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Thursday, February 07, 2008

Is The Kenyan Economy On The Brink Of Shutting Down?

Plus: What will happen when you meet a Kibaki descendant at some cocktail party 30 years from now.




Business and economics is boring to most people, but I will keep this very simple, so please bear with me. This is very important and is bound to affect every Kenyan.

Over 300 CEOS based in Kenya recently came out in a strong lobby to political leaders to come back to their senses. Led by the brilliant Safaricom CEO Michael Joseph, the most important part of their message was a warning. Some politicians seem to think that if the violence were to stop today, life would immediately go back to normal. It is not quite as simple as that and after you read through this post, you will begin to understand why.

Let’s say you were a chief executive of a company handling consumer products, sitting somewhere in Industrial Area Nairobi. Where would your big markets be? Here I am sure I will surprise you.

Nairobi would naturally be your biggest market, especially the slum areas and low income estates. Have you ever wondered why every consumer product these days has a miniature size of everything? That is the market segment where most companies make their profits. Now we know the Kibera is virtually shut down and Mathare is almost there.

Then there is another problem. The vast majority of residents in those areas survive from hand to mouth. That means the Kshs 150 or 200 that they get paid daily for casual labor is what they will take to the shop to make their purchases for the day. Many of these people have not done any work since December 30th last year. Others make money from the daily sales of “mboga” (vegetables). We are all aware that many folks have not done any business since before the elections.

Back to our CEO seated in Nairobi. With things in a mess in Nairobi, it is only natural that you as CEO will need to look to your other large markets starting with Mombasa. Now don’t even go there because the tourism industry is no more. Interestingly there are many businesses in Nairobi that have been sustaining a large staff based on strong sales in Mombasa.

That would leave you as CEO with only the Mount Kenya region and parts of Eastern province which have also been affected indirectly because there are people there whose business relies on selling to customers in the affected regions of the country.

When you sit down and analyze the effects of the post election crisis, it becomes clear every single area of the economy has been affected and even if peace were to suddenly return now, over 50 per cent of the economy is gone with tourism (mainly at the Coast) and Kenya’s bread basket in the Rift Valley, topping the list of casualties.

The impact all this is having on unemployment is colossal. So colossal that it is a very serious threat to national security.

Interestingly these are boom times for certain service industries. One excellent example is the mobile telephony industry. When there is a crisis, communication increases and whatever little money that is flowing the economy will find its’ way into the pockets of mobile phone service providers like Safaricom and Celtel.

Let me end this post by saying something about the Kenya shilling. I don’t know how long the government will be able to prop up the Kenya shilling for. But there is suspicion that this is being done to allow some certain fat cats to transfer their local assets to some safe havens outside the country. Incidentally Swiss accounts and European cities are no longer considered safe (the Kroll report blew that myth sky high). New destinations include other African countries like Namibia (large amounts of the stolen Moi assets have been transferred there) and a few other African countries. These sources claim that as soon as this exercise is over, the shilling will drop to its’ real value (estimated at around Kshs 80 to the dollar currently and still falling).

P.S. Whatever happens next, history will remember Mwai Kibaki as the one term president and former economics professor who made a terrible miscalculation that cost Kenyans dearly. I don’t envy future generations of the Kibakis. Imagine meeting a young Kibaki somewhere 30 years from now. The conversation would go something like this.

You: Kibaki? Any relations to the former president?

Kibaki: I am the great grandson, but please keep it secret, my life has been miserable because of it and there is nowhere in the world I can hide.

You: You can’t really blame people can you, your great grandfather was responsible for the deaths of thousands of Kenyans and some very serious distraction. I’m sorry but this is too emotional for me, please allow me to mingle with other guests.

(You will then make a quick exit muttering unprintable words under your breath).

6 comments:

The Benevolent Swordsman said...

I find it impossible to understand why Mr. Kibaki is not paying attention to our National plight. While Kenyans continue to suffer, lives and livelihoods are lost, Mr. Kibaki is nowhere to be seen or heard. To whom is it surprising that Kenyans voted this man out of office, or who understands not the reasons why we did so?

It is obvious that as negotiations have progressed, the positions of PNU and ODM have changed. As ODM has dropped the call for re-tallying and Kibaki's resignation, PNU is now saying re-tallying ought to be done. As ODM has dropped the rejection of a unity government, PNU is saying this is unnecessary, and unlikely. How can he be holding dialogue, negotionas or whatever you may call it, and then chair a conference on the same subject under the auspices of IGAD! It seems that Kibaki and his team are taking Kenyans through some legal and psychological gerrymandering, that will only hurt the country.

I can only remind my readers that Mr. Kibaki deserves every barb that he gets. Let us not forget that his "hands off leadership" is really a pretext for inability to lead. By the very definition, a leader is a person who has the ability to guide, direct, or influence people. Guiding, directing or influencing people does not happen in osmosis. It is a paritcipative function of interaction between the leader and his subordinates, no pun intended. By his absence, past and present, Mr. Kibaki has shown that he did not deserve to be elected to the great office of "President of the Republic of Kenya". It is no secret that as one who would not pass the opportunity to sit on the fence or bury his head in the sand like an ostrich, this position came his way by an accident of fate.

I am sure that some would argue that Mr. Kibaki indeed is a leader, but I beg to differ. What I see is a man detached from reality, either unwilling or unable to respond to the cries of the suffering people. I have no illusions about the facade that his handlers are presenting to the public, a facade that leaves many bewildered at what they see and hear. Take for instance, President Museveni's appeal for Kenyans to maintain peace. It left no doubt that this was an outside party, appealing to Kenyans for calm. Rwanda's Kagame also commented in a similar fashion -understandably so. However, it was surprising that Kibak's appeal also rang of the same tone whenever he spoke. To an unknowing foreigner, it would be impossible to tell among th three, who was "Kenya's president." He spoke like an outsider looking in - untouched and unaffected by the chaos in the country.

What kind of "leader" hides when the battle is raging? When Kenyans are hoping to hear significant and compelling appeals from ODM and PNU, the latter treat us to legalistic nonsense from ethnocentric holdouts that have no mandate to speak on Kenyas' behalf. The likes of Karua and Michuki have no legal standing in the presidential election debacle. It is obvious that theri hardline positions are self serving and are aimed to protect their ministerial positions which they will inevitably lose. It is either that they are the puppeteers behind the scenes, and Kibaki's will is yet unknown to Kenyans, or that Kibaki is so conniving that he is not the "gentleman of Kenyan politics" like some have thought.

For those who may not know, a very effective schemmer, devious in his ways and resolute in his quest can often be mistaken for a leader. The difference that we all ought to look out for is that leaders serve others, while connivers are self serving. Leaders act openly and empathetically for the benefit of the greater good, while actions of conniving schemmers are selfish, underhand and are only known after the die has been cast. It seems that Mr. Kibaki no longer sees himself living in any other capacity among Kenyans. Either his is president or he is president. Althernatively, given his public gaffes that leave us befuddled, he could be prisoner to hardliners who have no national mandate. A more powerful clique that make Kitchen cabinets a thing of the past. Whatever the case, does he represent the leadership that Kenyans want and need, or is he simply a pretender to the throne? Its your call!

The Benevolent Swordsman

teejay said...

...It is no secret that as one who would not pass the opportunity to sit on the fence or bury his head in the sand like an ostrich, this position came his way by an accident of fate...

well put anon @ 9:02 PM

Then Show Me Fate and I Will Curse Him a my Entire Life!

Anonymous said...

just watched kalonzo on ABC news.why is PNU asking ODM to go to court yet they know the ruling will take min.2 years?
Sorry,Kenyans cant wait for that long!

Dj Rik.

bloggeratti said...

I'm not surprised that only naysayers would comment on this subject spelling doom for Kenya.

TRUE: Tourism and Agriculture have tumbled.
If you cared to watch the news last night 7/2/08 you might have noticed that 145 tourist embarked from a cruise liner in Mombasa for a weeks stay in Kenya, thanks to the PR and negotiating skills of Tourim supremos?

TRUE: The stock market took a beating.
But if you cared to listen, KShs. 1.5bn worth of foreign investment streamed in last week alone

Kenya is taking an economic beating but NOT TO IRRECOVERABLE PROPORTIONS as some comments here would have us believe.

So do your bit, get your hands dirty and make some green. Remember, the chaps in the negotiating teams will duly receive their 850k come end month. What about you?

Anonymous said...

I export IT services to America from my bedroom over the Internet. My Jan '08 dollar sales were up 501% from Jan '07 and up 157% from Dec '07. According to The Economist, India's IT services exports for 2007 were almost $50bn.

http://www.economist.com/business/displaystory.cfm?story_id=10286436

The mind-boggling length of many of the posts in this blog is evidence of idleness when there are billions of dollars of market share up for grabs in the lucrative global IT services industry.

What about low-tech exports like agriculture? According to the US Department of Agriculture, US agricultural exports for 2007 were $82bn while imports were $70bn.

http://www.ers.usda.gov/Data/FATUS/DATA/FYNONAG.XLS

The following is an article by a British reporter on why kiuks are hated.

http://www.slate.com/id/2184031/

bloggeratti said...

My point exactly, Bwana/Bi Anonymous.

All this economic doomsday b***s*** is getting out of hand. Thanks for the solid statistics. That should shut the doomsayers up for a while.

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