Fears That Kenya Chaos Could Halt Economic Boom
The bitter dispute over the Kenyan presidency could have long-lasting economic repercussions, observers warn, fearing that financial turmoil could quickly derail an, until now, booming economy.
Considered an investor-friendly haven of relative stability on its way to becoming an “African Tiger”, Kenya has experienced its worst political unrest in 25 years since a controversial presidential election on December 27.
The crisis stemming from President Mwai Kibaki’s disputed re-election affects everyone from the financial powerhouses to people like Rose in the massive Nairobi slum of Kibera, where livelihoods are immediately under threat.
“First it was because of election day, then it was because they were busy cheating on the results; we have had no electricity and no water for a week, now there is nothing to eat,” said the 24-year-old mother of two.
A few yards away, the Toi Market was completely levelled by rioters who went on the rampage following the announcement of Kibaki’s victory, which defeated challenger Raila Odinga said was obtained through widespread rigging.
“We had 3 000 traders here, as well as 3 000 other people employed in the market, which if you include the families and the customers, means that 200 000 people depended on this place,” said Toi market traders’ association chairperson Ezechiel Rema.
Millions of Kenyan shillings worth of basic food goods, shoes and clothes went up in smoke on Sunday night when marauding gangs of rioters set ablaze stalls reportedly owned by members of Kibaki’s Kikuyu tribe.
Prices of basic goods have consequently more than doubled in the sprawling slum.
“The big men are fighting it out over the election, but if a compromise is not reached soon, we will just be left here to die,” said 63-year-old John Okwiri, clasping a mangled container cap, the only object he could salvage from his little coffee shop.
With a series of national holidays granted by the government for the election, the Christmas holidays and the ensuing crisis, the country has been at an economic standstill for a week.
Fuel shortages were beginning to cripple businesses not only in Kenya but in neighbouring countries such as Uganda.
Many imports needed by the Great Lakes countries arrive in the port of Mombasa and pass through the whole of Kenya before reaching their destination.
Business leaders hoped the turmoil would cause only a temporary economic blip in Kenya, which has boasted average growth of 5% for the past five years and is home to one of the world’s fastest growing stock exchanges.
“Such violence does not augur well for business as it leads to additional costs and deters investment,” said Betty Maina, head of the Kenyan Association of Manufacturers.
The Kenyan shilling, which firmed up significantly against the dollar in 2007, was expected to fall when markets re-open on Wednesday, as is the stock exchange.
The darling of foreign investors in East Africa, Kenya will be lucky to emerge unscathed on an increasingly competitive regional scene, analysts said.
“Uganda and Tanzania must be quietly rejoicing, as they could be getting a bigger share of donor money,” said a senior official from a Nairobi-based Pan-African bank.
“What is certain is that Kenya’s reputation has been dented … but it’s still very early to measure the impact, we’ll see how markets react on Wednesday,” the banker added.
Standard Chartered’s Chief Africa Analyst, Razia Khan, said that the shilling and the markets could slump if the violence did not subside and a swift outcome to the political stalemate was not found.
“Although the economy has done well, the electorate has still indicated its preference for change, and perhaps an impatience that more should be done to tackle graft,” Khan said.
The analyst stressed that despite the latest crisis, Kenya’s economy was still vibrant and a Parliament set to be dominated by the opposition “will create more pressure to deliver meaningful change, as quickly as possible”. — Sapa-AFP
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