SPEECH BY HIS EXCELLENCY HON. MWAI KIBAKI, CGH, MP PRESIDENT AND COMMANDER IN CHIEF OF THE ARMED FORCES OF THE REPUBLIC OF KENYA DURING THE OFFICIAL OPENING LAUNCHING OF KENYA VISION 2030 AND THE MEDIUM TERM PLAN OF VISION 2030 FOR THE PERIOD 2008-2012, JUNE 10th, 2008, PLENARY HALL, KICC, NAIROBI

Ladies and Gentlemen,

Just nine days ago, Kenyans held Madaraka Day cerebrations all over the republic to mark 45 years since Kenya attained internal self rule on the 1st of June, 1963. Today marks yet another great day in our collective effort to provide all Kenyans with a better future not only for themselves, but also for coming generations of Kenyans. On Madaraka Day I promised the nation that I would be launching the Kenya Vision 2030 today. Under the Vision 2030, Kenya aspires to be a middle-income rapidly industrializing country offering a high quality of life to all its citizens in a safe and secure environment.

Under the Kenya Vision 2030 we plan to have an economy in which GDP per capita at today’s prices will be US$3,000 by 2030, or about six times what it is now. I also mentioned that, in addition to launching the Vision 2030 document, we shall also be introducing the first Medium Term Plan for the period 2008 to 2012. This MTP will cover projects and programmes to be see implemented over the next five years. It will serve as the first phase in our long-term efforts to realize the goals and aspirations we have set for ourselves under the Vision 2030.

As many Kenyans are aware, the Economic Recovery Strategy for Wealth and Employment Creation (ERS), which has served us so well since 2003, comes to an end this financial year. Under it, our economy expanded from an annual growth rate of 0.6 percent in 2002 to 7 percent last year. This clearly indicates that our economy has recovered and is now well on its way to rapid long-term growth which Kenya needs in order to overcome the problems of poverty, unemployment and lack of access to basic household needs which still affect an unacceptably large number of our people.

Under the ERS we made the development of human resources, and in particular providing better education to our young people, one of Kenya’s top priorities. Indeed the provision of free primary education was one of the earliest steps my Government took when it assumed office in 2003. As a result the number of young Kenyans enrolled in our primary schools rose from 6.1million in 2002 to 8.2million in 2007. The primary school Gross Enrolment for boys stood at 110.7 per cent last year compared to 104 percent for girls over the same period, while national net enrolment ratio was 91.6percent which is the highest it has been in our history. We continue to face challenges of inadequate teaching facilities, low teacher to pupil ratios and low enrolment rates in some of our pastoral communities. But the Government is addressing these challenges as a matter of urgency. In addition our communities have benefited from the Constituency Development Fund, and other devolved funds, in addressing some of the challenges in our primary and secondary schools.

Starting this year, tuition-free secondary education is being provided in our high schools. Our transition rate from primary to secondary schools has risen from 47 percent in 2002 to 70 percent in 2007. We have nearly doubled the number of our high school students which has risen from 778,000 in 2002 to 1.2 million in 2007. The Government has put in place a recruitment programme for additional high school teachers to meet this need.

Furthermore, we are also addressing the problems of the gender gap in secondary school enrolment and in enrolment to science and mathematics courses—all of which favour boys compared to girls by an unacceptable margin. As we have continued to expand access at the tertiary levels, the number of students enrolled in public and private universities in Kenya went up from 71,349 in 2002 to 118, 239 in 2007 although, again, women are at a disadvantage. We are allocating about a quarter of our total recurrent expenditure to education. Taken altogether this is a record in promoting education in Kenya that we should all be proud of.

We have made commendable progress in the health sector as well, where the total allocation to the Ministry of Health has risen from KShs 21.1billion in 2003/04 to Kshs35.4billion in 2007/08. Combined with funds from CDF, the Local Authorities and our international development partners this has led to adequate supply of drugs in our hospitals, clinics, and dispensaries and sufficient rehabilitation of our health care facilities and the building of new ones. We have hired additional medical personnel and began a devolution programme of health care to district hospitals. The results are there for all to see. Our full child immunization coverage, for example, now stands at 73 percent compared to 57 percent in 2003. Kenya’s HIV prevalence rate has now fallen to 5.1 percent, while the Government has intensified its campaign against malaria and tuberculosis with positive results.

Over the period under which our economy was guided by the ERS we also witnessed progress in other aspects of social development. We continue to make safe water supply available to more Kenyan households, having doubled the Government’s total development expenditure on water supplies from Kshs 4.3 billion in 2003/04 financial year to Kshs 8.4 billion in the current financial year.

Ladies and Gentlemen
The goal of restoring economic growth within the context of a stable macroeconomic environment since 2002 has been quite successful given that we have managed to record a growth rate 7 per cent in 2007, which was indeed the target of the ERS. The remarkable performance has been a result of improvement in all sectors but is also a reflection of prudent monetary and fiscal policies pursued since 2003. The reform measures that we undertook over this period have led to a stabilization of our exchange rate with the shilling strengthening from Kshs. 76 in 2003 to Kshs. 62 in 2007; while the average lending rates declined from 19% in 2002 to an average of 13% over the last five years. Similarly the ratio of GDP to debt has also declined from 26.8% in 2002 to 22.3% in 2007. The net effect has been the expansion of credit, particularly to the private sector leading to higher investments in productive activities and also expanded credit availability to households for consumption and investments. Gross foreign reserves have risen substantively from US$ 1,468 million in 2003 to US$ 3, 355 million in 2007 supported largely by transfers from Kenyans in the diaspora. As a result import cover has averaged over 3 months throughout this period. Average underlying inflation was contained around 5% per cent between 2003 and December 2007 even though overall inflation was periodically high owing to fluctuations in food prices and oil price increases. We have as a result of disturbances this year and sharp oil prices, we witnessed sharp increases in inflation, which my government is doing everything to contain.

On the fiscal side, revenue collection has been kept above 20% of the GDP since 2003, enabling the Government to meet 95% of the budget from own resources. With higher revenue collection net domestic borrowing was contained at a low of 1.8% in 2006/7 per cent relative to 3.6 per cent in 2002/3.

On the production side, most sectors recorded growth during the ERS implementation period. Agriculture improved remarkably by growing from a negative 2% in 2002 to 4.4% in 2006 and 2.3% in 2007, despite low rains in the latter year. Agriculture’s performance was not just about growth but it was a reflection of the revival of key institutions that had collapsed; the Kenya Co-operative Creameries, the Kenya Meat Commission, the Coffee Sector, the maize Sector through high and stable prices and extension services and aggressive control of livestock diseases. Manufacturing grew robustly from 0.1% in 2002 to 6.3% in 2006 and 6.2% in 2007. Tourism, transport and communication also performed strongly prior to the interruptions early in 2008. Indeed our tourism sector broke historical records that over 2 million tourists by 2007.
Building and construction has also performed quite well over the period, with key indicators such as cement consumption rising to 2,064 thousand tonnes while the index on Government expenditure on roads also growing rapidly. In 2007 alone, the index jumped by 67.9 to stand at 269.0. Disbursements of funds by the Kenya Roads Board have also been growing rapidly, rising to Kshs. 15.4 billion in 2006/7 while expenditures on roads construction and maintenance has risen from Kshs 10 billion in 2002/3 to Kshs 52 billion in 2006/7 and Kshs 62 billion in 2007/8.

Wholesale and retail trade have also recorded significant gains over the period growing by 11.6% in 2006 and 11.5% in 2007. On the other hand the NSE index reached unprecedented levels with a growth rate of over 300%, with market capitalization rising from Kshs. 112 billion in 2002 to Kshs 792 billion in 2006 and Kshs 851 billion in 2007. Of course as of yesterday this has gone over Ksh. 1 trillion.

Ladies and Gentlemen,
As can be seen from all the above remarkable positive developments up to December, 2007, the Kenya Vision 2030 was developed against a backdrop of the best economic growth levels in three decades. The result of that outstanding performance of the economy reflected in its impact on the level of poverty which declined from 56.8 per cent in 2000 to 46 per cent in 2006, with rural poverty falling by 35 per cent. The implication is that the ERS has gainfully laid the foundation for Kenya Vision 2030.

Ladies and Gentlemen:
Kenya Vision 2030 is our new long-term development blueprint for the country. It is motivated by collective aspiration for a much better society than the one we have today, by the year 2030. The aim of Kenya Vision 2030 is to make Kenya a globally competitive and prosperous country with a high quality of life by 2030. Other developing countries with whom we share similar historical backgrounds and who have no better resource endowments than ourselves have managed to make that transition and Kenya intends to do the same.

The Vision is anchored on three key pillars: Economic; Social; and Political Governance. The economic pillar aims to achieve an economic growth rate of 10 per cent per annum by 2012 and to sustain such performance over the period to 2030 with the primary aim being to address the problems of poverty, unemployment and equity.

The vision has identified a number of flagship projects in every sector to be implemented over the first five years of the vision to facilitate the desired growth on a sustainable basis. In addition the vision has identified projects that will drive growth in key sectors such as agriculture, education, health, water and environment. The social pillar seeks to create a just, cohesive and equitable social development in a clean and secure environment. Within the social pillar also we have identified areas of priority interventions for the next five years. The political pillar aims to realise an issue-based, people-centred, result-oriented and accountable democratic system.

Ladies and Gentlemen:
All the three pillars of Kenya Vision 2030 will be anchored on firm foundations of macroeconomic stability; continuity in governance reforms; enhanced equity and wealth creation opportunities for the poor; infrastructure; energy; science, technology and innovation (STI); land reform; human resources development; security; and public sector reforms. These will consolidate the gains made in the ERS and also help ensure sustainability of our achievements as we implement the Vision.
In the economic pillar the primary goal will be to move the economy up the value chain. Indeed, following a comprehensive analysis of Kenya’s global competitiveness, six key sectors have been identified to deliver the 10 per cent economic growth rate per annum envisaged under this pillar. These are: tourism; agriculture; manufacturing; wholesale and retail trade; business process outsourcing (BPO); and financial services. The distribution of the flagship projects have been done in such a manner that no part of the country has been left out.

In the social pillar, Kenya’s journey towards prosperity involves the building of a just and cohesive society, that enjoys equitable social development in a clean and secure environment. This quest is the basis of transformation in eight key social sectors, namely: Education and Training; Health; Water and Sanitation; the Environment; Housing and Urbanisation; as well as in Gender, Youth, Sports and Culture. It also makes special provisions for Kenyans with various disabilities and previously marginalised communities.

On the other hand, the transformation of the country’s political governance system under Vision 2030 is envisaged to take place across six strategic areas, which are: the rule of law; electoral and political processes; democracy and public service delivery; transparency and accountability; and security, peace building and conflict management. The key flagship project under the political pillar is the delivery of a new constitution.

Ladies and Gentlemen:
As I mentioned earlier, the Medium Term Plan 2008-2012 which we are also launching today will serve as a successor to the ERS. It provides details of the flagship projects in the three pillars of the Vision 2030. These projects have been carefully selected giving priority to those projects that will get the economy back on the growth path following the shock associated with the post-election crisis and rise in international food and energy prices. The Medium Term Plan of the Vision 2030 has also incorporated the policies and programmes identified by the grand coalition parties in our harmonized parties manifestos document.
For the first time in the history of our country we are today launching a Vision document containing our collective aspirations on the society we would like to live in 2 decades from today and bequeath to our future generations.

Let me conclude by stating that with the launching of Vision 2030 a new dawn for Kenya has arisen. Our youth as we heard from them this morning, are proud of their nation and are prepared to rise up and seize the opportunities that we are making possible through this vision to create globally competitive and prosperous Kenya for themselves and for all Kenyans. I urge all Kenyans both at home and abroad to rally behind Vision 2030 especially its implementation framework in order to realise our targets. We also appeal to our development partners and investors both local and international to seize the great investment opportunities made possible by this Vision. I have no doubt that we shall achieve our Vision 2030 aspirations and targets both over the next five years and the long term.

Thank you.