Ministry of Foreign Affairs. Cover Note - Council for Development Policy Agenda item Overall purpose For Discussion

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1 Ministry of Foreign Affairs Cover Note - Council for Development Policy Agenda item 2 1. Overall purpose For Discussion 2. Title Synopsis for Denmark Kenya Country Policy Paper Presentation for Programme Committee: 24 October Executive Summary: This is a synopsis for the Country Policy Paper for Kenya , which is planned for final approval in May Kenya s geographical position on the Horn of Africa and as an entrance to the East African market provides the country with strong opportunities and yet difficult challenges. Long term instability at the Horn of Africa has seen Kenya suffer problems along its border with instability, frequent terror attacks and man-made humanitarian disasters. Kenya has taken up these challenges and through security arrangements, military engagement, humanitarian cooperation and active diplomacy contributed to finding regional solutions. Denmark has supported Kenya since independence and has under changing governments and different political climates played a decisive role in support of results achieved in both poverty reduction and democratic development. But more needs to be done. The new constitution from 2010 with a separation of the legislative, executive and judicial arms of government, a bill of rights and a devolution of power to 47 newly established counties, provides a foundation for a government reform and transition process that holds the potential for finding solutions to deep rooted conflicts and developing a more cohesive, political stable and rules based Kenya. Amidst these opportunities Kenya is faced with serious domestic problems including high level of inequality and poverty despite a decade with high economic growth. To spur higher and sustained inclusive economic growth, Kenya needs to address these issues. The objectives for Denmark s future engagement will be to support inclusive green growth and poverty reduction, support the democratic reform process and promote human rights. It will also be an objective in its own right to strengthen trade and commercial relations between Kenya and Denmark as-well-as the objective of stability and security in Kenya and the wider region. With Kenya s economic rise towards becoming a middle income country by 2030, the Kenya - Denmark partnership is increasingly becoming mutually beneficial. A strengthened cooperation in the area of trade and economic cooperation forms along with development cooperation and strengthened cooperation on stability and security the background for Kenya s continuous role as an important partner country for Denmark.

2 5. Strategic questions for the Council for Development Policy 1. Does the broad engagement including commercial, political and security areas give sufficient priority to Danish development policy goals such as human rights, poverty reduction and equality? 2. Does the synopsis provide the right mix of instruments to pursue the objectives and synergies? 3. Are the proposed strategic focus areas the best ones for achieving sustainable development and stability? 4. How does Denmark support the on-going transition process to decentralized governance in the most effective way given the objectives of poverty reduction, equality and human rights? 1. Denmark and Kenya introduction and future vision Denmark and Kenya have since the independence of Kenya in 1963 enjoyed strong bilateral relations. Through 50 years of development cooperation Kenyans know Denmark as a long term development partner. Modalities and areas of cooperation have naturally changed during these 50 years but the overall objectives have always been poverty alleviation and support to democracy and human rights. The Danish engagement along with other development partners has contributed to Kenya s significant results and progress in all three areas. With Kenya s economic rise towards becoming a middle income country by 2030, the Kenya - Denmark partnership is increasingly becoming mutually beneficial. A strengthened cooperation in the area of trade and economic cooperation forms along with development cooperation and strengthened cooperation on stability and security the background for Kenya s continuous role as an important partner country for Denmark. The terror attack in Nairobi in September 2013 was an attack not only on Kenya, but also on other partners that support the efforts for establishing stability and peace in the region. This calls for an even stronger cooperation and solidarity with Kenya and the region in the area of stability and security. Kenya s geographical position on the Horn of Africa and as an entrance to the East African market provides the country with strong opportunities and yet difficult challenges. Long term instability at the Horn of Africa has seen Kenya suffer problems along its border with instability, frequent terror attacks and man-made humanitarian disasters. Due to this instability Kenya has for decades played host to hundreds of thousands of refugees primarily from Somalia and Sudan. Kenya has taken up these challenges and through security arrangements, military engagement, humanitarian cooperation and active diplomacy contributed to finding regional solutions. Kenya s political importance as a democracy with a free press, a relatively well educated labour force, a tradition for stable economic environment and Nairobi s role as a financial centre further gives Kenya a natural role as an African regional centre. The new constitution from 2010 with a separation of the legislative, executive and judicial arms of government, a bill of rights and a devolution of power to newly established counties, provides a foundation for finding solutions to deep rooted conflicts and developing a more cohesive, political stable and rules based Kenya. A Kenya where the citizens role as rights holders have been greatly enhanced. Amidst these opportunities Kenya is faced with serious domestic challenges which 1

3 threaten Kenya s development aspirations. Security problems in neighbouring countries and in the Kenyan border areas, a polarised political climate along ethnic fault lines, inequality and widespread poverty, serious quality issues linked to provision of social sector services, impunity for serious crimes, weak and unguaranteed security due to common criminality and pervasive corruption; all these challenges undermine achievement of Kenya s development goals. To spur higher and sustained inclusive economic growth, Kenya needs to address these issues as well as severe infrastructure deficiencies, ensure a more business friendly environment for foreign investment, address climate change challenges and ensure a higher performance in the social sectors, particularly health and education. This synopsis presents the Danish Governments view on the current and emerging challenges in Kenya, as-well-as objectives and strategic focus areas for future engagement. The overall vision for the partnership is to support the Kenyan government and the people of Kenya to implement Kenyans own Vision 2030 to create a globally competitive and prosperous country with a high quality of life by The objectives for Denmark s future engagement will be to support inclusive green growth and poverty reduction, support the democratic reform process and promote human rights. It will also be an objective in its own right to strengthen trade and commercial relations between Kenya and Denmark as-well-as the objective of stability and security in Kenya and the wider region. Three strategic focus areas have been identified for effectively pursuing the objectives: i) Implementing the constitution towards a prosperous and equitable Kenya; ii) Inclusive green growth and employment; iii) Promoting regional cooperation and stability. The instruments for engaging in three strategic focus areas will be broad based and rests on focused and effective development cooperation, humanitarian assistance, an open and honest policy dialogue, strengthened commercial ties and security cooperation for the benefit of both countries and the region. The partnership will involve key stakeholders in both countries, including public sector, private sector, civil society and the academia. In the area of development cooperation Danish assistance will increasingly play a catalytic role in promoting needed change and progress within key areas and leveraging synergies and other public and private support. Gradually, trade and investment are expected to emerge as the most important area of economic cooperation between Kenya and Denmark. 2. National context challenges and opportunities in Kenya Kenya in Africa - regional integration and regional stability Kenya is a significant actor in the Horn of Africa and its geographical location provides many opportunities. Kenya is a regional commercial hub and an important partner for increased regional integration through the East African Community (EAC) which has the potential to create a larger and more attractive market for regional and international investors. Ensuring regional stability continues to be a significant challenge for the region and Kenya s development. Piracy off the coast of Somalia is decreasing, but remains a concern and will continue to need close attention in the coming years. Kenya is an active partner in promoting peace and stability on the Horn of Africa providing troops into Somalia, piracy judicial mechanism and hosting more than half a million refugees from Somalia, Sudan, Ethiopia and the Great Lakes region. The situation in the region will remain volatile in a foreseeable future, 2

4 and Kenya s challenge is to continue to be a stabilizing factor in the region while also addressing issues of radicalisation and potential conflicts at home. To work towards a regional collective response to both internal and external threats, Kenya hosts the Eastern Africa Standby Force Coordination Mechanism (EASFCOM) that performs as the planning element of the Eastern Africa Standby Force (EASF). Poverty and inequality high growth, but not for all Kenya has maintained a stable macroeconomic environment and has, at the same time, been developing key infrastructure facilities and public works nationwide to stimulate growth. Its economic growth however is below potential. The GDP growth rates appear to have stabilised and to be improving following the disruption caused by post-election violence in The economy achieved a 4.6% growth rate in 2012, up from the 1.5% experienced in The short-term projection is positive, expected to reach 5.6% in 2013 and 6.0% in 2014, driven by private sector investments and lower interest rates. The agricultural sector continues to be the largest contributor to GDP at 28.5%, followed by the industrial sector at 17.6% in The most important export earners are tourism, horticulture and tea. Kenya had a GDP per capita of 862 USD in 2012 compared to 523 USD in Kenya s tax revenue to GDP ratio stands at over 20%, which compared with its neighbouring countries, places Kenyans as amongst the highest taxed in the region. The latest household survey from Kenya s National Bureau of Statistics from 2009 found that 45% of the population lives below the national poverty line. Poverty levels are much higher in the Northern rural areas marked by marginalisation, lower level of education and high population growth rates. The coastal region is challenged by the greatest inequality levels. With its high levels of inequality, Kenya remains the most unequal in the East African Community. This results in marginalized communities as well as substantial challenges in equal access and quality of social services, such as water and sanitation, health and education. The population of more than 40 million is expected to reach 80 million in Each year it is estimated that around people enter the job market in Kenya and only 6 % are able to find a job in the formal sector. Unemployment is estimated at 40 %. Job creation is therefore essential in order to sustain economic, social and political stability. Good opportunities for economic growth and serious obstacles Kenya has a growing middle class of an estimated 5 million citizens, a large well-educated young population and a vibrant business sector mainly comprised of micro, small and mediumsized enterprises. These are important ingredients to push growth upwards. Adding to this, the discovery of significant oil resources in Kenya has the potential, if managed properly, to eliminate the current account deficit. Kenya was ranked 121 of 185 countries in the 2013 World Bank Ease of Doing Business Index. Weaknesses in infrastructure and pervasive corruption are barriers for business sector development, access to services, job creation and foreign direct investments. Furthermore, whereas the financial and ICT sectors are doing well, the agricultural, manufacturing and transport sectors, which are drivers of employment and export led growth, are underperforming thus contributing to a large current account deficit. Kenya scores 2.7 (on a scale of 0 10 where 10 is zero corruption) in the Transparency International s Corruption Perception Index Democracy, stability and polarised political situation Kenya has traditionally had a strong centralised government. Multiparty democracy introduced in 1992 has gradually consolidated democratic elections, but has also seen elections in especially 1992 and 2007 marred by intercommunity violence along ethnic fault lines related to a continued polarised political situation. The contested results of the 2007 general elections 3

5 brought the country to the brink of civil war, starkly illustrating its economic and political fragility. The cases at the International Criminal Court concerning alleged involvement in the post-election violence has divided the country along the same polarised political situation that dominated the 2013 March elections won with a narrow margin by the current Government Jubilee coalition. The cases at the International Criminal Court against the President and the Deputy President put government under pressure to live up to its international obligations, while at the same time there is an initiative by Jubilee MP s in parliament to recommend the Government to withdraw from the ICC. The Government has strengthened relations with China and Russia while relations with traditional Western partners have been limited at the top level due to the on-going ICC cases. The Government of Kenya s plan for reaching middle income status by 2030 A government, headed by President Uhuru Kenyatta and Deputy President William Ruto took office in April The Government has in October 2013 presented its 5 year Medium Term Plan that is the second of consecutive MTPs aimed at leading to implementation of Kenya Vision 2030 launched in 2008 as a national long-term development blue-print. It was supported by development partners at the Development Partner Forum in November 2013 and is considered equivalent to Poverty Reduction Strategy Paper. It emphasizes implementing devolution, national cohesion & unity; and accelerating economic growth. County governments are expected to align their respective County Integrated Development Plans to the MTP II; while national government will be expected to develop strategic plans to implement key priorities Governance reforms The new Constitution promulgated in 2010 seeks to address inequalities and bring decisions closer to the citizens. It has the potential to change the political, social and economic landscape in the coming decades. The Constitution promises equal rights for all Kenyans and promises improved delivery of services such as health care, housing, water and a clean environment. The Constitution holds the government accountable to the people on leadership and integrity, gender and regional balance, access to information and access to justice. With a comprehensive Bill of Rights the Kenyan people have an ambitious legal foundation to perform their role as rights holders and hold the national authorities accountable as duty bearers. The Constitution introduces with effect from June 2013 a system of devolved governance in Kenya both politically and administratively which now consists of a national government and 47 county governments. The county governments are responsible for county legislation, executive functions and functions transferred from national government such as agriculture, health, preprimary education, county public works and services. If properly implemented and managed, the devolved system can become a strong vehicle for addressing the challenges of inequality and poverty and enhancing national cohesion and bring democratic decision making closer to the grassroots. Conflicts of interest between the national and the county governments have clearly indicated that implementation will take time. Given the magnitude of the structural reforms, the transition to a devolved system is expected to be cumbersome, lengthy and challenging. The transition process itself will thus also require safeguarding and support including in capacity building. Human rights and rule of law The implementation of the Constitution has led to a large amount of structural, legal and institutional reforms needed to be implemented by The judiciary is undergoing progressive reforms including vetting of judges to re-establish the credibility of the legal system and improve the access to justice for the average Kenyan. Impunity at all level of government is 4

6 a serious problem and a report from May 2013 by the Truth, Justice and Reconciliation Commission which recommends prosecution of several hundred senior government officials and politicians has seen no follow up. Human rights violations continue to be a challenge as documented in Kenya s most recent Universal Periodic Review (UPR) from September The most serious issues related to the state being abuses by the security forces, including unlawful killings, torture, rape, and use of excessive force, arbitrary arrest and detention and police corruption. Kenya is also facing severe problems with common criminality. Gender equality impressive legislative progress - challenge now on implementation The Constitution s provisions on gender equity are amongst the most advanced by international standards, and represent a huge normative leap forward for Kenya. Despite significant progress, women are still marginalized in political, social and economic life. Women s employment in the formal sector is far less than that of men, and women s representation in the national parliament is only around 20 %. Cultural beliefs, traditions and practices in many communities remain a hindrance for women s access to land, employment and women s right to self-determination. As recently pointed out by the World Bank 1, the women represent a lot of potential for trade and growth in Kenya. They make a major contribution to trade, often in the informal sector, and. if properly empowered, can be essential for job creation and poverty. Health sector The access to quality health care is very limited for the around 45% of the Kenyan population who lives below the poverty line. Kenya continues to score very poorly on indicators like maternal health as majority of pregnant women cannot access skilled delivery or maternal health services. Kenya will not attain MDG 5 on improving maternal health but is likely to meet with a narrow margin MDG 4 on reducing child mortality. Factors contributing to poor health indicators include inadequate overall health financing, insufficient health services infrastructure, a shortage of human resources for health and essential medical supplies including medicine, and limited administrative and management capacity all of which restricts health service delivery and coverage. The new Constitution has provided an opportunity to address most of the above issues by enshrining the right to the highest attainable standard of health to every Kenyan. In the area of sexual and reproductive health and rights the Constitution includes a right to safe abortion. The definition of safe abortion remains a contentious issue and almost derailed the constitutional making process. The Constitution assigns the County Governments the responsibility for delivering essential health services functions, while the National Government has the function of stewardship for health policy and oversight of national referral health facilities. Natural resources management and transition towards green economy The Kenyan economy relies heavily on natural resources to support people s livelihoods and to generate national income. Roughly 42% of the national income is derived from the natural resource sectors (agriculture, mining, forestry, fishing, water supply and energy tourism closely related to Kenya s nature and wildlife also falls within the earning figure related to this area). Less than 15% of Kenya s land is arable, and supports about 80% of the population; the rest of the land is made up of fragile arid and semi-arid ecosystem, and land-use is largely pastoral. The majority of the population live in rural areas and rely predominantly on an everdegrading environment and scarce natural resources for their livelihoods. Unsustainable traditional policies and exploitation of natural resources are with an increasing impact from climate change underlying factors for this negative development. Further, linkages between 1 World Bank report; Women and Trade in Africa: Realizing the Potential, November

7 development and natural resources in the Kenyan context are profound. As demonstrated by the country s energy model, the bulk of energy is derived from hydro-power, which in turn depends on rivers emanating from the main water towers whose ecosystem services highly depend on proper land use management and protection of forests. Kenya has in the last years encountered an unprecedented challenge of climate change impacts and corresponding socioeconomic losses. This stems from heavy reliance on climate sensitive economic sectors coupled with the absence of preparedness and mitigation strategies. External assistance to Kenya many different partners and need to strengthen aid effectiveness Kenya is less dependent on donor assistance compared to neighbouring countries. The current level of external support is between % of the annual budget, but up to half of the development budget in some sectors like health. A large number of development partners are active in Kenya, which makes coordination, harmonization and development effectiveness very important. The Ministry of Finance with Denmark as a lead partner has coordinated this effort in an Aid Effectiveness Secretariat. A considerable part of development assistance is implemented outside of government systems. The reasons for this are many, but lack of accountability and the high level of perceived corruption in the public sector are often singled out. Denmark will continue to give high priority to building national capacity and strengthening national systems. Denmark is the 6 th largest bilateral donor in Kenya 2 and is supporting public financial management in order to make it possible to development partners to deliver assistance on budget. Denmark will play a catalytic role for development contracts and use of government systems, to the extent possible. Development partners including the EU are now regarding the Vision 2030 with the MTP II and the Medium Term Expenditure Framework as the joint strategy for development partners alignment and coordination efforts. The dialogue for joint EU programme has been initiated. South Korea and Turkey joined the Development Partners Group recently. India has been engaged in Kenya since before independence - also with development activities. China is rapidly becoming an increasingly important actor in Africa and Kenya - this is changing the donor landscape and involves new loans that have to be repaid and more turnkey engagements with fewer safeguards on environmental, human rights and other CSR issues. President Kenyatta visited China in August 2013 and made agreements on Chinese infrastructure investments in Kenya worth USD 5 billion. 3. From analysis and past Danish experience to strategic choices Kenya is facing serious problems with inequality, poverty, environmental degradation and instability in the region. The country still has a need for development assistance. Kenya has the potential to realise the high economic growth figures that can make Vision 2030 ambitious goals a reality. This will require not only economic growth but also development in the areas of security, business climate, democracy, human rights and inequality. Denmark s engagement will address these challenges and opportunities within three strategic focus areas and will draw on all relevant instruments including development cooperation, cultural cooperation, diplomacy & political dialogue, trade & commercial cooperation and security cooperation. In addition to the bilateral Danish engagement with Kenya, Denmark will engage actively at headquarters and local level in international fora, the UN, development banks and the EU. The 2010 constitution with devolved governance structure sets the new framework of operations in Kenya. It defines the transition to a new governance structures and encourages 2 The top ten donors of gross ODA ( average, USD m) US 642, IDA 244, IMF 159, Japan 139, AfDB 134, UK 131, Germany 129, France 128, EU 113, Denmark 71. 6

8 reforms to enhance rule of law and citizen participation. With the long experience in the Kenyan governance sector with support to both civil society and capacity building in the public sector Denmark is well placed to support this vital transition process and people s participation at central and county governance level. Similar after 40 years involvement in the health sector Denmark has contributed significantly to good results in establishment of national health systems and capacity building at all levels both in public health care and public financial management as well as promotion of sexual and reproductive health and rights. Denmark is therefore in a good position to play a catalyst role in making the new devolved system work in this important area. Denmark is supporting Kenya s aspirations for transition to a green growth economy. Denmark has provided support where the private sector has been promoted as the vehicle for economic growth while the public sector establishes a conducive environment for this sector. On-going support to small scale agri-business farmers through greening of the value chain has demonstrated the value of promoting green growth as a means of achieving higher and improved yields with less resource inputs. As such her historical presence and core competences places Denmark in a pivotal position to be a driving force in the green economy and natural resource sector in Kenya by promoting sustainable and inclusive economic development, while addressing climate and environmental challenges. Under the new country programme for development cooperation, the two existing sector programmes on Natural Resource Management and the Business Sector Programme are envisioned to be merged into one Green Growth Programme that will promote synergies to commercial activities while still giving priority to poverty reduction and environmental adaptation in some of Kenya s poorest areas. Denmark is an active donor in Trade Mark East Africa that based in Nairobi and with national offices in all EAC countries works closely with EAC to solve non trade barriers for expanded regional trade. The cooperation with EAC and TMEA is especially addressing regional infrastructure problems such as inadequate ports, roads and rail capacity and borderissues that constitutes an bottleneck obstacle for trade and economic growth in the region. The engagement in regional economic development creates synergies to the bilateral engagement and potential for growth for Kenya. In the area of regional stability Denmark is a close partner with Kenya in international rule setting as well as dealing with concrete piracy issues and has in recent years strengthened cooperation with Kenya in the area of defence including a MoU on cooperation. Denmark is through a regional stability programme contributing to AMISOM. This is the platform for continued engagement in regional stability activities involving Kenya. 4. Strategic focus areas & suggested areas of intervention Figure 1. Objectives, instruments 3 and the three strategic focus areas 3 Cultural cooperation refers to 2013 framework agreement between the Danish MFA and the Danish Centre for Culture and Development (CKU), while culture being a relatively small activity in Kenya the figure illustrates that all Danish Government related activities will seek to engage within the three strategic focus areas. 7

9 Strategic focus area 1: Implementing the Constitution towards a prosperous and equitable Kenya The Constitution and related reforms lays out an ambitious foundation for a human rights based approach not only in supporting respect for the political rights but also in addressing the challenges and root causes of development that Kenya is facing. A focus on national authorities as duty bearers and citizens as rights holders is therefore in accordance with the Kenyan Governments own priorities. The on-going progressive judiciary reforms are essential elements of improving the duty bearer s adherence to the rule of law, putting an end to impunity and ensuring victims right to justice. Similarly, a credible and trustworthy legal system is essential for the efforts of fighting corruption. Implementation of the devolved structures will require a massive effort. It will necessitate a general public sector reform, restructuring central ministries, creation of devolved structures as well as transfer of civil servants from ministries to counties.whereas the reforms represent a great opportunity for Kenya, it will most likely take years to effectively implement. External support can play a catalytic role in support of this transition in a number of areas such as policy development, institutional strengthening, public financial management as well as capacity building of public authorities at both national and county levels. Denmark will continue to work also with civil society organisations and support rights holders in Areas of intervention: Support national and county organs as duty bearers in meeting their obligations towards its citizens. Support Kenya s implementation of recommendations from UPR Support citizens and civil society organisations as rights holders in claiming their rights including gender equality. Promote public participation, oversight mechanisms and transparent decision making. Promote rule of law and fight corruption and impunity. Support effective delivery 8 of quality health services and improve natural resource management at county level.

10 work for human rights, gender equality and participation in decision making. Strengthening devolved governance at the central and devolved level will enhance the institutional capacity for counties to deliver on the devolved functions and hence provision of strengthened health services. It is important that devolution results in real change for Kenyans through equal opportunities and access to resources as well as improved service delivery. Specifically, citizen s rights to the highest attainable standards of health, including reproductive health and emergency treatment, will require attention, since this is an area where Kenya has not delivered according to the MDGs. Improved health is also important for enabling the poor population to make use of the window that has been opened for participation in decisions concerning their livelihood. Denmark has been active in the health sector in Kenya for more than 40 years and has a strong comparative advantage in this sector. Health will continue to be a strong area of focus in the partnership taking further the already introduced human rights based approach including a focus on sexual and reproductive health and rights and the need for improving quality in health services. Furthermore, access to energy and water and improved natural resource management are crucial for growth and a critical factor for improving livelihoods. Denmark will engage with the Government of Kenya and civil society to support national follow up on recommendations from Kenya s Universal Periodic Reviews. The increased collaboration between the Danish and the Kenyan defence is an opportunity to engage in a human rights based dialogue with the security arm of government including CSR issues and implementation of UN Security Council Resolution 1325 on women and peace and security. Strategic focus area 2: Inclusive green growth and employment The potential for a poverty-reducing economic growth is anchored in an active business society and a population educated and qualified to meet the requirements from the private and public sector. It is also important to support improvement of framework conditions including addressing inequalities and lack of possibilities for marginalised parts of the population. The Government of Kenya has shown commitment to promoting a green economy and low carbon development path through various strategies and initiatives. It will require strong political commitment to design an enabling framework that decouples economic growth from environmental degradation. Mitigating the embedded resilience to climate measures necessitates strong incentives for sustainable and environmentally sound productive infrastructure solutions. The natural resource sector can contribute towards the economic growth of the country. But pursuing a green growth and low carbon development path is a country commitment, not just an environmental bracket in the bigger picture. The transition to a green economy can by itself propel a new wave of economic growth, enabled by private sector commitment and investment in innovation of technologies and promotion of resource efficiency and job creation. An ambitious national climate Areas of intervention: Support an enabling environment for green economic growth sustainable private sector development and public privatepartnerships Promote and support development of green value chains in agribusiness and industrial sectors. Promote and support renewable energy, resource efficiency and climate friendly technologies Support employment for youth and women through business development and investments. Support inter-sectoral pro-poor planning, budgeting and improvement of framework conditions at national and county 9 level.

11 change strategy and action plan ( ) has been developed and its implementation is expected to reduce the long-term costs of climate change through mitigation and adaptation measures. This initiative will require external financing, but will also be an opportunity for innovation and promotion of climate friendly and green technologies and sustainable consumption and production patterns. Denmark will promote green growth in Kenya by actively encouraging and assisting national authorities in developing the necessary policy framework for sustainable economic growth benefitting the entire population. In developing green value chains women can be empowered and play an important role in enhancing green growth as producers of agricultural products. Development assistance will support this through a focus on developing economic and legislative incentive structures and support a businessfriendly environment, while promoting sustainable management of the country s natural resources. Danish companies can provide clean tech know-how and cost-efficient and resource efficient innovative solutions to support the transition towards a green economy. As Kenya is an active partner in 3GF the cooperation will be further enhanced in this field bringing government, private sector, civil society and academia together in new partnerships. An important area in the relations between Denmark and Kenya will be to make use of commercial business opportunities and strengthen trade relations. This will include promotion of commercial relations and utilization of development and financial services like the Investment Fund for Development Countries (IFU), the Export Credit Fund (EKF), and Danida s Business Partnerships and Finance. Cultural cooperation will also be able to contribute to business development and employment. Strategic Focus Area 3: Promoting regional cooperation and stability As a regional gateway and an economic powerhouse, Kenya plays an important and active role in the Horn of Africa and beyond. Denmark will use its close diplomatic relations with Kenya to encourage the Government to continue its role in promoting integration, economic cooperation, peace and stability in the region. Denmark will continue to support Kenya s role as a regional stabilizing factor including the countering of some severe security challenges on Kenya s borders and beyond, in particular at the Areas of intervention: Horn of Africa, and specifically in Somalia. Hence, Denmark will continue to assist multilateral Deepen the collaboration between organisations and efforts like the African Union Denmark and Kenya on stabilizing Mission in Somalia (AMISOM) and the continued the Horn of Africa, with special build-up of rapid deployment capacities within the focus on Somalia framework of the East African Stand-by Force (EASF). The multilateral support will be synchronized with the increased Kenyan Danish bilateral cooperation on programmes within e.g. counterpiracy, anti-radicalization and counter-terrorism. The activities will be executed through a comprehensive approach by Danish actors and their Kenyan counterparts. The programs will adhere to demands of sustainability and promotion of international law and standards. The bilateral security cooperation program will include, however not necessarily be limited to navy and Contribute to combat piracy and support Kenya s efforts in this respect Support building of regional responses to security challenges such as the EASF Support Kenya s efforts to address the refugee challenges Collaborate on global challenges such as climate change, counter terrorism, Global Green Growth (3GF) etc. 10 Support Kenya s role and integration into the common market of EAC

12 coast guard cooperation, military education, individual or unit training. Specifically, the maritime cooperation will aim at promoting national, interagency cooperation within the maritime domain, including cooperation on maritime safety. The bilateral security cooperation with Kenya will be supplemented by a coordinated cooperation with other East African and international partners. In the area of regional economic cooperation Denmark will support the work to enhance broad-based regional cooperation in trade, transport, and investment. Denmark will support the work of the East African Community at the regional level and through support in the Kenya programme to overcome non trade barriers to regional economic integration and jointly promote common interest on the international agenda. 4 To deliver on its commitment on green growth, environmental sustainability and climate change, Denmark will continue its collaboration with the United Nations Environment Programme (UNEP) which are headquartered in Nairobi. These efforts will be further supplemented by encouraging Kenya s lead role in the African Group and Global Green Growth Forum (3GF). 5. Results Denmark s partnership with Kenya will focus on ensuring long-term impact. Relevant development indicators from MTP II are highlighted in annex 2. The partnership will contribute to: 1) Strengthened position of rights holders and duty bearers in furthering democratic reforms and human rights 2) Reduced number of people living in extreme poverty 3) Progress in transition towards a green economy in Kenya. 4) Increased business and direct investment cooperation between Denmark and Kenya 5) Increased stability and peace in Kenya and on the Horn of Africa Based on the MTPII and the national monitoring systems Denmark will assist in developing baseline data in the areas of special importance for measuring results of the Danish engagement while using the OECD method for standard Managing for Development Results. 6. Monitoring and Evaluation Framework Denmark will, to the extent possible, rely on the Kenyan country systems for tracking and reporting results on development cooperation. Denmark will use the National Integrated Monitoring & Evaluation System (NIMES) for the Kenyan Governments Medium Term Plan II and the related Medium Term Expenditure Framework. Since available data on NIMES is often outdated, Denmark will also use supplementary data sources, for example World Bank website/forums; programme/project specific reports. Denmark will have a particular focus on supporting the gathering of baseline data to better guide development planning and measure impact. This will be a specific area of attention for Denmark s involvement in the Aid Effectiveness Group. The Danish Embassy will host an annual stocktaking forum on the country programme to assess implementation context and status. The 4 There will in next editing come 5-10 lines more about regional economic cooperation 11

13 forum will include partners to the development country programme, namely government institutions, implementing agencies and civil society organisations. The forum will result in a Forum paper which will document the country context, programme implementation status, results achieved, budget utilisation and possible recommendations to adjust the country programme. 7. Communication The Danish Embassy will launch the policy paper with a public event with relevant stakeholders including cabinet secretaries from relevant ministries, other government partners, business sector, civil society and academics. The objective will be to inform Kenyans of the continued Danish-Kenyan partnership adapted to the new devolved structures, the economic potential and shared focus on poverty reduction, human rights, green growth, trade & commercial cooperation and stability in the region. The Embassy webpage will keep an update on progress in implementation. Regular updates on the implementation of the Denmark-Kenya Policy Paper will be provided on the Danish Embassy website under a permanent section on the front page entitled: Danish- Kenyan partnership as it happens. These updates will also be shared through Facebook and Twitter as relevant. List of annexes: I II III IV V VI Risk Assessment Indicators Key data Kenya Denmark s on-going development activities in Kenya Overview of progress towards the MDGs in Kenya Map of Kenya illustrating the 47 counties according to the 2010 Constitution 12

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15 Annex I: Risk Assessment The Danish engagement in Kenya involves contextual, institutional and programmatic risks. Denmark has through 50 years engagement in Kenya been able to engage in a flexible manner to take into account different types of risks. The Danish engagement will continue to be designed in a robust manner to mitigate substantial risks. Contextual Risks Increased polarised political situation worsen latent conflicts Kenya is politically divided along ethnic lines. Ethnic tensions from national to village level may risk making the security situation volatile, as seen in the post election violence in December 2007 and January To mitigate this risk Denmark supports inter-ethnic and inter-religious dialogues, as-well-as devolution as a cross cutting issue, and projects in some of the most conflict-ridden areas to mitigate the risk of violence. Addressing the root causes to these conflicts, in many cases poverty-reduction, human rights and sustainable natural resource management, is a main objective of Danida s engagement in Kenya. Terror threat against Kenya and partners as well as serious problems with violent criminality The high level of crime as well as the threat of terror in Kenya may if it gets worse be an obstacle for attracting foreign investment and getting foreign businesses to engage in Kenya. Denmark seeks to support a more secure environment by supporting the AMISOM efforts in Somalia and engaging the Kenyan national security forces on rule of law, human rights and the legal chain. Denmark also support making Kenyan businesses more recilient. Limited political will to implement the Constitutions and reforms The new devolved governance structure brings an inherent risk of prolonged and challenging transition to the county government. To mitigate the risk of limited political will to implement the Constitution, Denmark will apply a multifaceted approach working with both the national and the county governments as well as the business sector and the civil society. Denmark will support actors promoting the reform agenda to facilitate an effective transition and build sustainable governance structures. The country programming will design the development programme in a robust manner that both support the transition to devolution and at the same time takes into account the risk of lack of political will. Political space Many civil society representatives are expressing concerns of their political space and some human rights defenders express concerns for their safety. To mitigate a retraction on respect for human rights, Denmark will support the judiciary reform process and the different actors in the legal chain both duty bearers and rights holders. Denmark will continue the dialogue on promotion of and respect for human rights with the Kenyan government, both at central and county level. An emphasis will be placed on promoting national processes of justice, gender rights, anti-corruption and anti-impunity at the national as-well-as county level. Non-collaboration with the International Criminal Court A motion in the Kenyan Parliament calls for Kenya to withdraw from the Rome Statute which questions Kenya s support to international justice. Denmark will seek to encourage the government of Kenya to collaborate and support processes of justice. 14

16 Institutional Risks Lack of capacity at county level leads to set back in service delivery and natural resource management The decentralization of certain service deliveries to the county government raises the question as to whether or not these devolved governments are capable of keeping the level of service delivery as prior delivered by the national government system. To address this concern, Denmark will work with the county institutions to support their capacity as well as with the national government to ensure appropriate measures are established to provide the county governments with the necessary assistance in the transition period. Denmark is already engage in Public Financial Management in specific sectors building capacity for this purpose. Programmatic Risks Large scale corruption in public sector and corruption against Danish supported activities A comprehensive reform of the public sector in terms of public finance management and control is still pending, creating risks of large scale corruption. The newly revamped Ethics and Anticorruption Commission is actively investigating several high profile corruption cases. Denmark will support efforts to combat corruption and strengthening public financial management. Denmark will design its development programme in a robust manner using country systems to the extent possible while continuing to apply a strict zero tolerance to corruption. 15

17 Annex II indicators from Kenya s Second Medium Term Plan Transforming Kenya: Pathway to devolution, socio-economic development, equity and national unity MTP Implementation framework - as relevant to the strategic focus areas in the Danish-Kenyan policy paper. Public Sector Reforms Goal Strategic Objectives Devolution Goal Strategic Objectives To transform the public service for accountability and provision of efficient and quality services to citizens Enhance quality and efficiency of Public Service Delivery; improve Performance Management; strengthen management systems and processes in Government; enhance the capability of public service leadership and management; transform the culture and attitude of public service Establish 47 functional county governments Strategic collaboration between national and county governments and between counties Governance and rule of law Goal Efficiently and expeditiously delivery of justice Strategic Objectives Enact and operationalize policies and legal framework towards national cohesion and integration, establish a comprehensive framework for human rights, undertake various legal reforms including development, review and implementation of all legislations relating to reforms in governance, judiciary and rule of law Micro and Small Enterprise Development Goal To promote growth and development of MSE Strategic Objectives Enhance capacity of MSEs to create employment and reduce poverty among Kenyans Environment Goal Strategic Objectives Health Goal Strategic Objectives Health Goal Strategic Objectives Health Goal Strategic Objectives Promote and safeguard the state of environment for economic growth Improve environmental planning and governance Reduce maternal neonatal and child health, morbidity and morality Country wide scale up of community health high impact interventions at level 1 health centers Improve access to referral systems Guide and support the establishment of efficient vertical and horizontal country-wide comprehensive referral system with national, intra and intercounty health service Comprehensive coverage to health services by the economically disadvantaged Consolidate and expand social health subsidy mechanisms to contribute towards achieving universal health care Gender, youth and vulnerable groups Goal Improve livelihoods of all Women, Youth and Vulnerable Groups Strategic Objectives Empower all women, youth and vulnerable groups to enhance their capacity and opportunities 16

18 Annex III Key data Kenya Key economic data Unit Source Area (2013) Km WSP Population (2013) Million HDR GDP Million USD WSP Annual economic growth % in GDP 4.4 WSP GNI per capita (2012) USD 800 WDR Growth in GNI per capita (2012) USD 2 WDR Ease of doing business (2013) Rank 121 IFC/ World Bank Economic sectors: Value added: Agriculture (2012) % of GDP 29 WDR Industry (2012) % of GDP 17 WDR Manufacturing (2012) % of GDP 10 WDR Services etc. (2012) % of GDP 53 WDR Government expense (2013) % of GDP IMF Tax revenue % of GDP 19 WDR Net official development assistance per capita Billion USD 2.48 WDR Net official development assistant % of GNI 7,4 WDR Debt service % of exports of goods, 4.0 WDR services and primary income Key social data Unit Source Population growth (2013) % annual 2.7 WSP Life expectancy (2013) Years 57.7 HDR Infant mortality (2012) Deaths per 1000 births/ 49 WDR first year Population with sustainable access to an % 61 WDR improved water source (2012) Access to health facilities (percentage with % 40 estimate inadequate access, estimate no official data) Number of doctors Per 1000 inhabitants 0.2 WDR People btw years living with HIV % 6.2 UN-AIDS (2012) Adult literacy rate (2010) % of people ages 15 and 87.4 HDR above Primary-secondary education (2012) % gross enrolment 91.1 WSP Girls in primary education (2009) % school enrolment 85 WDR Military expenditure (2012) % of GDP 2 WDR Distribution of income: Richest 10% of population (2012) % of national income 38 WDR Poorest 10% of population (2012) % of national income 2 WDR Key environmental data Unit Source CO 2 emissions (2009) Metric tons per capita 0.3 WDR Key Human Rights data Unit Source Ratification with main international human Number of treaties 7 OHCHR rights instruments (2013) Sources HDR: Human Development Indicators, UNDP/ WDR: World Bank s Annual World Development Report WSP: World Statistics Pocketbook 17

19 Annex IV Denmark s ongoing development activities in Kenya Democracy, Human Rights and Good Governance From the early 90s when the push for political and governance reforms heightened, Danida supported civil society organizations on anti-corruption and human rights, moving to gender, constitutional reform and access to justice ten years later. The Danish assistance has facilitated the establishment of democratic institutions, multiparty democracy as well as political space for civil society, gender equality promotion and human rights dialogue. The current Kenya Governance Support Programme (DKK 175 million, ) focuses on three areas: 1) support to drivers of accountability through partnerships with both independent public institutions and civil society organizations, including support to constitution implementation, judiciary reform, the election commission, transition to devolved structures, as well as promotion of gender and human rights and civic education, 2) support to public financial management reforms including the auditor general s office and 3) support to inter-religious and inter-ethnic civil society efforts of peace and security in the coastal region. The new devolved structure of governance reorients the efforts of good governance to county level and provides potential for greater synergies with other Danida programmes at county level. Likewise, the progressive Bill of Rights in the Constitutions provides a solid foundation for a human rights based approach across all the sectors. Gender Danida has for decades been a major partner in promotion of gender equality that runs as a cross cutting issue in all interventions. Danida has provided core support to the Federation of Women Lawyers (FIDA) and the UN Gender and Governance Programme (GGP). With Danida support FIDA has played a leading role in policy advocacy and in mobilizing national and community women groups to ensure that gender equality measures are included in legislation and government policy. The far-reaching gender equality provisions in the 2010 Constitution can be credited to their work, which they have continued by monitoring the implementation of the constitutional requirement of not more than 2/3rds of either gender in public organisations. Through the GGP programme Danida has empowered female aspirants and encouraged women s participation in the last General Elections. As the not more than 2/3rds of one gender rule is being implemented, an increased number of women representatives have entered the political sphere providing a momentum for more gender focused and sensitive policies as well as gender mainstreaming throughout the public sector. Health The Danish-Kenyan partnership in the health sector spans over 40 years with the main objective being reduction of poverty and disease. The current Health Sector Programme Support ( DKK 430 million ) concentrates on influencing policy dialogue on increased access as-well-as support to systems strengthening in provision of health care to the poorest population. With Danida s assistance, Kenya has achieved key milestones on a number of policies, for example, improvement on child health (MDG 4) which Kenya is set to achieve, sexual reproductive health in management of population growth, health care financing, management of medical supplies, and health information to inform decisions and policy planning. Danida has also strongly supported aid effectiveness focusing on sector coordination, harmonisation and improved government ownership of the health care process. The new devolved system of health services provides an opportunity to strengthen the health care system and improve access to health care by the majority rural and urban poor, which remains a challenge. Danida s long experience in health care system strengthening is a comparative advantage and enables Danida to play a catalytic role in establishing capacity at county level and bring services closer to the people. The support complements Danida s broader support to good governance, public financial management and human rights by advancing equity, quality and social accountability in health service delivery. Danida is also leveraging existing private sector investments to improve access, affordability, and quality of health services. Natural Resource Management Danida has supported management and reforms of Kenya s natural capital base especially in the sectors of water, environment and agriculture since the early days of engagement with Kenya. Partnering directly with the Government, this support has brought forward development of relevant sectoral 18

20 policies, institutional and capacity building, in addition to facilitating community-driven environmental management and advocacy initiatives. Currently Danida is implementing the Natural Resource Management Programme (DKK 375 million, ). The Programme s main focus is the reduction of poverty through legal framework for sustainable management of natural resources. It supports the demand from community level for technical services from both public and private service providers. Danida has supported the development of Kenya s National Climate Change Action Plan ( ) and Danida manages the Fast Start Climate Change Programme (DKK 100 million, ) to enhance the private sector and community engagement in climate interventions through the use of technology innovation to reduce vulnerability to climate change and contribute to a low carbon development path. Improved capacities and networks within government agencies in environmental management as well as increased energy efficiencies in various industries have been achieved. Three Green Point Centers have been established at county level to showcase practical application of green growth innovations. Business sector Since the late 1990s, Danida has been contributing to the development of an enabling and vibrant private sector in Kenya. The Business Sector Development programme (320 mio. kr ) creates green growth and employment in particular in micros and small businesses and supports the regional East African integration in the interest of trade. In addition the Danida Business Partnership programme has over the years supported 50 Danish and Kenyan businesses contributing to poverty elevation, green growth, technology transfer and capacity building in agriculture, fishery, IT, health, energy and environment, manufacturing and service industries. Since 2011 the Trade Council is present in Kenya, an expression of the trend in shifting from aid to trade as the Kenyan economy develops. Building on the synergies across Danida s four areas of engagements in health, governance, natural resource management and business a One-Stop-Shop for businesses is being established jointly with IFU (Danish Industrial Fund for Developing Countries) and EKF (Danish Export Credit Fund). It is a unified entry point for Danish companies looking for opportunities, market access and support mechanisms. The initiative facilitates access to all the Danish instruments available for businesses to enhance trade and development between the two countries. Regional Economic Cooperation Denmark is in cooperation with other donors supporting with DKK 160 million the Regional Economic Integration Support Programme in East Africa that is being implemented by the Secretariat for the East African Community and Trade Mark East Africa. The programme is promoting the development of the regional market in East Africa and facilitating real economic integration. It is one of the instruments and approaches of the Strategic Framework to support the integration of the EAC and enhance the impact and synergies of regional and country programmes in Kenya, Tanzania and Uganda through coordinated support. The programme is supporting improvements in procedures for border crossing, harmonisation of standards, common systems for regulations and improvement of regional transport infrastructure. Regional Security Cooperation The Peace and Stabilization Program (DKK 215 million ) for East Africa and the Horn of Africa supports among other activities Kenya s important role in promoting peace and stability in the East African region. It compliments the Danida Kenyan program by supporting the Kenyan Navy and the broader regional security architecture like the East African Standby Forces (EASF). It also supports measures against terror and anti-radicalisation and prevention of money laundering. Much effort is directed to the fact that stabilisation of Somalia, and Kenya s role herein, is becoming increasingly important, including the rule of law, anti-piracy efforts, support to the AU mission in Somalia and improved Somali National Security Forces. 19

21 Annex V: Overview of Progress towards the MDGs in Kenya MDG GOALS Indicators Previous level GOAL 1: ERADICATE EXTREME 52.6 % POVERTY AND HUNGER (1997) 1.Halve, between 1990 and 2015, the proportion of people whose income is less than $1 a day 2. Achieve full and productive employment and decent work for all, including women and young people. 3. Halve, between 1990 and 2015, the proportion of people who suffer from hunger GOAL 2: ACHIEVE UNIVERSAL PRIMARY EDUCATION Ensure that, by 2015, children everywhere, boys and girls alike, will be able to complete a full course of primary schooling GOAL 3: PROMOTE GENDER EQUALITY AND EMPOWER WOMEN Eliminate gender disparity in primary and secondary education, preferably by 2005, and in all levels of education, no later than 2015 GOAL 4: REDUCE CHILD MORTALITY Reduce by two-thirds, between 1990 and 2015, the mortality rate of children under five. GOAL 5: IMPROVE MATERNAL HEALTH 1.Reduce by three-quarters, between 1990 and 2015, the maternal mortality ratio. 2. Achieve, by 2015, universal access to reproductive health. Proportion of population below total consumption poverty line Current level 45.9 % Poverty gap ratio 16.2 % Share of poorest 4.6 % quintile/national consumption (the poorest 20 %) Employment to population ratio Percentage of underweight under age 5 Net enrolment ratios in primacy education Primary school completion rate Literacy rate of yearolds Ratio of girls to boys in primary school Ratio of girls to boys in secondary school Ratio of girls to boys in tertiary education Share of women in wage employment in the nonagricultural education Proportion of seats held by women in the National Assembly Under-five mortality rate (per 1000 live births) Infant mortality rate (per 1000 live births) Maternal mortality ratio (per 100,000 live births) Proportion of births attended by skilled health personnel 74.9 % (1998/99) 22.1 % (1998) 77.3 % (2002) 62.8 % (2002) % (2002) % (2002) % (2002) 30.6 % (2000) 1.5 % (1988) 87.3 % (2009) 16.2 % 95.7 % 74.6 % 79.5% 0.98 % 0.86 % 0.94 % 31.9 % 9.9 % 115 (2003) (2003) (2003) To be checked 42 % (2002) Contraceptive prevalence 39.3 % (2003) % 46 % 20

22 GOAL 6: COMBAT HIV/AIDS, MALARIA AND OTHER DISEASES 1.Halt and begin to reverse, by 2015, the spread of HIV/AIDS. 2. Achieve universal access to treatment for HIV/AIDS for all those who need it. 3. Halt and begin to reverse, by 2015, the incidence of malaria and other major diseases. GOAL 7: ENSURE ENVIRONMENTAL SUSTAINABILITY 1. Integrate the principles of sustainable development into country policies and programmes and reverse the loss of environmental resources 2. Reduce biodiversity loss, achieving, by 2010, a significant reduction in the rate of loss 3. Halve, by 2015, the proportion of the population without sustainable access to safe drinking water and basic sanitation 4. Achieve, by 2020, a significant improvement in the lives of at least 100 million slum dwellers GOAL 8: DEVELOP A GLOBAL PARTNERSHIP FOR DEVELOPMENT 1. Develop further an open, rules-based, predictable, non-discriminatory trading and financial system 2. Address the special needs of least developed countries, landlocked countries and small island developing states 3. Deal comprehensively with developing countries debt 4. In cooperation with pharmaceutical companies, provide access to affordable, essential drugs in developing countries 5. In cooperation with the private sector, make available benefits of new technologies, especially ICTs rate Adolescent birth rate (per 1,000 women) HIV prevalence among population aged years Condom use at last highrisk sex Proportion of population aged years with comprehensive correct knowledge of HIV/AIDS Proportion of children under 5 sleeping under insecticide-treated bed-nets Death rates associated with tuberculosis Proportion of terrestrial and marine areas protected Proportion of species threatened with extinction (out of total known species) Proportion of population using an improved drinking water source Proportion of population using an improved sanitation facility Proportion of urban population living in slums Proportion total developed country imports (by value and excluding arms) admitted duty free Average tariffs imposed by developed countries on agricultural products and textiles and clothing Source: UNDP Millennium Development Goals - Status report for Kenya 2011 and (2003) % (2003) 35.2 % (2003) 44.4 % (2007) 4.6 % (2003) 2.9 % 26 % 48.7 % (2009) 46.7 % (2009) 5 % (2003) 4 % (2009) 34 % (1999) % (1996) 5.03 % (1996) 355 hectar (2009) 196/7,847 (2009) 39.5 % 50 % (2009) % (2007) 2.41 % (2007) Mobile cellular subscription 68.4 % Internet users 41.1 % 21

23 Annex VI Map of Kenya illustrating the 47 counties according to the 2010 Constitution 22