The business community in Kenya has expressed concern over the current political stand-off in the country, warning that it could hurt the economy.
This is after the August 8 general elections, held last week, where Jubilee’s President Uhuru Kenyatta was re-elected to office for a second five-year term.
The move has sent jitters among the opposition’s National Super Alliance (NASA ) supporters.
NASA’s presidential candidate Raila Odinga has rejected results. On Sunday, he called for work boycott, a move whose impact negatively affects the economy.
Violence has been witnessed in Nairobi’s Mathare, Kibra, Kisumu and Mombasa towns after the presidential results were announced on Friday night.
Led by the Kenya Private Sector Alliance, under its ‘Mkenya Daima’ initiative, the business community has warned that continued political strife will negatively impact on the country’s Gross Domestic Product, calling on aggrieved parties to seek legal redress instead of resolving to violent demonstrations.
“We continue to urge all Kenyans to go back to their daily routine activities, in line with what has been the case with many since immediately after the voting exercise was over,” Isuzu East Africa retail sales manager Priscilla Mathiu said.
Kenya’s GDP has already plunged by a 0.1 percentage point in the last one week, industry players said on Monday.
This is however far much lower than 2008 when the country plunged into post elections violence (2007-08), slowing the country’s GDP by 7 percentage points. Kenya’s GDP stood at $70.53 (about KSh7.317 Trillion) in 2016.
“We have always had GDP change during election years. This year we expect a slight change of not more than 0.2 percentage points,” said Patrick Obath, member of the Mkenya Daima steering committee.
Mkenya Daima is a peace campaign spearheaded by KEPSA , meant to foster peaceful coexistence and peace for economic growth and prosperity for the country.
Most affected sectors include the manufacturing sector, transport, financial sector, retail market and service sector, the Kenya National Chamber of Commerce and Industry national chairman Kiprono Kittony noted on Monday.
In the manufacturing sector, firms scaled down on production ahead of the elections with investors adopting a wait-and-see impression.
International trade through the port of Mombasa was also affected as a section of the business community in the neighbouring countries redirected their cargo to Tanzania’s port of Dar es Salaam.
“We have job losses. People not turning out to work especially in the service sector. All this have a negative impact. Kenyans need to go back to their normal routine,” Kittony said.
Kittony said the business community will continue supporting and working with the government in accelerating job creation, empowering the youth and promoting large and small enterprises.
“To achieve these goals, business needs government to continue its push to remove barriers to doing business, most importantly reductions in critical input costs such as power and transport. We need continued policy consistency in fiscal and regulatory policy,” he said.
Kenya’s economy expanded 4.7 per cent in the first quarter of this year down from 5.9 per cent in the same period of 2016, recent Kenya National Bureau of Statistics data shows.
KNBS attributed the slow growth to the drought that hit the country in the last quarter of 2016 into the first quarter of this year as a result of failed short rains.
The business community, mainly Small and Medium Enterprises, have also been grappling with a credit squeeze as commercial banks shun lending high risk borrowers.
This is after the government capped lending rates at four per cent above the Central Bank Rate, under the Banking (Amendment) Act, 2016.
Analysts have warned that the declining growth in credit to the private sector is likely to hurt the projected six per cent growth in the economy.
Growth in private sector credit has stabilised at about 4.5 per cent since December 2016 after a steady slowdown from about 17 per cent in December 2015, largely on rising default levels.
Election fever begun slowing down new investments way back in December last year, according to different industry players.
Sectors which recorded slow activities since last year include the real estate sector, tourism and international trade. Foreign Direct Investments have also been affected.
The Central Bank of Kenya in April downgraded the country’s economic growth forecast to 5.7 per cent in 2017 from 5.9 per cent last year.
