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         THE REPUBLIC OF KENYA: COUNTRY PARTNERSHIP STRATEGY

                           CHAIRMAN'S CONCLUDING REMARKS

                                    Meeting of Executive Directors

                                            April 20, 2010

         Executive Directors discussed the joint Bank-IFC Country Partnership Strategy (CPS) for Kenya
for the period FY I 0-13.

          Directors acknowledged the Government has made commendable progress in limiting the
opportunities for corruption and also detecting corruption when it occurs. However, several Directors
noted serious challenges remain and much more needs to be done. Directors urged the Government to
vigorously implement its governance and anti-corruption strategies, and Bank staff to support these
efforts, particularly in the areas of strengthening procurement and financial management systems,
improving transparency, and broadening stakeholder involvement and oversight. Directors also observed
that Kenya remains at risk of violence during the CPS period, and urged greater attention to Kenya's
political economy, as well as Bank program flexibility, to support the Government's efforts to consolidate
stability.

        Directors broadly supported the focus of the CPS on achieving growth with equity and
environmental sustainability. They observed that successful implementation of the CPS should strengthen
Kenya's resilience to domestic and external shocks and enhance competitiveness and growth. Directors
agreed with the level and composition of planned Bank Group assistance to Kenya, in light of its
enormous infrastructure needs, and urged the Government to ensure that all investments, particularly in
health and education services, help to improve equality and social inclusion, especially for girls and
women. Noting the unsatisfactory implementation of the previous Country Assistance Strategy, Directors
also welcomed the streamlined CPS results framework and urged the Bank Group to ensure that it
achieves greater selectivity and a sharper division of labor with other development partners during the
CPS period. They also urged an update of poverty analysis data in light of the numerous crises the
country has experienced since late 2007, and called for improved measurement of gender mainstreaming
in the CPS.

         Directors welcomed the CPS' cross-cutting efforts to improve governance and highlighted the
need for the Bank Group to support this effort by providing technical assistance and knowledge transfer.
In this context, Directors also urged the Bank to proceed cautiously with any proposed development policy
lending as a vehicle for reforms, and only in conjunction with other partners and against a strong set of
prior actions.

         Directors noted that most task team leaders have been decentralized to Kenya, and noted the close
collaboration between IDA, IFC and MIGA staff to improve the investment climate, expand access to
credit (especially for small and medium enterprises), and identify and exploit opportunities for public­
private partnerships. Directors also acknowledged and strongly supported Bank Group collaboration with
the IMF and other development partners. In this context, several Directors welcomed the Bank's efforts to
establish a stronger dialogue with the Government and other donors through the Partnership Forum.

       Finally, Directors looked forward to an early CPS Progress Report, to enable the Bank Group's
program to respond flexibly to emerging developments in Kenya.