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KENYA

Sekondi Accra

International criminal court indictee Uhuru Kenyatta was officially declared the winner of Kenya's presidential election this afternoon, although his rival, Raila Odinga, will not concede defeat and a legal challenge alleging widespread fraud is certain.Kenyatta won by the slimmest of margins, earning 50.07% of the vote to clinch a first-round win, in an election that saw a record turnout of 84.9% of registered voters.Kenyans waited for nearly a week for its beleaguered electoral body, the Independent Electoral and Boundaries Commission, to announce the result. So far protests have remained peaceful in a country known for ethnic violence.

With the economy rebounding from havoc caused by the post election violence of December 2007-February 2008, Kenya is entering 2013 with great expectations. How President Mwai Kibaki's administration deals with a host of complex issues will determine whether his tenure is remembered more for its creation of a new constitutional order or for its perpetuation of Kikuyu ethnic domination and tradition of elite impunity.

The popular vote in favor of the new constitutiton in a referendum on August 4, 2010, followed by its official promulgation three weeks later, means that grass roots agitation has now been replaced by negotiations in the parliamentary implementation committee which will refine the details of the country's long-term future. The initial competition for the leadership of the committee suggested a continuation of the rivalries inherent in the coalition government of Kibaki's Party of National Unity (PNU) and Prime Minister Raila Odinga's Orange Democratic Movement (ODM). Even as the ODM secured the chairmanship for the youthful Ababu Namwamba, elsewhere the bureacracy, composed primarily of politicians and security officers, was reasserting itself.

Devolution of powers to the new semi-autonmous country governments will mean a gradual loss of power for the central government. If successful it will guarantee the tranfer of approximately $1.2 billion dollars annually to the counties by 2013, and the money will then be under the control of democratically-elected regional governments. Welcomed by Kenyans as a relative second independence, the devolution should reduce Nairobi's authority over the rest of the country and contribute to the weakening of the politics of ethnic nad regional favouritism. The conservatives in the PNU are frightened that if the transfer is implemented to quickly, it will damage their 2012 election campaign strategy, considering their past reliance on provincial administrations to gather popular support.

Not only is 2011 the year that the shape of the new constitutional order will be determined, but it will also see the beginning of the campaign cycle, with Kabaki's role increasingly focused on the choice of his preferred candidate. With the passing of the old guard, the outcome over the fight over the role of the provincial administration - Nairobi's - clandestine agents in the regions, long controlled by members of the Kikuyu community - will be critical. The reformed Bill of Rights should also restrict the often controversial role of the intelligence services and officers.

The political landscape will be radically transformed if the International Criminal Court (ICC) issues indictments against senior politicians in Central Province and Rift Valley for their role in the 2008 post-election violence. The suspension from the cabinet in mid-October 2010 of the higher Education Minister, William Ruto, following a Constitutional Court ruling that he stand trail on an old corruption case, appears to be the part of a long period in the political cold for the putative leader of Kalenjin. This could be further reinforced by the outcome of an investigation of the ICC Prosecutor Luis Moreno Ocampo, if it turns out that Ruto is one of those targeted in the indictment.

Despite earlier suggestions, a new alliance between Ruto, the deputy premier, Uhuru Kenyatta (seen as Kibaki's successor), and Vice-President Kalonzo Musyoka now seems unlikely to materialize. While Odinga's opponents inside and outside try to form a credible alliance to challenge his bid for the presidency in 2012, Kenya's political stability will be determined by Kibaki's ability to rise above the interests of his inner circle to embrace a new order.

Economic indicators show that 2010 put an end to the downturn that followed the political violence of 2008. In his role as finance minister Kenyatta told the IMF/World Bank annual meetings that real GDP growth for the year would reach 5%, while the forecast for 2011 is 5.7%.

The government and private sector have continued to invest in building and reconstructing roads, electricity transmission networks, housing, commercial real estate and other infrastructure. This has helped the financial sector to register healthy growth in business and profits, while the manufacturing sector has also recorded increased production by 5.8% in the first quarter, in turn contributing to lower inflation. By September 2010, the year-on-year rate was 3.2%

Increased earning meant that the current account moved into a modest surplus in the first half 2010. Kenya's two main foreign exchange earners, tea and tourism, have performed especially well. Motivated by increased demand from China and India, tea exports earned 51% more in the first eight months of 2010 than in the same period of 2009.

Going into the December-March high season of 2010-11, tourism may exceed the record set in 2007. The sector registered a 43% increase in earning in the first six months of 2010 as compared in the same period of 2007.

Tourism Minister Najib Balala said Kenya's more aggressive global marketing had brought in visitors from new sources, but he believes hotels, particularly those on the coast, need to refurbish their establishments and rethink their business if they are to remain competitive with other destinations, such as South Africa.

In a bid to promote further economic development, the Keyan government is encouraging foreign investment in the Tana River delta, one of the country's most pristine areas and a major wild bird habitat. Although long occupied by subsistence farmers, the delta region is being cleared for cultivation of sugarcane and jatropha, a shrub whose nuts are used to produce biofuels. A Canadian company, Bedford Biofuels has been given 25,000 acres to grow jatropha, while a British firm, G4 Industries has received 70,000 acres toward the same goal. In exchange for Qatar's offer to finance a new deepwater port on the Indian Ocean, the Keyan government has also awarded 100,000 acres to various companies from Qatar for growing fruits and vegetables. There has been increasing hostility from inhabitants of the delta toward the government in Nairobi because of its largesse to foreigners.

Kenya's trade with the East African Community (EAC) is expanding, and the region accounted for 23% of Kenya's exports in the first half of 2010. Kenyan businesses are investing in Rwanda, Tanzania and Uganda. In turn, as high growth economies, they have provided a reliable market for Kenyan businesses, as well as a hedge against periods when the domestic economy is down. And yet, the EAC's common market is only developing slowly. The difficult part is translating EAC agreements into member states' laws and bureaucracies. Judging from the experience of the customs union, which took effect in January 2005 but is still being adjusted, the common market will evolve over a period of years.

Although it is not official policy, The EAC has evolved a dual approach to implementing its protocols. An example is the provision of the free movement of people in the common market protocol, which states that East Africans do not need a work permit to get a job in another member state. Rwanda had already lifted that requirment for East Africans in 2007. Kenya followed Rwanda's example in July 2010 as soon as the common market protocol took effect. The other members still do not permit free movement of EAC citizens within their borders.

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Kenya maintains an embassy in the United States at 2249 R Street NW, Washington, DC 20008 (tel. 202-387-6101, website: http://www.kenyaembassy.com) and consulates in Los Angeles and New York.
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