Econimic

CONTENTS

Page

Executive Summary

2

Kenya - a general overview

4

Recent Economic Performance

6

Political and Social System

8

Regional Integration

10

Globalisation

11

Recommendation and Conclusion

13

References

15

EXECUTIVE SUMMARY

Suez is a global service group that designs and implements solutions in energy and the environment for business, individuals, and regional and local authorities. It has a presence in 130 countries around the world.

This report will concentrate on only one of the group's four divisions, namely Ondeo, the provider of water and sanitation services. It has been focused mostly in Europe and major markets abroad namely North America, Central Europe, South East Asia, Latin America and the Middle East. It manages seven of the worlds 10 largest water contracts. Ondeo has launched an appeal to all governments to renew initiatives to ensure water for everyone. The company has adopted the United Nations Millenium Declaration to have the number of people without access to water by 2015 as its misson.The company undertakes long term projects about of 20-30 years. It forms public-private partnerships which contribute to local development in a way that is sustainable. Ondeo has developed new methods through its partnerships to bring water and sanitation services daily to low income households. It has successfully established a presence in Southern Africa, West Africa, Morocco and Egypt and is planning development in Kenya in order to springboard into the rest of East Africa.

This report looks at the possibility of establishing sustainable business partnerships in Kenya, as the country is known as the gateway to the East African region. The following factors of the country will be discussed:

* The economic system

* The country's recent performance, fiscal policy and structural issues which affect the performance

* The political and social system

* The extent of regional integration

* The effects of globalisation on the country

The report concludes with recommendations to assist the CEO of Ondeo in planning a company strategy to deal with globalisation as well as advice on setting up an office in Kenya.

Kenya - a general overview

Kenya is located in Eastern Africa, bordering the Indian Ocean, between Somalia and Tanzania. It has borders with the following countries: Ethiopia 861 km, Somalia 682 km, Sudan 232 km, Tanzania 769 km, Uganda 933 km.

The climate varies from tropical along the coast to arid in the interior and its terrain consists of low plains which rise to central highlands and are bisected by the Great Rift Valley; fertile planes lie in the west of the country.

A land of contrasts, Kenya suffers natural hazards caused by recurring drought and also experiences flooding during rainy seasons. Current environmental issues are: water pollution from urban and industrial wastes, degradation of water quality from increased use of pesticides and fertilizers, water hyacinth infestation in the region of Lake Victoria, deforestation, soil erosion, desertification and poaching.

The country is party to numerous international environment agreements: namely, Biodiversity, Climate Change, Climate Change-Kyoto Protocol, Desertification, Endangered Species, Hazardous Wastes, Law of the Sea, Maritime Dumping, Marine Life Conservation, Ozone Layer Protection, Ship pollution, Conservation of Wetlands, Whaling. All of these agreements have been signed but not ratified.

Geography

The Kenyan Highlands comprise one of the most successful agricultural production regions in Africa; glaciers are found on Mount Kenya, Africa's second highest peak; unique physiography supports abundant and varied wildlife of scientific and economic value.

Population: 33,829,590.

note: estimates for this country explicitly take into account the effects of expected morality due to AIDS; this can result in lower life expectancy, higher infant morality and death rates, lower population and growth rates, and changes in distribution of population by age and sex than would otherwise be expected. The population growth rate is 2.56% (2005 est). The official language is English and the lingua franca is Kiswahili.

The legal system is based on Kenyan statutory law, Kenyan and English common law, tribal law, Islamic law, judicial review in High Court; accepts compulsory ICJ jurisdiction with reservations; constitutional amendment of 1982 making Kenya one-party state repealed in 1991. The present liberal government came into power through peaceful democratic elections.

The next elections will be held at the end of 2005.

Economic overview

The regional hub for trade and finance in East Africa, Kenya has been hampered by corruption and by reliance upon several primary goods whose prices have remained low. In 1997, the IMF suspended Kenya's Enhanced Structural Adjustment Program due to the government's failure to maintain reforms and curb corruption. A severe drought from 1999 to 2000 compounded Kenya's problems, causing water and energy rationing and reducing agricultural