4. FOCAL SECTORS AND THEMATIC AREAS

The programmatic elements of Denmark’s development cooperation with Kenya in the strategy period 2006-2010 are described in the following chapter. The chapter will present the planned support to the selected sectors and thematic areas. The selection of sectors is not least based on the possibility of creating synergies between the chosen sectors. It is important to note that most objectives and indicators are drawn from the ERSWEC and/or national sector plans. Many correspond directly to the MDGs. Hence, targets are not directly related to the support provided by Denmark but represent sector-wide goals. Achieving these depends on the coordinated efforts of the Kenyan government, donors and other stakeholders. At programme level, quantifiable indicators will be developed where necessary in order to measure progress.

4.1 Agriculture

Agriculture is the backbone of Kenya’s economy, directly contributing to 26 pct. of GDP and 60 pct. of export earnings. About 80 pct. of Kenya’s population live in rural areas, and among the poor households subsistence farmers and pastoralists account for over 50 pct. About 70 pct. of smallholder farmers are women. Broad-based growth in the agricultural sector is therefore a key factor in the Kenyan government’s ability to successfully reduce poverty and improve the livelihood of the population.

The strategic framework for the Danish support to the agricultural sector is Kenya’s Strategy for Revitalisation of Agriculture (SRA) (March 2004), which contributes to attaining MDG 1’s objective of reducing by half the proportion of people living below the poverty line by 2015. The overriding goal of the strategy is to achieve a lasting reduction in unemployment and poverty in Kenya, and the main challenge is the transition of farming enterprises from subsistence to commercial production. The strategy identifies five critical areas requiring public action for modernisation of the agricultural sector: reform of the legal and regulatory framework; promotion of research and technology development; reform of the extension system to create effective linkages among research, extension and farmers; establishment and development of a market-based agricultural credit and inputs system; and promotion of domestic processing. Denmark has supported the pilot phase of the implementation of the agricultural sector reforms.

The investment plan for the ERSWEC 2003-2007 (March 2004) estimates that 11 pct. of the total costing of the ERSWEC will be used for agriculture and rural development. In the investment plan, the Kenyan government expresses its commitment to a significant rationalisation of agricultural parastatals and to allocating a greater share of resources to priority programmes.

Denmark has supported agricultural development in semi-arid districts for many years. The projects initiated in 1999 will come to an end in 2005. The support has included: support to smallholder farmers and community initiated agricultural support activities; support to micro and small enterprise development; and support to micro finance initiatives.

A ’first-generation sector programme’ with Danish support was launched in July 2005. The Agricultural Sector Programme Support (ASPS) will address poverty alleviation through support to economic growth and employment creation in the smallholder-farming sector and amongst small entrepreneurs.

The ERSWEC and the SRA call for a redefinition of the role of the state as facilitator for private sector growth and investment in agriculture. The programme will assist the Kenyan government in establishing clear roles of the public sector through support to the development of the policy and regulatory framework for agriculture, including capacity building. Denmark’s support will in this area form part of a basket funding arrangement provided by like-minded donors.

The Danish assistance will support agricultural business development, including rural finance. Smallholders and small entrepreneurs constitute the majority of Kenya’s business sector and the change from subsistence farming is vital for the economic development in agriculture. The ERSWEC aims at creating 500,000 jobs annually. Although this target is hardly realistic, the majority of new jobs will have to come from smallholders and small enterprises. The support to agricultural business development as a private sector intervention will be implemented by private sector stakeholders.

Finally, the ASPS will support districts in establishing rural infrastructure and agricultural advisory services to reduce transaction costs for agricultural business. The decentralised support will be implemented by decentralised governments and will also assist in building capacity for the devolution process expected to be included in Kenya’s new constitution. The Kenyan government emphasises the importance of creating economic development in ASAL areas, where 65 pct. of the population is poor. The ASPS district-based interventions will initially target seven semi-arid districts.

The overall outcomes described in the SRA and the ERSWEC will be used for monitoring. The ASPS will support the development of the monitoring and evaluation system for impact monitoring developed for the ERSWEC and the SRA. The ASPS will furthermore liaise with research institutions to document the scope of interventions in the semi-arid areas creating viable economic development and reducing poverty and vulnerability. Output indicators will be gender-disaggregated. Specific component targets and indicators have been developed.

The Kenyan government recognises that gender inequality is a fundamental challenge to economic growth and productivity in the agricultural sector. Support to gender equality will form an integral part of the ASPS, and emphasis will be given to addressing the special problems faced by women in agriculture. Within traditionally male dominated areas, such as market-oriented agriculture, agri-business and use of advisory services, the target is that 50 pct. of the ASPS-beneficiaries will be women. Gender-sensitive baseline studies and indicators will form the basis on which progress will be measured. The training activities will be gender-sensitive and the inclusion of women in decision-making processes will be given priority, as will women’s participation in business-related activities, including access to credits.

The semi-arid lands in Kenya are environmentally vulnerable, and support to productivity enhancing agricultural interventions to promote effective and sustainable utilisation of the natural resources and environmental protection forms part of the support. In the targeted ASPS districts, the environment support programme will support the districts’ capacity to integrate environmental aspects in their planning, thereby creating synergy with the ASPS.

The programme will support prevention of HIV/AIDS and mitigation of the impact of the epidemic through pilot interventions designed to include the more vulnerable segments of the population in economic development. Finally, the programme will support good governance and democracy by assisting the Kenyan government in developing transparent and democratic decentralised planning and accounting processes at local levels.

4.2 Private Sector Development

The ERSWEC takes full recognition of the importance of private sector development in poverty reduction, and it is stated that the productive sectors of the economy represent the core of the government’s economic recovery strategy. In the context of the ERSWEC, the productive sectors are agriculture, tourism, trade and industry. The government estimates that these sectors account for approximately 50 pct. of GDP and provide 628,000 formal sector jobs and 3.7 million informal small and medium-sized enterprises (SME) sector jobs.

Reviving private sector activity and investment, and specifically micro-enterprise and SME development, feature prominently in the Kenyan government’s strategy for raising incomes and productivity. The government’s objectives, policies and strategy for private sector development are articulated in four critical policy and strategy documents: (i) the ERSWEC; (ii) the IP-ERS, which translates the government’s mandate into a prioritised programme of action for the coming years and emphasises the importance of especially the micro and small enterprise sector in job creation; (iii) the Private Sector Development Strategy, which is presently being prepared by the Ministry of Trade and Industry (MoTI); and (iv) the ’Micro and Small Enterprise Sectional Paper’. The latter two documents lay the policy framework and government vision for the sector’s development.

The Kenyan government is committed to improving the environment for private sector growth and investment, mainly by removing barriers to investment and lowering the cost of business. This will include measures to further libera-lise trade, strengthen the financial market, enhance the infrastructure, improve security, facilitate use of technology licences, review mechanisms for wage determination and improve access to quality training.

To help describe the business climate in Kenya, the following four indicators have been identified from the World Bank ’Doing Business’ survey:

Implementation of the Business Sector Programme Support (BSPS) will commence in late 2005. The BSPS aims to improve the overall environment for private sector growth and support to the following areas:

• Support the Kenyan government’s efforts to implement its Private Sector Development Strategy and action plans, especially in terms of strengthening private sector advocacy, capacitating business associations, enhancing public-private partnership, and monitoring and evaluating interventions in private sector growth.
• Enhance the competitiveness of SMEs through promotion of vertical linkages, access to new markets, technologies standardisation and financial services.
• Improve labour market productivity through support to the implementation of labour market reforms, with an initial focus on occupational health and safety, HIV/AIDS, labour productivity and benchmarking studies, as well as and the promotion of tripartite dialogue.

The BSPS aims to improve the overall environment for private sector growth and will concentrate on regulatory reforms and improved capacity building within the private sector. This support will provide a coordinating framework for private sector efforts, particularly the PSDP and mixed credits. It will also be coordinated with the business component of the ASPS. In the area of private sector growth, as well as in general, a regional approach will be sought where feasible, aiming at improving commercial relations to neighbouring countries, especially Tanzania and Uganda within the East African Community.

HIV/AIDS is an important issue for the private sector in Kenya and it is generally agreed that the pandemic has had a negative impact on productivity, although very little research has been done on the subject. At present, very few private sector companies have a clear HIV/AIDS policy. The BSPS addresses the HIV/AIDS issue by balancing the social responsibility obligations of enterprises with the productivity aspects. Promotion of women’s and men’s equal access to the business sector is incorporated in the BSPS and special attention is given to enhancing women’s capacities and active participation in the business sector.

Kenya has participated in the Private Sector Development Programme (PSDP) since 2002. The overall goal of the programme is to contribute to economic development in Kenya through the facilitation of long-term business linkages between companies in Kenya and Denmark. During the first years of the PSDP in Kenya, most activities have been in the feasibility phase. There has been a good diversity in the sectors involved, which included agro-industry, industrial production, and the service sectors. A number of activities are now being implemented and others are in the pipeline.

The Kenyan government has strongly emphasised the role of private business in the economic recovery and the PSDP is considered to have great potential. Against this background, Denmark will continue to support the PSDP in Kenya during the strategy period 2006-2010 within the framework created by the Business Sector Programme. The PSDP will also be closely coordinated with the private sector component of the ASPS. Furthermore, the programme will establish a close cooperation with IFU with a view to identifying and supporting joint ventures with the potential to develop into IFU projects.

Kenya is eligible for Danish mixed credits projects in both both the public and private sector. A number of potential initiatives for this form of financing are under consideration. Opportunities that supplement existing and previous Danish development cooperation programmes with infrastructure or small industrial plants are deemed to be good and have a significant positive impact in the current economic environment in Kenya.

4.3 Health

The strategic framework for the Danish support to the health sector is Kenya’s National Health Sector Strategic Plan 1999-2004 (NHSSP). A new five-year NHSSP is being developed for 2006-20-10. The NHSSP focuses on reducing the burden of disease, increasing decentralisation, reallocating more resources to preventive and promotive services, strengthening health management systems and human resources, restructuring the Ministry of Health (MoH) to support health sector reforms, and increasing the flow of resources. Development partners, including Denmark, view the NHSSP as a satisfactory framework for the health sector, although implementation has been very slow. It is important that the revision of the sector strategy and the health sector reforms promised by the Kenyan government are implemented as soon as possible in order for Kenya to break the downward spiral of deteriorating social indicators. A revised sector strategy is also a prerequisite for a SWAp.

In order to implement the NHSSP, the Kenyan government has promised to increase total government spending in the health sector from 5.6 pct. of the total public expenditure in 2002 to 12 pct. in 2007, two thirds of which is to be spent on salaries. The World Health Organisation (WHO) recommends that countries spend USD 34 per patient per annum. However, Kenya presently spends approximately USD 12 per patient per annum. Although this is comparable with the situation in other African countries, the health sector will continue to be under-funded in the strategy period, even with the planned doubling of the government resources.

Denmark has supported the health sector in Kenya for over three decades. In the mid 1990s, a move towards SPS was initiated. However, the political situation and poor governance made it necessary to channel assistance directly to the provincial level, with close financial monitoring.

In line with the objectives of the health sector in the ERSWEC and the IP, Denmark will support the efforts to improve the health status in Kenya, particularly among poor and vulnerable people. The support will aim at expanding primary health care and makeing it more effective, accessible and affordable.

In the strategy period, the Danish-supported health activities will be carried out in two phases. In the first phase, 2005-2006, the existing District-Based Health Support Project in Coast and North Eastern Provinces and the new ’first-generation sector programme’ – Kenya Health Sector Programme Support, Phase I (HSPS-I), – will be run in parallel and coordinated by HSPS-I. HSPS-I includes support to four components: health sector reforms; support to the pharmaceutical sector; a health information system; and children and adolescents. In 2007, the two activities will be merged into a full-fledged sector programme – Kenya Health Sector Programme Support, Phase II (HSPS-II).

Danish health activities will support improvement of the primary health care system. The success of the support will depend on the Kenyan government’s ability to provide primary health care for poor and disadvantaged population groups and on the health sector’s performance in terms of accountability and transparency in the use of funds. Coordination and harmonisation of support from development partners in the health sector are making good progress and reinforcement of this trend will be given high priority. The two impact indicators for the health sector described in the ERSWEC (see above matrix) correspond to MDGs 4 and 5. Output and outcome indicators for monitoring the Danish-supported health activities will be selected.

The sector support programme component ’Health Management Information Systems’ will promote the collection and analysis of data disaggregated by sex and age, providing a better basis for gender sensitivity in the planning and implementation of the health sector support. Proper handling and discarding of expired drugs will address environmental considerations. Transparency and decentralisation of activities in the health sector will be strengthened at community level.

Throughout the long Danish-Kenyan cooperation in the health sector, extensive capacity and experience have been built in the primary health area. Denmark has over the years contributed to the mainstreaming of HIV/AIDS into the primary health sector in Kenya. Assisting in the prevention of the spread of HIV/AIDS and addressing the consequences of the pandemic continues to be an underlying theme throughout the health activities. Efforts will focus on preventing further spread of the disease, especially among adolescents. Initiatives that supplement these efforts will be included in other sector programmes. In parallel, reproductive health is a main area of activity under the sector support programme’s component for children’s and adolescents’ health.

4.4 Water and Sanitation

The ERSWEC places strong emphasis on the water sector, especially in the ASAL. The MDG related to the water and sanitation sector is to halve the proportion of people without access to safe water and sanitation by 2015. The objective of the Kenyan government is to provide 100 pct. of the population with access to clean and safe water by 2010. The government is committed to increasing coverage and access to water and sanitation services, especially to the poor, by 8 pct. per annum until full coverage is attained.

The government’s efforts in the water and sanitation sector have led to significant investments and improvements in water supply service (65 pct. in urban and 40 pct. in rural areas). A reform programme has been initiated to ensure the provision of reliable, sustainable, and affordable water and sanitation services to all categories of consumers. With respect to sanitation, about 40 pct. of the rural population have access to sanitation – mainly pit latrines. A sanitation policy is under preparation. The rural water supply and sanitation service coverage is particularly low in the ASAL, where ground water resources are scarce, surface sources are not perennial and the population is nomadic.

It is an ambitious plan to implement the 2002 Water Act, including the establishment of new authorities, in a process that promotes a democratic culture and respect for human rights and gender equality. The Water Act foresees a completely new institutional environment, separating water resources management from water services and leaving water services provision to the private sector.

The sector reform programme includes the development of clear and well-supported water and sanitation services strategies and investment plans; implementation of an institutional framework that will lead to a clear separation of functions and ensure effective policy making by the Ministry of Water Resources Management and Development (MoWRMD); independent regulation by the Water Services Regulatory Board (WSRB) and effective business planning and asset development by the Water Services Boards (WSBs); accountability and efficient performance by the Water Service Providers (WSPs) contracted by community user groups such as Water User Associations (WUAs) and Water Resources Users Associations (WRUAs).

Danish support to the water sector will support the implementation of the 2002 Water Act and the fulfilment of the ERSWEC objectives. Through this cooperation, Denmark will contribute to the improvement of the living conditions of the poor, disadvantaged and marginalised women and men of Kenya by providing better access to and control over water and sanitation-related services. The support will contribute to the prevention of HIV/AIDS through integration in relevant plans and activities such as training and extension.

The activities are designed in cooperation with the Swedish International Development Cooperation Agency (Sida) as an SPS. Other development partners are expected to join by 2009. A first phase will be implemented with support to sector investment in a manner that is consistent with the Kenyan government’s new reform process. Support will be given to technical and institutional capacity building at different levels, linking these together. In a second phase, a basket fund will be established leading to an SPS. The expected outcome of the joint Kenyan government/Danida/Sida-supported activities is a sustained and replicable improvement in the water and sanitation sector.

The indicators described for the water sector in the ERSWEC will be used as outcome indicators. The indicators include the number of water points/schemes constructed or rehabilitated; the proportion of the poor with access to improved services; the reduction in time spent by women in fetching water; and the number of female entrepreneurs engeged in water-related economic activities. Additional gender-sensitive qualitative and quantitative indicators that are specific to water resource management, capacity building and consolidation of the sector reform programme will be used. Specific component targets and indicators are being developed together with targets and indicators for sanitation at sector and component level, as these are not included in the ERSWEC.

4.5. Good Governance, Regional Stability and Anti-Terrorism

The promotion of good governance is of major importance to Kenya’s development. Rampant corruption and nepotism as well as a poor human rights record have marred the country’s past. Progress has been made since the NARC government came into office in 2002, especially in the legal and institutional framework. However, much still needs to be done.

The ERSWEC stresses that ’in an effort to revive the economy and meet the expectations of Kenyans for better living conditions, the starting point is better governance....’. The ERSWEC highlights the promotion of the rule of law and the control of corruption as key impact indicators and targets for improved governance.

To institutionalise the government’s efforts, a new Ministry of Justice and Constitutional Affairs (MoJCA) has been created, and a new department established, under the president’s office, in charge of governance and ethics. Other institutions created include the Kenya Anti-Corruption Commission (KACC) and the Kenya National Commission for Human Rights; the latter to initiate judicial, police and prison reforms.

In line with these overall government policies, the MoJCA has actively led a process of strategic planning that takes a SWAp to justice. In early 2003, the Kenyan government launched the Governance, Justice, Law and Order Sector (GJLOS) Reform Programme covering the years 2003-2008. The process is led by the MoJCA, in close coordination with other government institutions. The GJLOS Reform Programme has seven key result areas: Ethics, Integrity and Anti-Corruption; Democracy, Human Rights and Rule of Law; Justice, Law and Order; Public Safety and Security; Constitutional Development; Legal Services; and Leadership and Management Development.

GJLOS is the closest Kenya is to an integrated SWAp. A total of 19 development partners have so far joined GJLOS and almost all have signed up to a Joint Statement of Intent. Funding is secured both through a basket arrangement and through direct contributions. Denmark has been a member of the basket from the beginning. All donors, including the non-basket members, are coordinated through an activity matrix, which is regularly updated. Common reporting in GJLOS is structured around semi-annual reviews undertaken by an independent team of experts.

A further institutional strengthening of the democratic institutions in Kenya is needed. The prolonged constitutional review process clearly illustrated that respect for democratic ground rules is not inherent in the political system but will have to be nursed. It can also be foreseen that external support to the democratic process in Kenya will be called for in connection with the upcoming 2007 elections in the form of support to the election committee as well as civic education.

Civil society in Kenya continues to play an active role in the promotion of human rights, democracy and good governance. Kenyan civil society actors are particularly concerned about the establishment of a new constitutional framework and the lack of progress in this process. The ’watchdog’ function with respect to transparency and accountability remains essential and contributes to keeping government and citizens alert on the necessary reforms. The operational framework for civil society - organisations as well as media - has improved since 2002, but the need for continued awareness and strengthened capacity remains.

Another contested topic of wide implication for the Kenyan society is land issues. In June 2003, a Judicial Commission of Inquiry on Illegal and Irregular Allocation of Public Land (the Ndungu Committee) was established. The recommendations in the commission’s report are being implemented including the establishment of a Land Titles Tribunal and an advisory task force under the Ministry of Lands and Housing (MoLH) to work on the recovery of seized land. The land issue, however, continues to be a complex and highly politicised topic in Kenya and the practical implications of the Ndungu Committee still remain to be seen. A number of NGOs are engaged in this and some have received Danish support. The ASPS will also, to a limited extent, support farmers in receiving title deeds on their lands.

All of the above constitute the framework for Danish support to good governance in Kenya. Danish support has been provided to human rights, democratisation and good governance in Kenya for many years and has – together with support from other like-minded donors – been instrumental in bringing about the recent democratic changes in the country. The Human Rights, Democratisation and Good Governance Programme (HRDGGP) ended in 2005 and a new Kenya Good Governance Programme (KGGP) has been approved for the 2005-2010 period. The KGGP supports the government reform programme, including the key GJLOS Reform Programme and anti-corruption activities. The KGGP also includes support to civil society in order to strengthen the role of civil society, enhance dialogue and interaction with the government with a view to improving democracy, human rights and good governance. Finally, the KGGP supports the further strengthening of Kenya’s democracy through support to future democratic election processes. Gender issues will be mainstreamed throughout the programme as well as being specifically targeted, for instance through support to women CSOs and gender-sensitive voter training.

Stabilising the region is important to ensure that development in Kenya and the neighbouring countries can proceed unhindered. Even a short period of insecurity and violent conflict can undo many years of development work. Denmark plays an active role in supporting regional efforts. Through, for example, the Africa Programme for Peace, Denmark supports the efforts of regional and sub-regional organisations in conflict resolution, peace-building, reconstruction and development.

Denmark also supports the stabilisation in Kenya and the region and promotes human security through anti-terrorism efforts. The bilateral activities have focused on identifying Denmark’s comparative advantages and have concentrated on ’softer’ interventions aimed at making local communities more resistant to extremism and political radicalisation, rather than ’hard’ interventions in the form of support to the security sector. In Kenya, the bilateral activities have been branded as the ’Peace, Security and Development Programme’. A pilot phase launched in 2005 consists of support to four local CSOs in the Muslim-dominated Coast Province. The focus of the pilot is vulnerable local communities with a view to promoting dialogue, tolerance and inclusion of marginalised groups in the Kenyan democracy. Support is provided for implementing outreach activities, including information campaigns; public education activities; community forums; inter-faith dialogue meetings; training of peace and security facilitators; and information sharing and trust-building between religious community leaders. The objective of the Peace, Security and Development Programme is to contribute to the promotion of a democratic Kenyan society open to all ethnic and religious groups as an attractive alternative to political violence. Thus, the programme will aim at the deep roots of terrorism by targeting economic and political exclusion, thereby linking up to the general priorities of Danish development assistance, including poverty reduction and the promotion of democracy. The programme will contribute to reducing the breeding ground for new generations of potential terrorists and weaken the environment that allows international terrorists to hide and operate from local communities. The experience gained from the pilot will feed into the preparation of a more comprehensive programme, which will start up in 2006.

Furthermore, Denmark will allocate support through the multilateral development budget to Kenya’s efforts to implement the provisions of Security Council resolution 1373 and other relevant legislation. This will be administered at headquarters level by the Ministry of Foreign Affairs and channelled through international organisations. A two-year project was initiated on 1 December 2005. Based on the experience from this project, more activities may be considered.

The anti-terrorism efforts will be closely associated with the KGGP and especially the civil society component of that programme. Coordination with other donors is a priority, although most other donors in the sector tend to focus on supporting ’hard’ security activities.

4.6. Assistance to the Environment

The ERSWEC recognises the need to achieve development without deterioration of the environment. The Kenyan government is committed to environmental management and sustainable development, as demonstrated by the adoption of the Kenya National Environmental Action Plan (NEAP) in 1994 and the enactment of the Environmental Management and Coordination Act of 1999. The government has emphasised the need for conservation, sustainable utilisation and management of the environment and natural resources. The EMCA establishes national environmental principles and provides guidance and coherence in good environmental management. The EMCA created various organs to implement the provisions of the act, such as the National Environmental Management Authority (NEMA) and District Environmental Committees.

The key challenges include support to the Ministry of Environment and Natural Resources (MoENR) and NEMA to build the necessary capacity to enable the development of tools and standards for effective management and monitoring of environment policies in key sectors.

NEMA should maintain a policy and regulatory function, leaving implementation to ministries and institutions that already have the local capacity to do so. The Danish support to the sector will be provided under a special mechanism with earmarked funds set-up in accordance with Kenyan government decisions. The set-up will provide a comprehensive approach to environmental management, creating synergy with the Water SPS and the Agricultural SPS by focusing on work in the same ASAL districts as those two programmes. The Danish support is planned for a period of five years, starting in 2006. Joint cooperation with other development partners is foreseen.

The support will be poverty focused and gender-sensitive. The overall development objective is to ensure sustainable management of natural resources and enhanced livelihood with special emphasis on poor and marginalised women and men. The programme will address: (i) technical and institutional capacity building of the MENR, NEMA, district authorities and relevant stakeholders in line ministries; ii) support for community user groups through training and support to environmental projects through district authorities and NGOs; and iii) integrated coastal zone management. The intention is to undertake a capacity building programme and to involve the community in environmental management in order to demonstrate that environmental management and improvement in the livelihood of the poor can go hand in hand. Therefore, a substantial amount of the Danish support will be provided for community implemented sustainable development projects.

All the activities are based on NEMA’s Strategic Plan (2005-2010), and priority areas have been chosen in close cooperation with other donors.

Kenya’s vulnerability to climate change is a challenge which needs to be addressed as a cross-cutting concern affecting many aspects of sustainable development. It is important to address the negative impact of climate change through climate-friendly energy solutions and through adaptation responses to reduce the vulnerability of the country. Therefore climate change needs to be taken into consideration where relevant in Danish development cooperation with Kenya.