Business people fret about Kenya’s economy

The business community has warned that the economy is in danger of total decline and urged politicians to strike a quick deal to end the stalemate over the repeat election.

On Monday, three business associations said the country was experiencing slow growth, a sharp dip in profits, drop in employment rates and markets taking a beating since campaigns began in June.

The Kenya Private Sector Alliance (Kepsa), Kenya Association of Manufacturers (Kam) and the Kenya National Chamber of Commerce and Industry (KNCCI) warned that the political tension could lead to inflation and an unpredictable economy.

INVESTORS
Kepsa and KAM said most businesses are witnessing a wait-and-see approach by both local and foreign investors, a situation that could be worsened by the delayed decision-making process ahead of the election.

Kepsa chief executive officer Caroline Kariuki said activities at the Mombasa port, lending, foreign exchange, employment and international trade could be the most hit by the extended campaigns.

TRADING

Early this month, the shilling fell by as much as 0.32 percent, as trading at the Nairobi Securities Exchange (NSE) was temporarily halted because of panicky transactions mostly by foreign investors, barely an hour after the Supreme Court ruling that annulled the presidential election.

The trading meltdown at the securities market extended to Monday with investors warning that the poor returns could spell a doom for markets.

“Today’s turnover at NSE is about Sh400 million. Definitely the election and its uncertainties is affecting our securities market,” investment banker Jimnah Mbaru said.

TOURISM
Ms Kariuki said: “With the prolonged electioneering period, the country is expected to witness slowdown in business in various sectors that can lead to economic decline and thus keeping with the set dates of elections is welcome.”

The country’s economy, billed as the biggest in East Africa, also relies on tourism.

The sector has however, suffered a beating in the past following disputes arising from elections including the 2007-8 post-poll violence.

PROFITS
Kam chief executive officer Phyllis Wakiaga said a survey done on industries showed at least 57 percent of the respondents said the months preceding the elections would be bleak in terms of new orders, profits, employment and volume output.

“Our economy has been flattening since the beginning of the year and this typically happens in any General Election,” she said.

“This means that we need to start visualising elections, not as a stand-alone occurrence that paralyses our lives and suspends the certainty of our livelihoods, but as part and parcel of our daily decision making.”

KNCCI national vice chairman Laban Onditi said the prolonged political uncertainty was scaring away local and foreign investors and called on the government and the Opposition to resolve contentious issues.

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