Jitters as El Nino threatens fresh blow to already bruised economy

Governor Johnson Sakaja interacts with newly-hired sanitation after he unveiled Nairobi's preparedness plan ahead of the El Nino rains. [Denish Ochieng, Standard] Kenya is facing a new shock to its already battered economy, but this time from the weather. El Nino, the naturally occurring climate phenomenon that is predicted to hit the country in the second half of this year, according to local weather officials and experts, could usher more pain and suffering on Kenyans if the government does not prepare for it, analysts say. El Nino is a natural climate phenomenon that fuels tropical cyclones and boosts rainfall and flood risk. The climate pattern in the Pacific Ocean affects weather and will likely contribute to heavy rainfall and potential flooding across the country. And now experts say the stakes are higher for Kenya, which is already confronting swings in food, energy prices and production, and is facing erosion of fiscal buffers that would limit government's ability to cushion the impact. The extreme weather could put a drag on economic growth, with Kenya expected to confront what forecasters say will be one of the worst El Nino spells on record. Forewarned, forearmed; to be prepared is half the victory, goes the quote attributed to the Spanish writer Miguel de Cervantes. But while other countries are racing to prepare for the extreme weather, it seems a different story in Kenya. While the country has known for months about the heavy rains, there has been little preparedness, a spot check by The Standard shows. A peek at past experiences that Kenya has had with El Nino shows that this year's phenomena is a disaster waiting to happen even as government agencies sit and watch. The Meteorological Department has already issued a stark warning. "During the October-November-December 2023, it is expected that most parts of the country will experience enhanced (above average) rainfall that will be fairly distributed in some areas and well distributed in others in both time and space. The forecast also indicates a high probability that some counties in the Northeastern region are likely to experience above-average rainfall," said the Met Department in an update on August 30. The Kenyan economy is listed among the most vulnerable to El Nino's impact this year, according to an index by Standard Chartered Bank, taking into account the weight of the primary sector, the share of food in inflation baskets, and a country's ability to offset through fiscal support. "We believe that the countries most at risk from an El Nino event this year are those that have relatively weak economic fundamentals and that experienced relatively weak agricultural production during the 2014-16 El Nino period," Eugene Klerk, head of ESG Research at Standard Chartered Bank, was quoted saying by Reuters. Failed rainy seasons While El Nino could offer a reprieve to the country, which recently suffered five consecutive failed rainy seasons, sudden changes in rainfall or temperature can wreak havoc on crops. Although sizeable damage to crops is expected, the government has been silent at least publicly on efforts to mitigate this. With agriculture accounting for more than half of the share of the economy, the report sees Kenya as especially vulnerable to a possible El Nino fallout. Food prices make up a larger share of the consumer price index (CPI) basket of Kenya - so El Nino's severity or possible destruction of crops is set to directly impact inflation. A spike in food prices would squeeze incomes as food is the most heavily weighted component in the CPI. Any faltering farm production threatens to cloud the outlook for growth and rekindle inflation. Overall, inflation in Kenya declined to 7.3 per cent in July 2023 from 7.9 per cent in June, driven by lower food and non-food non-fuel inflation. The inflation rate returned to the target range of 2.5 per cent to 7.5 per cent. The International Monetary Fund (IMF) has already warned that this year's El Nino weather pattern would affect crop yields and the ability of people to work. Kenya is bracing for massive harvests in its key food baskets such as western Kenya and the Rift Valley. The Food and Agriculture Organisation (FAO) noted recently that while the El Nino rains could improve food production, households risked losing this food, livestock and other property to the floods that will come with the heavy rains. This would be costly for households that are yet to recover from the drought-induced high cost of living, Covid-19 and other recent shocks. "El Nino-induced above-average rainfall could support the recovery from the ongoing drought conditions experienced in the region, improving crop and livestock production. However, such rains can also result in heavy rainfall episodes, flooding and landslides especially in eastern Ethiopia, Kenya, Somalia and southern Uganda," said FAO in an action plan offering governments in East Africa pointers as to how to prepare for the El Nino titled Anticipatory Action and Response Plan for August-December 2023. "Therefore, households that have already experienced back-to-back shocks over the past several years face an increased risk of additional crop and livestock losses, infrastructure damages, population displacements and water-borne diseases. This includes cholera, which is already a major source for concern across the region. "After a drought and especially when there is no time to transition between droughts and floods, livestock are often nutritionally challenged and stressed, leading to reduced immune system functioning, increasing the likelihood of diseases. Furthermore, wet conditions enhance the probability of vector-borne diseases." The El Nino phenomenon is not new to Kenya, having experienced it in 1997/98, 2006 and in 2015. The El Nino that struck the country at the end of 1997 and early 1998 was perhaps the most devastating, causing widespread destruction in the country, including the death of some 50 Kenyans. Several thousand people were displaced and large numbers of livestock dead or dying, all blamed on the flooding. According to a past World Bank report, drainage systems in cities like Nairobi were quickly overloaded and then swept away, along with major portions of the rural road system and water points. "By far the most severely impacted parts of the country are in the eastern regions, at lower altitudes and closest to the Indian Ocean coastline. There, whole districts were cut off from the rest of the country as low-lying land areas became, and remained for some time, flooded and bridges and roads were totally destroyed," said the World Bank, which in 1998 advanced money to Kenya to help in recovery from the devastating rains. "Water supplies were either lost or contaminated, food production in normally self-sufficient areas ceased, and outbreaks of water-borne diseases overwhelmed the available health services. "Local authorities were not prepared to cope with the aftermath for want of warning and resources. In November 1997, the government declared 17 districts (nearly one third of the total in the country), most of them in the east, disaster areas and appealed to the international community for humanitarian assistance. "Emergency deliveries of food and medicines began almost immediately with available local funds and transportation dedicated to relieving the immediate consequences of the floods." On Monday, Nairobi Governor Johnson Sakaja said at least 3,500 Nairobi youth have been contracted to clean the capital as the city anticipates El Nino rains. Kenya's medium-term growth remains bright as the economy recovers from a poly-crisis of global and domestic factors. National Treasury Cabinet Secretary Njuguna Ndung'u earlier said that Russia's invasion of Ukraine had affected regional economies by slowing growth and jacking up inflation, in turn increasing the cost of living and shrinking the fiscal space. "What was a promising post-COVID-19 economic recovery is now overshadowed by new shocks and vulnerabilities," he said earlier. "East African countries are grappling with the effects of these headwinds at a time when we should be consolidating policy actions to accelerate structural transformation to promote inclusive growth and build resilience across different sectors."

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