KENYA: AGOA ELIGIBILITY REVIEW 2010

UNCLAS NAIROBI 002184

STATE PASS USTR CONSTANCE HAMILTON

STATE FOR AF/EPS GABRIELLE MALLORY

TREASURY FOR ANTHONY IERONIMO

COMMERCE FOR KEVIN BOYD

AGRICULTURE FOR DON EVANS AND CATHY MCKINNELL

LABOR FOR SUDHA HALEY AND MAUREEN PETTIS

SIPDIS

E.O. 12958: N/A
TAGS: EAGR EAID ECON ETRD EINV ENRG ELAB AGOA PGOV PREL
KE
SUBJECT: KENYA: AGOA ELIGIBILITY REVIEW 2010

REF: STATE 97769


1. This cable is not/not for internet distribution.


2. Country: Kenya


3. Current Status: Eligible


4. Country Background Summary: The population of Kenya is 38.6
million (mid 2008 estimate),estimated 2008 GDP is $30.4 billion,
and per capita income is $770. An estimated 54% of the population
(an 8% increase over the 2007 figure of 46.1%) lives on less than
one U.S. dollar per day. The increase in poverty is largely
attributable to January-February 2008 post-election violence, global
economic slowdown, drought, and high food prices. The economy
experienced 1.7% growth in 2008, but rebounded with 4% growth in the
first quarter of 2009 and 2.1% growth in the second quarter. About
80% of the country's workforce is employed in the agriculture and
livestock sectors. Of an estimated 9.9 million workforce, 2 million
Kenyans hold jobs in the formal sector while 7.9 million are in the
informal sector. About 467,000 new jobs were created in 2008. The
Ministry of Labor puts the unemployment rate at over 40%. Real
wages dropped heavily in 2008 by 16.2% due to high inflation after
falling .3% in 2007. Inflation almost tripled in 2008 to 26.2% from
9.8% in 2007 and 14.5% in 2006. Bilateral trade dropped to $786
million in 2008 from over $900 million in 2007. U.S. exports to
Kenya fell to $442.4 million in 2008 from $576.2 million in 2007.
In 2008, U.S. imports of Kenyan goods totaled $343.5 million, an
increase over the 2007 figure of $326.1 million. The U.S. enjoyed a
trade surplus with Kenya of $99 million. AGOA duty free and GSP
imports constituted over $255 million. Kenya's total foreign trade
was over $16 billion, up from almost $12.5 billion in 2007.
Although its exports increased 25% to almost $5 billion, Kenya saw
its trade deficit jump 28.8% to $6.15 billion. The Common Market
for Eastern and Southern Africa (COMESA) is Kenya's biggest export
market. Horticulture, both fresh and processed, continued to be the
primary export earning $1.03 billion. Agriculture (horticulture,
tea, and coffee are the main exports) accounts for 23% of GDP while
the manufacturing, wholesale and retail trade, and transport and
communications sectors account for approximately 10% each.

Kenya is a constitutional, multiparty democracy. Following a
disputed presidential election on December 27, 2007, Kenyans endured
two months of ethnically motivated political violence which left
approximately 1,500 dead and 500,000 displaced. International
mediation efforts resulted in a late February 2008 power-sharing
agreement whereby the incumbent president, Mwai Kibaki, retained
office and the opposition candidate, Raila Odinga, was appointed to
a newly created prime ministerial position. With peace restored, a
Grand Coalition Government with a 42-member Cabinet was formed.
Throughout the disturbances the military remained apolitical.
Voters removed over 70% of the sitting parliament in the December
27, 2007 general elections. This power-sharing agreement also
outlined an ambitious reform agenda, including land, electoral,
police, and judicial reform and the drafting and passage of a new
constitution. As of October 2009, progress on reforms, as well as
bringing to justice those responsible for post election violence,
remained disappointingly slow.

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Comments on Eligibility Requirements
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I. Market-Based Economy
--------------


A. Major Strengths Identified

-- The Government of Kenya (GOK)generally maintains sound fiscal
and monetary policy.

-- Kenya has a relatively stable banking sector that was not
severely affected by the global financial crisis.

-- In 2008, Kenya began 24/7 operations at the Port of Mombasa to
increase efficiency; Businesses report the improvement has
significantly decreased the time required to ship their goods.

-- In 2008, he Kenyan Revenue Authority implemented an online
customs clearance system, further increasing efficiency and
transparency.

-- The majority of Kenya's AGOA exports are produced in Export
Processing Zones (EPZs) where total investment increased 5.8% to
$290.9 million in 2008. Over 50% of EPZ manufactures enter the U.S.
market under AGOA provisions. In 2008, 74 companies operated in
Kenya's EPZ employing more than 30,000 employees.

-- As a direct result of AGOA, 19 apparel/garment firms operate
within the EPZs. These firms employ over 25,000 workers and
exported $226 million worth of goods to the U.S. In an effort to
diversify, the firms exported $2.5 million to Canada, Europe, the
Middle East, Asia, and Central America.

-- AGOA exports, primarily apparel but also including cut flowers,
nuts, pineapple, and light manufactures, stayed steady at $255
million despite the economic slowdown in the U.S.

-- In 2008, horticulture exports stood at $1.03 billion, Kenya's
largest foreign exchange earner. Tea exports were a close second at
$922 million. Agricultural exports to the United States increased
to over $65 million.

-- Tourism receipts in 2008 totaled $762 million from 936,000
tourists.

-- Fresh horticultural exports, cut flowers, fruits and vegetables,
primarily destined for Europe, stood at $838 million.

-- Despite the economic slowdown in Kenya, the manufacturing sector
grew 3.8% in 2008 after a 6.5% gain in 2007.

-- Approximately 467,000 new jobs were created.

-- In September 2007, Kenya established a National Codex Council to
comply with Codex Alimentarius Commission international standards
and guidelines.

-- The Licensing Act of 2007 has so far eliminated and/or
simplified 694 licenses. In 2008, the government also reduced the
number of licenses to set up a business from 300 to 16 and is
reviewing another 337 licenses. The Business Regulation Act of 2007
established a "Business Regulatory Reform Unit" within the Ministry
of Finance to continue the deregulation process.

-- In 2009, Kenya launched a national e-Registry to ease business
license processing and help improve transparency.

-- In 2008, the Anti-Counterfeit Act was signed which establishes
an agency and a strong legal framework to police counterfeit goods.

-- In addition, the Kenyan Copyright Board was turned into an
independent watchdog group.

-- In January 2006 Kenya established a "Public Procurement
Oversight Authority" to minimize graft. To further ensure
transparency, in September 2007 Kenya enacted the "Supplies
Practitioners Management Act."

-- The GOK continues to increase the role of private sector in the
economy. Enacted in 2005, the Privatization Act went into effect on
January 1, 2008. In 2009, the government plans on divesting
holdings in Kenya Pipeline Corporation, Kenya Wine Agencies,
National Bank of Kenya, New Kenya Cooperative Creameries and the
Kenya Tourism Development Corporation. In June 2008, it sold 25% of
its Safaricom (the national cellular network) shares, reducing its
holdings to 35%. In 2007 government divested its shares in the
Kenya Electricity Generating Company, the Mumias Sugar Company,
Kenya Reinsurance, and Telekom Kenya (the public fixed-line
telephone monopoly).

-- Kenya is compliant with the WTO Customs Valuation Agreement, a
member of WIPO, and a Paris (industrial IP) and Berne (copyright)
Conventions signatory.


B. Major Issues/Problems Identified

-- As a result of January-February 2008 post-election violence,
economic growth slowed to 1.7% in 2008. The Kenyan economy suffered
losses totaling $1.5 billion. Inflation stood at 26.2% for 2008,
the highest rate since 1994. Inflation reached an all-time high of
31.5% in May 2008.

-- Tourism receipts dropped 19.2% in 2008 from 2007 levels, while
tourist arrivals were off 34%. Some 20,000 hospitality workers lost
their jobs.

-- In the past six years, about 40 investors have pulled out of
Kenya, while 106 companies have closed down, according to the
Federation of Kenya Employers (FKE). With the conclusion of the
Multi-Fiber Arrangement, seven garment factories closed, resulting
in the loss of over 10,000 jobs. Several more apparel factories
closed in early 2008 as a result of the political turmoil.

-- Slow courts, degraded infrastructure, high crime, high power
costs, and corruption are deterrents to investment. Electricity
tariffs rose 65% in 2008.

-- Kenya fell five places to 98 in the 2008 World Economic Forum's
global competitiveness index. The issues leading to the drop
include increasing insecurity, inefficient government, rising
corruption and insecurity, as well as major health issues.

-- Pirated and counterfeit products mostly from East Asia are an
impediment to U.S. business. Infringement of copyright, especially
on music and films, is pervasive.

-- Parliament's FY08/09 budget projects an overall fiscal deficit
of approximately $1.7 billion, Kenya's biggest ever at 5.6% of GDP,
drawing concerns from the IMF that the budget is unsustainable and
inflationary.

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II. Political Reforms/Rule of Law/Anti-Corruption
-------------- --------------


A. Major Strengths Identified

-- On December 27, 2007 Kenyan voters turned out in record numbers
to vote in multiparty elections for the Presidency, Parliament, and
local government.

-- In an effort to end two months' post-election violence, Kenya's
rival political leaders - incumbent President Mwai Kibaki of the
Party of National Unity (PNU) and Raila Odinga of the Orange
Democratic Movement (ODM) - agreed to form a Grand Coalition
Government on February 28, 2008. Under the auspices of former UN
Secretary General Kofi Annan and a "Panel of Eminent African
Persons," the two signed a power-sharing agreement, which provided
for the establishment of a prime minister (a position assumed by
Odinga) and two deputy prime ministers (one nominated by the PNU,
the other by ODM). It also provided for the division of Cabinet
posts according to the parties' proportional representation in
Parliament.

-- On March 18, 2008, Parliament amended the constitution to create
the position of prime minister and adopted legislation to establish
the coalition government. On April 17, 2008, Prime Minister Odinga
and the new 42-member Cabinet, the largest in Kenya's history, were
sworn in. Kibaki retained the presidency for a second five-year
term.

-- With the Grand Coalition Government in place, the ODM took
control of the Parliament, holding 105 of 222 seats, with the PNU
holding 46.

-- The Kenya Anti-Corruption Commission (KACC) became fully
operational and sufficiently funded in 2005. However, public and
parliamentary disappointment with the lack of progress in
investigations of corrupt high-level public officials led to the
resignation of the KACC's chairman in September 2009.

-- In late September 2007, President Kibaki vetoed portions of the
Statute Law (Miscellaneous amendments) Bill of 2007, adopted by
Parliament, that would have otherwise effectively barred the KACC
from probing corruption cases committed before it was established in
2003, namely the Goldenberg and Anglo Leasing Scandals.

-- In August 2008, the Witness Protection Act became law. No
witness has yet been enrolled in the program, over which the
Attorney General has sole control.

-- Parliament effectively forced former Finance Minister Amos
Kimunya to resign in early July 2008 after Lands Minister James
Orengo alleged that Kimunya had approved the sale of a
government-owned property, the Grand Regency Hotel, to a Libyan
group, without a public tender being executed and then giving
misleading statements to Parliament about it. Parliament
subsequently held public hearings on the matter. However, President
Kibaki subsequently appointed Kimunya as Minister of Trade in
January 2009 after a November 1998 government inquiry cleared him of
any wrongdoing in the Grand Regency sale.

-- As part of the February 28 power-sharing agreement, the parties
agreed to appoint an "Independent Review Commission" (IREC) to
investigate the conduct of the December 2007 elections. Its report,
released on September 19, 2008, concluded that allegations of
vote-rigging related to the presidential election had not been
proven, but that the conduct of the local, parliamentary, and
presidential elections was "so materially defective" that the
results announced by the Electoral Commission of Kenya (ECK) had no
integrity. It proposed a series of reforms to strengthen Kenya's
electoral system.

-- The discredited ECK was disbanded and an Interim Independent
Election Commission (IIEC) was established in May 2009. The IIEC
successfully oversaw two parliamentary by-elections in August 2009.
However, it has yet to begin a new national voter re-registration
exercise as required by the power-sharing agreement.

-- The government established a Committee of Experts charged with
drafting a new constitution, as provided in the power-sharing
agreement. The new constitution will need to address land rights
issues, which fuel inter-ethnic hostility in Kenya, and to
restructure the government by strengthening institutions to create a
more equitable distribution of power and a more effective system of
checks and balances. The draft, if approved by Parliament, will be
submitted to a national referendum to be administered by the IIEC.

-- In October 2008, the Commission to Investigate Post-Election
Violence (CIPEV),commonly known as the Waki Commission after its
chairman, submitted its 529-page report to Parliament. In the
report, the Commission outlined a series of reforms, notably in the
police and judicial sectors, designed to prevent a recurrence of the
post-election violence of late 2007 and early 2008. The Waki
Commission also handed a sealed envelope identifying chief
perpetrators and/or financiers of the post-election violence to
mediator Kofi Annan.

-- The Truth, Justice and Reconciliation Commission (TJRC) was
established and commissioners were appointed in July 2009. However,
the TJRC has not yet formulated its plan of work or held any public
hearings.


B. Major Issues/Problems Identified

-- As determined by the IREC report, Kenya's electoral system is in
need of significant reform.

-- Post-election violence left 1,500 dead, thousands injured, and
500,000 Kenyans displaced. Most internally displaced persons (IDPs)
have returned home but some (notably the landless, squatters, and
former slum residents) remain displaced and have not received
promised government compensation.

-- None of the Waki Commission's major recommendations for police
and judicial reform have been implemented. Further, after the
government of Kenya failed to act against suspected perpetrators of
post-election violence, Kofi Annan turned over the confidential list
of suspects in July 2009 to the International Criminal Court for
possible indictment and prosecution.

-- Serious human rights problems remain, particularly with regard
to abuses by the security forces. Some elements of the security
forces continued to commit abuses, including extra-judicial killings
and the torture and beating of detainees, particularly during a
March-April 2008 sweep of rebels calling themselves the Sabaot Land
Defense Force in the Mt. Elgon area. Other security operations in
the Mandera area of northeastern Kenya in November 2008 and against
suspected Mungiki members in Central province also gave rise to
allegations of abuse.

-- According to the 2009 Transparency International-Kenya East
Africa Bribery Index, Kenyans still consider the police force the
most corrupt government institution.

-- The government arrested some police officers for abuses;
however, most police who committed abuses were neither investigated
nor punished. There were no successful prosecutions against any
police officer for abuses.

-- Corruption is endemic. According to Transparency
International's 2008 Corruption Perceptions Index, Kenya is one of
the most corrupt countries in the world. It ranked 147 out of 188
countries surveyed with a score of 2.1. Freedom House's Freedom
in the World index ranks Kenya "Partly Free".

-- The government commissioned the Kroll Report in 2003 to identify
and recover the proceeds of corruption and crimes. Although the
report was completed in 2004, the government has yet to use its
findings to prosecute any senior politicians for corruption. To
date, there have been no prosecutions of senior government
officials, despite strong indications of high-level graft.

-- The government has not enacted anti-money laundering
legislation. Kenya will continue to remain vulnerable to
corruption, tax evasion, narcotics trafficking, trafficking in
persons, and terrorism financing.

-- The judiciary remains subject to executive branch influence and
corruption.

-- The Attorney General lacks the capacity to handle the volume of
cases referred to his office and frequently declines to prosecute,
especially in corruption cases or cases involving politically
powerful individuals.

-- The KACC does not have prosecutorial powers rendering it at the
mercy of the Attorney General to prosecute corruption cases. Only
74 convictions had been achieved out of 383 files forwarded to the
Attorney General for prosecution. No high-level government
officials have been convicted over the last five years.

-- No convictions or serious prosecutions came out of the two
massive scandals the past two decades; the Anglo Leasing scandal and
the Goldenberg scandals, both of which implicated high-level
officials.

-- Kenya's ranking on the October 2009 Ibrahim Index of African
Governance fell ten places to 27 based on setbacks in insecurity,
rule of law, transparency, and corruption.

-- Major scandals worth tens of millions of dollars erupted in

2009. One scandal involved the illegal re-selling of grain from the
national food storage system. Another scandal involved the
misappropriation of money from the Education Ministry.

-- Drought-related conflicts, especially in arid and semi-arid
pastoralist regions of Kenya, escalate and increasing food shortages
and malnutrition, exacerbated by government mismanagement of food
resources (i.e. maize scandal) require extensive additional food aid
funded by the international community.

-- The issue of evicting both titled landholders and squatters from
the protected Mau forest causes intense political conflict and is
complicated by a lack of a comprehensive national land use policy or
implementing legislation.

-- Reports of ethnic militias arming or re-arming themselves in
preparation for further conflict before or during the 2012 elections
are widespread.

-- The coalition government lacks cohesion and the political will
to advance the reform agenda; despite the establishment of the TJRC,
it also fails to undertake any comprehensive government-led
reconciliation efforts, resulting in continued interethnic mistrust
on the ground.

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III. Poverty Reduction
--------------


A. Major Strengths Identified

-- The Government of Kenya, working closely with its development
partners - including the private sector -- has made progress in
recent years toward creating a market-driven enabling environment
for agricultural sector development.

-- The GOK removed the white maize import tariff through June 2010
to facilitate commercial imports that have since helped reduce the
current food deficit and make maize more affordable for Kenya's
citizens.

-- The GOK, through a third-party, conducted an audit of the
National Cereals and Produce Board (NCPB) and the Strategic Grain
Reserve.

-- In addition, the NCPB has begun to engage with the Eastern
Africa Grains Council (EAGC) to make available some of its
warehouses for inspection and certification under the EAGC's pilot
grain warehouse receipts system. Ultimately this partnership could
lead to more efficient and structured grain trade in the region and
more effective use of the strategic grain reserve and famine
mitigation mechanism by NCPB.

-- Kenya has a dynamic, well organized private sector, with
businesses ranging from cottage industries and "Jua Kali" artisan
shops in the informal sector to domestic and multinational
corporations in manufacturing, agro-processing, horticulture,
fishing, tourism, shipping and commercial transport,
telecommunications, construction, banking, finance, and insurance in
the formal sector.

-- Government is initiating new policies to improve informal
settlements and provide more low cost housing. One project was
recently completed which moved 1500 residents of the Kibera slum
into new low cost housing.

-- The government allocated 2.5% of total revenue collection (about
$198 million) in the current year to 210 local Constituency
Development Fund (CDF) accounts throughout the country. CDFs are
designed to meet communities' most pressing infrastructural needs.
These decentralized block grants support the construction of water
projects, classrooms, roads, and police posts. A quarter of the
fund is allocated according to population size, poverty index, state
of infrastructure, and the desire to improve the local economy to
match the rest of the country.

-- The government also initiated Youth Enterprise Development Fund
and Women Enterprise Fund, all geared towards uplifting the
standards of living of targeted groups. To date, the government has
allocated $398 million to support these initiatives.

-- With the implementation of an "Integrated Financial Management
Information System" and further progress in public enterprise
reform, business regulation has been streamlined and public
financial management strengthened.

-- Primary school enrolment increased 2.8% from 8,330,100 to
8,563,800 students; secondary school enrolment leaped 17.1% from
1,180,300 to 1,382,211 students.


B. Major Issues/Problems Identified

-- Food insecurity was exacerbated this year by severe drought.
Chronic food insecurity combined with a continued rise in food
prices (white maize prices remain 70% above the five-year average)
and poor urban and rural purchasing power has contributed to
increased malnutrition.

-- Humanitarian agencies estimate that approximately 3.8 million
(an increase from 2.6 million last year) pastoralists,
agro-pastoralists, and marginal agricultural households require
emergency food aid this year.

-- In addition, there are other populations that are chronically
food insecure including: 1.5 million school children in
drought-affected areas who require school feeding programs, 2.5
million persons in urban areas who are unable to meet 50% of their
daily food requirements, 2 million vulnerable poor in rural areas
who are affected by HIV/AIDS, and 100,000 persons displaced by the
post-election crisis whose livelihoods have not fully recovered.

-- According to the UN Children's Fund (UNICEF),more than 200,000
children five years of age or younger are affected by moderate
malnutrition and more than 30,000 children five years of age or
younger are severely malnourished.

-- Kenya remains uncertain about seeking another Poverty Reduction
and Growth Facility (PRGF) agreement after the one signed on
November 21, 2003 ended last year. A mid-2008 IMF mission carried
out an Ex-Post Assessment (EPA) of the Kenya-IMF PRGF program which
was presented to the IMF Board in September 2008. However, the IMF
disbursed $209 million to Kenya under the Exogenous Shocks Facility
as a result of the global economic slowdown.

-- Since the outbreak of violence on December 30, 2007, the cost of
living has risen by 25 to 30% throughout Kenya as prices of all
basic goods have increased. The cost of electricity has also risen
dramatically.

-- The Kenyan government has rhetorically vowed to stamp out graft
and push ahead with economic liberalization, but entrenched private
interests and political in-fighting threaten the agenda. Corruption
on a grand scale continues to alarm the public and turn away
potential donors and investors.

-- Relations with major international donors are dependent on the
government's commitment to its economic and governance reforms and
its anti-corruption agenda.

-- Greater efforts are needed to improve the legal framework for
public finance management and to accelerate financial sector
reform.

-- Garment exports to the U.S. under AGOA are likely to decline if
Kenyan producers do not enhance their global competitiveness or seek
niche markets.

-- A July 2008 World Bank assessment concluded that economic growth
in Kenya is insufficient to reduce poverty. The World Bank
estimates that growth in Kenya would need to reach 8% at the current
population growth figures to reduce poverty. First projected to
reach 8% in 2008, economic growth was waylaid by the
January-February violence and did not reach 2%.

-- According to a September 2007 Adult Literacy survey, 7.8 million
Kenyans cannot read and write. Most are women and youth.

-- The Kenya AIDS Indicator Survey 2007 (released in July 2008)
indicates that 7.4% of Kenyans ages 15-64 are infected with HIV,
with considerable disparities in prevalence among provinces. While
over 220,000 Kenyans are receiving anti-retroviral therapy (ART),up
from approximately 10,000 in 2003, many of those in need still do
not receive ART.

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IV. Workers' Rights/Child Labor/Human Rights
--------------


A. Major Strengths Identified

-- Existing legislation protects workers' rights and rights to
organize and bargain collectively are well established.

-- During its fall 2007 session, Parliament passed and President
Kibaki signed five new labor laws, drafted by the Task Force on
Labor and supported by Kenya's Central Organization of Trade Unions
(COTU),to improve the status of workers, namely the Labor
Institutions Act, the Labor Relations Act, the Employment Act, the
Occupational Safety and Health Act, and the Work, Injury and
Benefits Act. These measures establish two weeks' paternity leave
for fathers, increase maternity leave with full pay from two to
three months, and compensate both public and private employees for
work-related injuries and diseases contracted at work, among other
provisions. There are continuing court challenges to provisions of
the new labor law as employers are arguing about the cost
implementation, particularly the provision regarding workers
compensation. The labor bills ensure compliance with ILO core-labor
standards and better enforcement of occupational health and safety
standards. U.S. companies typically meet the new labor
requirements.

-- The Industrial Relations Charter, executed by the government,
the Confederation of Trade Unions (COTU),and the Federation of
Kenya Employers, gives workers the right to engage in legitimate
trade union organizational activities. Both the Trade Disputes Act
and the Charter authorize collective bargaining between unions and
employers, and wages and conditions of employment are established in
negotiations between unions and management.

-- Kenya has ratified ILO Conventions 182 on the Worst Forms of
Child Labor and 138 on Minimum Age.

-- In an effort to reduce child labor, the government collaborates
with COTU, ILO, and NGOs to eliminate the worst forms of child
labor. The Child Labor Division in Ministry of Labor has been
implementing the "Time Bound Program for the Elimination of the
Worst Forms of Child Labor" from April 2005- April 2009. In July
2008, the government signed an MOU with the ILO to implement a four
year program, TACKLE, which will combat child labor through improved
opportunities to acquire a basic education. In 2009, the U.S.
Department of Labor announced a four-year project with the ILO to
combat the worst forms of child labor in three Kenyan districts,
Kilifi, Kitui, and Busia.

-- The Constitution prohibits slavery, servitude, and forced labor.
Additionally, the Children's Act of 2001 prohibits all worst forms
of child labor as defined by ILO Convention 182. The Department of
Children's Services (Office of the Vice President and the Ministry
of Home Affairs) is responsible for the administration of all laws
regarding children.

-- On July 14, 2006, Kenya adopted the Sexual Offenses Act, which
criminalizes rape, defilement of a minor, child pornography, sex
tourism, sexual harassment, and trafficking for sexual purposes.


B. Major Issues/Problems Identified

-- The Ministry of Labor's inspection and enforcement functions are
weak.

-- Trade unionist complained of labor inspectors routinely
accepting bribes from employers.

-- Trade unionist reported a trend towards employers sacking
workers in lieu of casual or contract labor.

-- Kenya has not ratified ILO Convention 87 on the right to
organize and collective bargaining.

-- The private sector has expressed concerns about the financial
burden imposed on business by the 96 months of full disability leave
requirement.


-- The ILO has urged repeal of provisions of labor laws that
contravene ILO conventions on forced labor and is critical of
legislation not in conformity with ILO conventions governing freedom
of association.

-- Workers have been fired for participating in trade union
activities, especially in export processing zones.

-- The law allows employers in some industries to dismiss workers
regardless of the provisions of their collective bargaining
agreements.

-- Child labor remains a serious problem in the informal and
agricultural sectors.

-- Government agents conducted at least three extrajudicial
killings in 2009, targeting two human rights advocates and one
journalist. The government has not investigated nor prosecuted any
suspects in these three incidents.

-- While the government is taking steps to address trafficking, and
there are laws that could be used to prosecute various aspects of
trafficking, Kenya has not yet passed a law defining and prohibiting
human trafficking. There have been reports that persons were
trafficked to, from, and within the country.

-- Abuse and discrimination against women occur frequently and
include forced marriage.

-- Certain ethnic groups commonly practice female genital
mutilation (FGM) on young girls, particularly in rural areas.

-- Violent clashes among ethnic groups and vigilante justice were
problems.

-- The government has attempted to forcibly resettle citizens who
were internally displaced after the post-election violence.

-- The government has failed to investigate security officers
suspected of extrajudicial killings, torture, and other human rights
abuses in Mt. Elgon, the Mandera triangle, and Mt. Kenya.


V. International Terrorism/U.S. National Security


A. Major Strengths Identified

-- Kenya is an active supporter in the global coalition against
terrorism.

-- Kenya is a key player and cooperates closely with USG in
promoting peace and regional stability in neighboring Sudan and
Somalia.

-- Kenyan forces are frequent participants in UN peacekeeping
operations.

-- Kenya is a leading participant in U.S. African Contingency
Operations and Training Assistance (ACOTA) peacekeeping training
program.

-- Kenya is a major recipient of Anti-Terrorism Assistance (ATA)
programs.


B. Major Issues/Problems Identified

-- The volatile Kenya-Somalia border region sees an increase in
instability, including successful cross-border kidnapping raids by
Somali militias and a continued flow of small arms into Kenya.
Incidence of recruitment efforts by al-Shabaab and other Somali
militia groups and terrorist organizations (i.e. Al Qaeda East
Africa) among Kenyan Muslims increased, including in Nairobi, Dadaab
refugee camp, Isiolo town, and throughout Northeastern Province.

-- The U.S. Travel Warning for Kenya was reissued (addressing
recent warnings on travel near the porous border of Somalia) on July
24th, 2009, advising U.S. citizens of ongoing terrorist threats and
continuing incidents of violent crime. Violent criminal attacks,
including armed carjacking and home invasions/burglary, can occur at
any time and in any location, and continue to be brazen, vicious,
and often fatal. Kenyan authorities appear to have limited capacity
and will to deter and investigate such acts. Recently, an American
citizen was kidnapped, transported into Somalia and held for ransom
by fundamentalists while working in Mandera, Kenya, abutting the
Somali border.

-- Terrorists and their supporters reside in Kenya as well as in
neighboring Somalia.

-- Counter-terrorism and Anti-Money Laundering legislation is still
on the Parliamentary agenda but has not yet been debated or voted
on.

-- The acquittal and release in June 2005 of seven terrorist
suspects implicated in the November 28, 2002 attack on the Paradise
Hotel in Kikambala and attempted downing of an El Al jetliner
carrying 200 passengers reveal legislative and prosecutorial
weaknesses. One suspect was rearrested and charged with being in
possession of dangerous weapons. He was eventually convicted and
sentenced to eight years imprisonment. On September 14, Ali Saleh
Nabhan, one of the suspects and influential al Qaeda operative in
East Africa, was killed in Somalia.

Ranneberger