post election violence on the economy. The strategy
will be implemented during March - June 2008 and covers: (a)
security, peace building and reconciliation; (b)resettlement of
internally displaced persons; (c) revitalization of productive
sectors - agriculture, tourism and business; (d) restoration of
damaged infrastructure; and (e) positive engagement of the youth.
The total cost is KSh31.47 billion (approximately $500 million).
The Government has re-allocated KSh1.25 billion and the current
shortfall is KSh30.22 Billion. The GCG is looking to secure funding
and in-kind support from the private sector, international and
domestic PVOs/NGOs, and the donor community to fill this financial
gap. At the meeting, the Ambassador indicated that the U.S. has
already pledged $25 million in new funding. End summary.

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Background/Context
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2. Kenya held the fourth multiparty general election on December 27,

2007. The dispute that followed the announcement of the results of
that election by the Electoral Commission of Kenya (ECK) on December
30, 2007, quickly degenerated into an unprecedented seven-week long
spate of violence in Coast, Nairobi, Nyanza, Rift Valley and Western
Provinces. The conflict led to an estimated loss of 1,200 lives,
dislocation of more than 300,000 people or Internally Displaced
Persons (IDPs),destruction of property, heightened ethnic hatred,
and a general disruption of social and economic life. An additional
50,000 IDPs are estimated to have been dislocated and are housed by
friends, relatives or have relocated to their ancestral homes.


3. The signing of the National Accord and Reconciliation Agreement
between President Mwai Kibaki and ODM leader Raila Odinga on
February 28, 2008 marked a turning point in the post-election
conflict. The agreement paved the way for the restoration of peace
and security in the country and a return to normalcy in all spheres
of the society and economy.


4. The two leaders established a 10-member committee from PNU
Coalition and the ODM to look into the political, economic, and
social challenges facing the country, including post-election
conflict and recommend policies and programs for economic recovery.
At its first meeting on March 10, 2008, the Committee adopted the
name the National Accord Implementation Committee (NAIC).


5. The NAIC decided that the development of an emergency recovery
program would be its first priority. This program is to be
implemented in the period to June 30, 2008. Subsequent activities
of the Committee were prioritized as development of the GCG policy
guidelines and formulation of short, medium, and long term
development strategies.

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The Recovery Agenda
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6. Kenya has achieved significant economic growth since the 2002
general elections. The economic growth rate rose steadily from 0.6
percent in 2002 to nearly 7.0 percent in 2007. Progress has also
been made towards the realization of the Millennium Development
Goals (MDGs) with poverty declining from 56% in 2000 to 46% in 2006.
The introduction of the free primary education in 2003 has led to
an increase in total primary school enrollment from 6.1 to 7.8
million. These impressive gains, however, are jeopardized by the
post-election crisis. The Government's proposed plan is to expedite
the implementation of projects under this strategy to minimize
bureaucratic bottle-necks. This includes fast-tracking of
procurement of goods and services without circumventing existing
laws and regulations.


7. The Strategy is divided into four parts that correspond to the
issues the NAIC agreed would require emergency interventions for
recovery. These include:
(a) National Reconciliation, Peace Building and Security;
(b) Resettlement of Internally Displaced People;
(c) Revitalization of Key Economic Sectors; and
(d) Positive Engagement of the Youth.

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National Reconciliation, Peace Building and Security

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8. The post-elections conflict severely impacted the economy and
threatened the momentum of the social and economic gains of the last
few years. The disruption of economic activities, especially
farming, tourism and commerce, have contributed to reductions in
employment and incomes. Private and public property (buildings,
schools, public offices, motor vehicles, roads and railway lines
were destroyed. Most importantly, a heightened negative ethnicity
threatened the survival of Kenya as a nation.


9. The GCG is committed to develop a pragmatic and all-inclusive
national reconciliation and peace building program that will promote
a renewed harmonious co-existence of Kenyans. The National
Reconciliation and Peace Building Program will be national in scope
with activities in all districts and constituencies. Civil society
organizations and non-state actors will be encouraged to partner
with the government in developing effective reconciliation and peace
building programs. The Government will put in place suitable
structures to provide the requisite synergy among the key players
including provincial administration, private sector, civil society,
media, community based organizations, non-governmental
organizations, popular artists and musicians, athletes and
faith-based organizations. Activities to be implemented include:
joint reconciliation and peace rallies, music as a tool for
reconciliation and development, media advertisements and guest
appearance; legal measures to deter future occurrence; and the
scaling up safety measures.

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Resettlement of Internally Displaced Persons (IDPs)
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10. The post-election crisis threw Kenya into a period of
unprecedented uncertainty that created a large number of IDPs.
Government estimates that as of February 19, 2008, there were at
least 301,000 in camps across the country and additional 50,000 who
have been housed by friends, relatives, or relocated to their
ancestral home. The strategy notes that different categories of
IDPs will require different interventions that include securing
abandoned land/house for safe return, survey, demarcation and
allocation of land, relocation, integration, and compensation.


11. The GCG would like to resettle and reintegrate IDPs as quickly
as is safely possible. It plans to establish the Government
Resettlement and Reintegration Committee within the Ministry of
State for Special Programs. Peace building and reconciliation is
envisioned that will be led by the two key principal leaders(Kibaki
and Odinga)as well as political and opinion leaders of the affected
communities, the provincial administration, churches, community
based organizations, teachers, youth groups, women groups, persons
with disabilities, etc. The Resettlement and Reintegration Program
will include the following components in order of priority:
security, shelter, food aid, social services, and revitalization of
economic activities.

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Revitalization of Key Economic Sectors
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12. The Agricultural Sector. Post-election violence impacted
negatively on the agricultural sector. The most affected areas are
Rift Valley, Western and Nyanza provinces where many farmers have
either been directly or indirectly affected through the destruction
of food stocks in the stores, crops in the field, displacement of
farm families and destruction of infrastructure. Transport services
were also disrupted thus affecting the delivery of both agricultural
inputs and outputs. As a result of the violence, land preparation
is lagging. The cost of farm inputs and land preparation has also
escalated beyond affordable levels. The Government makes the case
for short-term assistance to the affective families to mitigate
future food shortages. The anticipated assistance will be in the
form of (a) provision of maize seeds; (b) provision of fertilizers;
(c) intensification of extension services; (d) assistance for land
preparation and planting; and (e) rehabilitation of Agricultural
Society of Kenya (ASK) show grounds in Nakuru occupied by IDPs.


13. The Tourism Sector. Since the onset of post-election violence,
tourism practically collapsed as a result of the negative publicity
in the global media. Projections by the Kenya Tourist Board
indicate that the sector has been loosing KShs 5.5 Billion per month
for January/February. Under the first phase of the Strategy, Kenya
will be re-branded as a safe destination. The second phase of the
recovery will be part of a wider marketing campaign to include: (a)

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re-branding of Kenya in overseas markets; (b) request to countries
that have imposed travel advisories to remove them; (c) Suspension
of programmed increment of park fees by the Kenya Wildlife Service
for the entire; (d) hotels, airlines and tour operators will be
encourage to offer discounts to attract customers; and (e)security
will be enhance on critical tours routes such as those leading to
game parks and tourist police force will be strengthened.


14. Livestock and Fisheries Development. The post election
violence has caused losses of K Shs 1.11 Billion - mostly in Nyanza
and Rift Valley Provinces. Losses included destruction of
government and private assets, loss of livestock, non-collection of
revenue and reduce production and service delivery. Plans to
revitalize livestock and fisheries sectors include: (a) vaccination
of livestock in affected areas (Rift Valley, Western, North Eastern
and Nyanza Provinces.); (b) assistance to 4,000 fisher folk (Lake
Victoria and Lake Naivasha) for losses incurred due to
destruction/loss of fishing equipment; (c) assistance to livestock
and poultry farmers in restocking especially in greater Trans Nzoia
District, Western and Nyanza Provinces; (f) assistance in provision
of animal feeds to IDPs; and (e) restocking of government breeding
farms.


15. Small Businesses. One of the most affected sectors of the
economy is the Micro and Small Enterprises (MSEs) that include both
the formal and informal sub-sectors. Micro and small businesses
were burnt, looted and/or destroyed in Nairobi, Eldored, Nakuru,
Kisumu, Mombasa and Naivasha. In addition, the post-election
violence led to displacement of human capital from their work
stations. There has also been a disruption of access to raw
materials and supply of goods and services. It is estimated that
business enterprises in urban centers lost about 30 billion shilling
in the form of property and capital as a result of post-election
violence. It is further estimate that business losses in rural
areas amounted to KShs 60 billion. The strategy include
interventions to: (a) increase security, highway patrols, and
community policing/reporting mechanisms; (b) Assistance to small
businesses to re-build business premises, provision of working
capital for cases not covered by insurance, restock of raw material
and restoration of supply and distribution networks.


16. Infrastructure. The Government is currently undertaking an
in-depth review to establish an appropriate rehabilitation budget.
Emergency funds are, however, needed to repair damaged bridges,
culverts, railway lines,
roads, water supplies, and sanitation facilities.

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Positive Engagement of the Youth
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17. There are 11 million youth between the ages of 18 and 35 years.
Youth play a vital role in shaping the present and the future of
all societies. The post-election events have shown that having
large numbers of relatively well educated, but unemployed, youth is
a serious deterrence to economic growth and a real threat to
national security. Those primarily involved in the post-election
violence were youth. The Government will prioritize immediate
livelihood needs of the youth particularly those who lost the
business premises and tools by re-establishing them to back to their
former status. The Government will also undertake the following
initiatives as a means of creating youth employment opportunities:
(a) construction, maintenance and repair of road in rural areas; (b)
reconstruction of burnt houses, public utilities and in the
resettlement of displace people; (c) planting trees under the "Trees
for Jobs Programme"; (d) environment sustainability through water
conservation measures; (e) peace building an reconciliation
initiatives; and(f) additional recruitment of 4000 youth to the
National Youth Service.


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The Donor Response to the Recovery Strategy
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18. Individual donor responses vary widely. In general, there has
been a strong appreciation that in preparing this document, the GCG
is being forced to work together for the national good. The
exchange between senior PNU and ODM officials at the unveiling was
very healthy and collegial. Both sides clearly had a sense of
ownership of the document and were committed to its realization.
Given the short preparation time, the document is well-conceived
comprehensive, and generally consistent with our field-based
knowledge. The strategy does, however, have some serious flaws.

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First, the document is static rather than dynamic in that it assumes
resettlement of 350,000 IDPs in the next three months, which is not
realistic. While the text of the document notes that the different
types of IDPs will have different requirements, this is not
reflected in the budget. The budget also includes line items that
may be more appropriately funded within the actual budget as opposed
to a supplemental request. Finally, many of the budget parameters
appear to be unsupported by current costs. The strategy is also
limited in that it does not address program implementation
mechanisms and modalities.


19. For these reasons, the donor community is unwilling to give the
Government carte blanche to implement the program. Rather, the
donors plan to respond as true development partners working in
collaboration with each other, the government, NGOs and private
sector partners to facilitate the transition. The donor community
notes the time-sensitivity of the resettlement issue, but also
recognizes that resettlement cannot occur in isolation. It must be
linked to addressing the underlying causes of the conflict -
poverty, inequality, corruption, land injustices, youth unemployment
and others. Many in Kenya's civil society are concerned that if
donors respond to the recovery strategy without addressing these
underlying causes, we will be setting a dangerous precedent that
provides short-term superficial solutions, which may undermine
resolution of the underlying issues.


20. At the meeting, the Ambassador made clear the U.S. commitment to
assist Kenya recover from the crisis and to support implementation
of the political accord. The Ambassador reviewed the support
humanitarian and other support we are already providing, and
indicated that the U.S. has pledged $25 million in additional
support.

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Comment
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21. The National Reconciliation and Emergency Social and Economic
Recovery Strategy is the Grand Coalition Government's effort to
accelerate Kenya's recovery process. While there are significant
short-comings in the strategy, the Coalition's leadership and
commitment to nation-building is most welcome. As we review the
USG's recovery plans, we find that our plans are fully consistent
with the interventions proposed within the strategy. We are also
confident that we will be able to develop implementation
modalities/mechanisms in a coordinated fashion that will ensure our
efforts contribute to the overall objectives of the recovery
strategy.


22. We share the concern of civil society and some other donors
that recovery activities cannot be distanced from addressing the
underlying factors of the conflict. We will strive to find the
appropriate balance to ensure that the underlying causes are
actively addressed while simultaneously encouraging a responsible
and timely recovery.
Ranneberger