Busi­nesses pre­pare for slow­down over fresh poll

Hos­pi­tal­ity, retail and trans­port suf­fered dur­ing Aug polls as clients stayed away

Business Daily (Kenya) - - ECONOMY & POLITICS - Reuters

It’s much eas­ier to snag a seat in Nairobi’s pop­u­lar Strollers bar these days — a prob­lem that man­ager Stephen Nga­tia partly blames on Kenyan con­sumers hoard­ing their money dur­ing the tur­bu­lent elec­tion pe­riod.

Monthly sales have fallen by half since June, as cau­tious cus­tomers saved cash in case the Au­gust 8 elec­tions turned vi­o­lent and they had to leave town fast.

The Au­gust polls were rel­a­tively peace­ful, but a rul­ing by the Supreme Court nul­li­fy­ing the pres­i­den­tial race and or­der­ing a re-run means many con­sumers are still stay­ing home and sav­ing. The new elec­tion is sched­uled for Oc­to­ber 17.

“Be­cause of the re­peat elec­tion, peo­ple don’t want to spend their money. We are not ex­pect­ing a re­cov­ery un­til maybe in De­cem­ber,” Nga­tia told Reuters.

Kenya’s cap­i­tal­ist tra­di­tion, sta­bil­ity and role as a West­ern ally in a re­gion roiled by con­flict have made it a favoured East African head­quar­ters for in­ter­na­tional firms.

But the pro­longed elec­tion pe­riod is slow­ing growth in the coun­try, East Africa’s rich­est per capita. The gov­ern­ment pro­jected the econ­omy would ex­pand by 5.9 per cent this year, but first quar­ter growth was at 4.7 per cent, mainly due to drought and a slow­down in pri­vate sec­tor credit growth. “The Gen­eral Elec­tion spreads across two quar­ters and it is not clear when po­lit­i­cal ten­sions will ease,” said Irungu Nyak­era, a prin­ci­pal sec­re­tary in the Min­istry of Plan­ning.

The slow­down af­fected busi­ness sec­tors in dif­fer­ent ways. Hos­pi­tal­ity, retail and trans­port all suf­fered as con­sumers stayed home. But tourism and agri­cul­ture, two of the main for­eign ex­change earn­ers, were largely un­af­fected.

The Nairobi bourse lost Sh130 bil­lion ($1.27 bil­lion) over two ses­sions af­ter the Supreme Court judg­ment. It has since re­couped about half of that but the blue chip in­dex, the NSE-20, is still 300 points be­low its year-high of 4114.01 points hit on Au­gust 15. The big­gest firm by mar­ket cap­i­tal­i­sa­tion, telecoms op­er­a­tor Sa­fari­com, said it lost $3-4 mil­lion in rev­enue from its mo­bile fi­nan­cial ser­vices busi­ness, M-pesa, dur­ing last month’s vote. East African Brew­eries, con­trolled by Bri­tain’s Di­a­geo, said busi­ness slowed over elec­tions but de­clined to give de­tails. The retail sec­tor was also hit, said Wam­bui Mbarire, head of the Retail Trade As­so­ci­a­tion of Kenya. Cus­tomers had stuck to buy­ing basics like bread, milk and sugar, where the mar­gins were thinnest, she said.

The trans­port sec­tor lost money. Fuel con­sump­tion in Au­gust de­clined by 10-12 per­cent com­pared to July 2017 due to the slow­down, said the Kenya Pri­vate Sec­tor Al­liance (KEPSA), the main busi­ness lobby.

De­mand for ce­ment, es­ti­mated by in­dus­try ex­ec­u­tives at 500,000 tonnes a month, dropped by 15 per­cent in the weeks around the Aug. 8 vote, said Pradeep Paun­rana, the chief ex­ec­u­tive of ARM Ce­ment, a lead­ing pro­ducer.

PEACE­FUL A voter casts the bal­lot in El­doret on Au­gust 8. FILE

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