Kenya - Domestic policy

Although its economy is among the most advanced on the African continent, Kenya is among the poorest of African nations. Years of corruption, mismanagement, and high population growth rate have negated its advantages. During the 1990s Kenya began to recover from economic decline of the mid-1970s, but the economy continues to be negatively impacted by world prices for tea and coffee. It also has suffered from the various acts of international terrorism, most recently the November 2002 attacks carried out against Israeli tourists at a Mombasa hotel. Endemic corruption and poverty run rampant in Kenya, conditions which are exacerbated by HIV/AIDS. It is estimated that 13% of the adult population carries the virus.

Kibaki's aim will be to make good on Kenya's potential for economic recovery, but he is saddled with an economic growth rate of 0.7% in 2002, which is projected to grow to2.5% in 2003 and to 3.3% in 2004. Consumer price inflation is expected to remain fairly low at 3.0% in 2003 and 2.5% in 2004.

Help from the International Monetary Fund (IMF) and World Bank are expected as long as Kibaki delivers on the passage of anticorruption legislation, the prosecution of offenders, and a commitment to privatization. Kibaki's minister of finance, David Mwiraria has a reputation for honesty and efficiency, and should instill confidence among the donor community. However, the government is likely to delay privatizing key parastatals such as Telkom Kenya and the Railways Corporation until they can be made more profitable and thereby fetch higher prices. Depending on policy implementation, the IMF will resume funding in mid-2003.

In the fight against corruption, Kibaki has named John Kitanga, the leader of the local chapter of Transparency International, to head this effort. The Kitanga appointment should convince nongovernmental organizations (NGOs), donors, and the Bretton Woods institutions that Kibaki intends to make good on his campaign pledges. Constitutional reform will be more difficult, particularly efforts to reduce the power of the presidency and to create an office of prime minister. A national convention to discuss this and other constitutional matters is likely in May or June 2003, and could last for three to five months.

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