Bad Politics to Blame for our Woes

Since independence, Kenya has enjoyed relative calm and many of its 42 tribes co-existed well. This happened against a backdrop of bickering, infighting and politically instigated uprisings accross the continent. Indeed, Kenya has been an island of peace in the sea of political turmoil.

The advent of multiparty democracy in Kenya saw the widening of the democratic space and with it came the increase freedom of expression. The media that had been strangled and gagged for a long time rejuvenated and reemerged with a renewed gusto to delve into issues bedevilling the country in a suscint, blunt and unwavery way.

As the media industry in Kenya grew by leaps and bounds, many became more informed on the goings-on in the political, social, and the business arena. The populace had now become greatly abreast with the issues affecting their lifes many bordering on bad governance, inherent grand corruption and blatant looting of public resource. This unending tirade of grand corruption has its epicenter in the ills of the Kenyatta administration that grabbed massive junks of public land alongside haemorrhaging of public assets and resources.

The unveiling of the Moi administration was seen as a ray of hope and light at the end of the tunnel on issues reform. Many were optimistic and expectant of radical shift in the paradigms that begat our leadership. Sadly however, hardly had the administration sat in office than another sweeping indictment of the administration was revealed. The cases of mega corruption had now been given a thrust and its tentacles now spread far and wide as public officers, cognizant of the public servants code of ethics, defiantly diverted public resources to private use.

The corruption that had eaten into every facet of the Moi administration was epitomized in the Goldenberg scandal that saw the country loose Billions in imports compensation.
Fast forward to 2002 and the political climate was so charged after exit of the hallowed baba Moi. Many including those in his inner circle didnot take kindly his open support of project Uhuru, then an amarteur in politicalspeak. This latter saw a wave of rebellion in government leading to the formation of the Rainbow Coalition and eventually NARC that resounding took power away from the party of the Cockerel-KANU with its project that was no match to the machinery of 'yote yawezekana'.

The unveiling of the Kibaki administration lend credence to the hope of fighting corruption as hundreds of thousands thronged the Uhuru Park to celebrate the resounding victory against the metaphoric Mugumo tree.

Theafter, and in a sudden change of events, the administration was dogged by the Anglo Leasing scam that encaptioned payments to fictitious companies through promissory notes. Sadly therefore, the administration had become an embodiment of corruption that tainted its leadership and the ghost still haunts some of them until today.

The administration oblivious of the resolve of its populace, and the resilience of their will went into the ballot again in 2007 for a second term though some of its members had ditched camp during the referendum to form the Orange Democratic Movement, ODM, that became such a force to reckon with upto the ballot.
Hordes of Kenyans turned up in large numbers to cast their vote though the tribal equation was now more evident than before.

The results became such a close game to call and each party was expectant of a resounding victory. As the results were announced Kibaki had 'won' and this did not augur well with the other camp that marshalled its troops for countrywide mass action that latter blurgeoned into full blow violence now famously know as the Post Election Violence. Several months latter over a thousand had died, several injured and hundreds of thousands displaced and became the Internally Displaced Persons.

Indeed, quite sadly and unprecedented, politics had wrecked havoc in our country and the effects are still being felt.
As the country reels from this unfortunate events, businesses have sufferred immensely as the economy was dealt a major blow. Further our risk assessment internationally was alterred and Foreign Direct Investment significantly reduced.

The stock market is at its lowest ebb and sadly it is a victim, a pawn in this roller coster called politics.

NSE will be most Volatile in 2008

Crisis
It is now evident that if the current political crisis is not resolved as soon as possible the NSE that is often the barometer of economic growth is in for the most volatile period with suppressed activity despite entry of foreign investors into the market.

Facts
Since the year began, the NSE has shed Sh44 billion in market capitalization from a high of Sh851 billion at the beginning of the year to Sh810 billion as at the close of trading yesterday - a five per cent drop.
During the same period, equity turnover has declined by almost 30 per cent from daily trades worth Sh505 million on December 24 last year to Sh347 million at the close of trading yesterday.

Economic Slowdown
Economists had predicted a slow down in the economy pointing to a dip in tourism revenues, disruption of agricultural production and lower business turnovers in the wake of recent political turmoil.

Investor Confidence
Pundits have been quite to point out that a speedy resolution of the current stalemate and rejuvenated investor confidence is key to a speedy economic recovery and renewed momentum in the equity market.

Post Election Violence
The outbreak of post-election violence has eroded investor confidence in the market leading to some of the most aggressive sale of shares at the bourse with retail investors as the most active.

January/February Trades
The market was throughout January characterised by thin trades with retail investors - rushing to liquidate their positions in the short term - as the main sources of supply.

Institutional Investors
Battered investor confidence has seen institutional investors concede that any resumption of normalcy at the stock market depends on a speedy settlement of the political crisis.

Kenya Economy Reeling From Post Election Violence

Economy
The orgy of violence that has greeted Kenya's disputed election result has led to hundreds of deaths and forced tens of thousands to flee their homes.The post election violence witnessed in various parts of Kenya has indeed raised pertinent questions on the resilience of the economy to sustain long periods of civil unrest and violence.

Tourism
Kenya's tourism industry, which brings in some $900m (£455m) a year and attracts more than one million visitors a year, is sure to take a hit after four days of rioting and ethnic clashes. Its relative economic success has been helped in part by its thriving tourist sector, with visitors attracted by its abundant wildlife and pristine beaches.Provisional figures for 2006 from the Kenya's tourist board said the country had received 1.5 million visitors for the year, a growth of 5.2 per cent.

Repercussions
The stalemate over the election results has cost the economy billions of shillings with the repercussions being felt across East Africa.

Bankers Analysis
Several bodies including the Treasury, Nairobi Stock Exchange, Tourism sector, and financial organizations have given their predictions and analysis of the implication of the destruction and sporadic violence that errupted in the country against a backdrop of controvesial presidential elections and delays in announcements.
The effects are indeed immense and portends widespread implication for Kenya as an emerging economy that has recently been rated the fast growing and most preferred by investors seeking emerging markets.

East Africa
The pinch on the economy is not only being felt locally with close to 4B having been lost but has spilt to Uganda, Tanzania Rwanda and Burundi where essential products were not forthcoming as fuel passing through Kenya was unavailable due to closure of roads and violence.

Central Bank of Kenya analysis
Kenya’s economy has grown steadily in the past five years with all indicators pointing out that if the trend was sustained, growth would hit 10 per cent. The economic recovery that started in 2003 has achieved some major milestones and laid down solidly the growth fundamentals. The growth fundamentals laid down have reversed growth decline that had taken years. It is true that the recent violence in some parts of the country could adversely affect the tempo of economic activity, but cannot destroy the growth fundamentals so far laid down. more

Foreign investors
Private investment has been behind Kenya's thriving economy. It has averaged GDP growth of 5% since 2002 and the economy is expected to expand by 7% in 2007 - rates of growth that are only beaten in booming Asian countries such as China.
Kenya's shilling strengthened by 9% against the dollar in 2007 as foreign investors poured into the country's stocks and bonds, but those gains were largely erased when currency markets began trading on Wednesday.

Equity Market
The equity market on the Nairobi Stock Exchange lost 40 billion Kenyan Shillings ($591 million) in value on its first day of New Year trading Wednesday. Kenya has attracted a large number of multi-nationals and is home to one of the world's fastest growing stock exchanges.

Positive Prospects
Expected planned sale of Safaricom shares might stir the market once again back to its feet .