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Price controls and restrictions in distributive trade are key disincentives to foreign investment in Kenya. In the last two years, the government has reduced the number of items under price control and streamlined the system by which it reviews applications for price increases for those items still on the list. In addition, the government has promised to further liberalize price legislation.

In June 1989 and 1990, the government reduced corporate taxes to 42.5 percent. Withholding tax ranging from 12.5 percent to 30 percent is imposed on payments such as royalties, interest, dividends, and management fees. Kenya's tax treaties normally follow the Organization for Economic Cooperation and Development model for the prevention of double taxation of income. There is no tax treaty with the United States.

The government does not have any significant investment performance requirements. Recent policy statements, however, indicate that the government may soon institute export performance requirements. Investors who are potential or successful exporters may obtain special concessions over and above the generally available incentives.

Under FIPA, foreign investors are permitted to repatriate dividends, interest on loan capital, and the value of their original equity investment plus any reinvested profits. Due to the current foreign exchange crisis, delays of up to 18 months have been experienced in dividend remittances. Permission is not normally given for immediate repatriation of capital gains, which must be placed in blocked accounts or invested in government securities at below market rates for five years before they can be repatriated. Loan capital, which can be denominated in local currency or in the currency in which it was brought in, can be repatriated. It has become increasingly difficult to obtain exchange control approval for registering royalty, technology, and management agreements.

6. Export Subsidies Policies

The government of Kenya operates an export compensation scheme for locally manufactured products with less than 70 percent import content. Investors receive 20 percent compensation of total export value after earnings have been received. Petroleum products, chemicals, electric power and certain agricultural products are ineligible. For most products, eligibility is not automatic. Exporters have to seek approval from the Ministry of Commerce. The government has stated that it will establish a green channel to simplify and speed up current lengthy procedures for import licensing and foreign exchange allocation.

The government grants a one time 50 percent investment allowance tax deduction from the cost of industrial buildings, fixed plant, and machinery for investments outside Nairobi and Mombasa, and 10 percent for those within these towns. This has an overall effect of reducing income taxes in the start-up phase of a project.

Exporters to the regional market covering 18 countries which are members of the Preferential Trade Area (PTA) Treaty receive advantages. Restrictive Rules of Origin which did not

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allow foreign firms to participate in the PTA market have been suspended until 1992. (Under the suspended rules, goods produced by firms with more than 51 percent local ownership received 100 percent duty free treatment, while those from firms with between 41 percent and 50 percent got 60 percent preferential treatment. Exports from firms with between 30 and 40 percent local ownership received 30 percent preferential treatment.) Kenya is a member of the General Agreement on Tariffs and Trade and receives benefits under the Lome Convention.

7.

Protection of U.S. Intellectual Property

Kenya is party to several international agreements on intellectual property, including the Convention Establishing the World Intellectual Property Organization, the Paris Convention for the Protection of Industrial Property, the Universal Copyright Convention, and the Brussels Satellite Convention.

U.S. businesspersons are entitled to the benefits of these conventions, such as national treatment and "priority right" recognition for their patent and trademark filing dates. In spite of these agreements, pirated books, records, videos, and to a limited extent, computer software, find their way into Kenyan markets. Government inspection and existing laws are inadequate.

8. Worker Rights *

a. Right of Association

Most workers in Kenya are free to form or join unions. The major exception is the civil servants whose union was deregistered by President Moi in the early 1980's. The Central Organization of Trade Unions (COTU) is the legally mandated sole trade union federation to which all unions (except for the Kenya National Union of Teachers) belong. Workers (except for certain categories of "essential" workers such as prison guards, soldiers, and the law enforcement personnel) have the right to strike 21 days after a written report of the dispute is submitted to the Minister of Labor. Workers in essential industries have to give 28 days strike notice. Under the "Trade Disputes Act," however, the Minister of Labor has the authority to require the two parties to go to the Industrial Court for mandatory arbitration of their differences.

b. Right to Organize and Bargain Collectively

The government promotes voluntary negotiations between employers' and workers' organizations. Collective bargaining is protected by law and is practiced throughout the country. Kenya does not permit closed shops.

On November 23, 1990, Parliament passed the Export Processing Zones Act. The legislation, which envisions the creation of at least three such zones, is silent on the issue of worker rights.

c.

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Prohibition of Forced or Compulsory Labor

Under the Chiefs' Authority Act a local administrative official can require individuals to perform community services in the context of an emergency (e.g., fire, flood, earthquake, etc.) or in order to conserve natural resources when voluntary labor is unavailable. Individuals so employed must be paid the prevailing wage for such employment. The Kenyan penal code, the Public Order Act, Prohibited Publications Order, Merchant Shipping Act and the Trade Disputes Act contain measures which appear to contravene ILO conventions 29 and 105 concerning forced labor.

d. Minimum Age for Employment of Children

Kenya has minimum age legislation in the "Employment Act" which limits the employment of children under the age of 16. Children cannot be employed in factories, mines, construction or transportation, nor can they be required to work more than six hours in one day. Young people between the ages of 16 and 18 can be required to work more than six hours per day but cannot be employed in dangerous occupations.

e. Acceptable Conditions of Work

Kenya has a complicated minimum wage scheme which is divided by age, location, and occupation. It should be noted that over 80 percent of the Kenyan workforce does not hold jobs in the wage sector and are not covered by minimum wage law. Virtually all these workers are employed in agriculture. Currently the minimum wage (last revised June 1, 1990) for an unskilled laborer ranges from $20.50 per month in rural areas to $36.50 in Nairobi. Many families supplement a wage earner's salary by selling agricultural produce or by having additional family members in the workforce. The standard legal workweek in Kenya as defined by the Regulation of Wages Order is 52 hours over six days, except for night duty workers who can be employed for up to 60 hours per week. Agricultural workers are exempt from this order.

f. Rights in Sectors with U.S. Investment

Workers have the right of association, the right to organize and bargain collectively in all sectors where U.S. capital is invested. U.S. firms operating in Kenya in such sectors as petroleum, food and related products, transportation equipment, and chemical and related products have had no major labor related problems in recent years. Conditions in these sectors do not differ from other sectors of the economy.

(D)-Suppressed to avoid disclosing data of individual companies

(*)-Under $500,000

Source: U.S. Department of Commerce (unpublished)

Bureau of Economic Analysis, August 1990

* Section 8 is an abridged version of Section 6 of the Kenya country report included in the Department of State's Country Reports on Human Rights Practices for 1990, submitted to the Congress January 31, 1991. For a comprehensive discussion of worker rights, please refer to that report.

NIGERIA

Key Economic Indicators

(Millions of U.S. Dollars ($) or Naira (N) As Noted)

GDP by sector at 1984 factor costs (pct of GDP)

1/ 1988 and 1989 money supply figures are for December; 1990 figure is for June.

2/ Rate is percentage of GDP.

3/

1988 official exchange rate figure is January-Dec. average; 1989 and 1990 figures and 1990 parallel exchange rate figure are January-June average.

Sources:

IMF, IBRD, Central Bank of Nigeria, USDOC, Embassy.