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).
