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Poll uncertainty adds to Kenya’s business decline

By Otiato Guguyu | Published Wed, September 13th 2017 at 08:03, Updated September 13th 2017 at 08:06 GMT +3

A farmer sorts out maize for shelling. The August elections have been blamed for the current business dip. [Jennifer Wachie, Standard]


If East Africa’s trade can be measured by maize, then the two elections held in Kenya and Rwanda last month gave a clear picture of the impact of polls on the region’s economic hubs.

The two countries had their general elections four days apart and, while both were relatively peaceful, Kenya has been thrown back into the electioneering period by a Supreme Court ruling that annulled President Uhuru Kenyatta’s victory.

According to the Eastern Africa Grain Council’s Regional Agricultural Trade Intelligence (Ratin), the uncertainty of outcomes of the elections, especially in Kenya, led to maize traders and consumers taking a break from the markets to manage risks.

This was reflected by the drop in volumes traded at all entry points.

“Busia, the most active border in the region, was significantly affected by the elections with informal trade dropping by a massive 97 per cent (3,532 tonnes),” says Ratin.

On the other hand, the opposite was observed in Rwanda as Gatuna and Rusizi II borders had an increase in volumes of maize sold, which have persisted to date.

Ratin, however, says that despite the jittery market in Kenya, the relative calm experienced after the elections is expected to lead to a turnaround.

Kenya’s elections have been blamed for a slower growth by the private sector, lobbies and political commentaries.

Issack Abbey, who owns several M-Pesa outlets, says business has slowed even as transactions reduce and purchasing power shrinks.

“In M-Pesa shops we have not been able to keep enough float because when liquidity is low and cash is scarce, we become targets for fraudsters and robbers,” he said.

“People are also not transacting as such and the figures we are getting are that transactions are down 15 per cent to 20 per cent,” he added.

Mr Abbey said that with the uncertainty surrounding the elections, investors were shying away from making decisions while those who do business with the Government are not getting paid or generating new deals.

“There is nothing moving. People are scared of buying stock, it is a very shaky situation,” he said.

While he asserts that elections have a part to play in the slowdown, he also cited banks for reducing their lending, further eroding people’s purchasing power.

Data from the Central Bank of Kenya’s Credit Survey showed the local banking sector’s loan book growth shrunk by 0.84 per cent in June from March when it grew by two per cent. Gross loans shrunk from Sh2.38 trillion in March to Sh2.36 trillion in June.

Kenya Private Sector Alliance (Kepsa), which met President Kenyatta earlier this week, said the election period led to a drastic reduction in imports and exports.

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