Revealed: The full cost of poll violence

The full impact of the post-election violence on the economy was on Monday laid bare in a Government report, which lists tourism, manufacturing, transport and agriculture as the sectors which declined most.

The report by the National Bureau of Statistics also says that the economy will grow by only 2.1 per cent this year and not the 6.3 per cent that the Government had projected.

This means that there will be increased unemployment and that businesses in key sectors will not reap as handsome profits as they did last year.

Experts said the effects of violence were likely to haunt Kenya for a long time to come. The situation has been worsened by the global economic slowdown which has hit hitherto strong economies like the US and EU.

According to the Bureau of Statistics, tourism was the biggest loser, declining by 34.7 per cent. Hoteliers are feeling the pinch the most as the number of visitors has declined significantly.

It was followed by agriculture, which fell by 4.7 per cent this year yet it had declined marginally by 0.3 per cent last year.

The decline in agriculture is already being felt in the rising food prices and the shortage of maize, which has compelled the Ministry of Agriculture to seek the importation of three million bags of maize.

In tourism, hoteliers are feeling the pinch as the number of tourists declines.

New figures indicate that manufacturing shrunk by 0.7 per cent this year, yet it grew by 7.5 per cent in 2007. This is a significant decline, which means that more people lost their jobs.

However, the chairman of the Kenya Association of Manufacturers, Mr Vimal Shah, remained optimistic that consumers’ purchasing power will improve as inflation stabilises.

In the third quarter of the year, manufacturers had said that their businesses would close, leading to lose of about 80,000 jobs, due to the high cost of electricity and other expenses that had raised the cost of doing business.

The cost of electricity is expected to reduce next month, with fuel prices easing after reaching historically high levels mid this year.

According to the new report, the transport and communication sector recorded a marginal growth of 0.1 per cent compared to the more robust 13.4 per cent recorded last year.

This sector gives indications on the level of business activity. A decline signals reduced business, which translates to few jobs.
In the sector by sector analysis, hotels and restaurants alone recorded a decline of 34.7 per cent.

Kenya Association of Hotelkeepers and Caterers CEO Mike Macharia said: “As at December last year, we used to receive up to 41 chartered flights weekly in Mombasa. After the election violence, we hardly received three. And today, we received a paltry 11.”

Each chartered flight carries about 300 tourists.

Statistics indicate that the number of tourist arrivals and departures has decreased considerably.

Mr Macharia said the situation was unlikely to improve in the coming year. “At around this time next year, we envisage a decline in the number of tourists coming to Mombasa,” the official said.

According to him, when flight plans are changed, the concerned agents usually start marketing new destinations.

“To bring them back will take not only serious convincing of the companies organising the flights, but, them to convince the tourist as well. That is why we are not envisaging a recovery any time soon,” he said.

On agriculture, the Kenya National Bureau of Statistics indicated that the sector recorded a decline of 4.7 per cent in the third quarter of 2008 compared to a decline of 0.3 per cent over a same period last year.

The trend was blamed on low food production due to unfavourable conditions in the first six months of 2008.

Over that period, agricultural activities were disrupted by poll violence, especially in Rift Valley Province. Parts of the province considered as the “bread-basket” of the country, including Uasin Gishu, were hard-hit by the violence. Matters were worsened by the high cost of agricultural inputs that followed.

Agriculture PS Romano Kiome yesterday declined to comment on the figures, saying, his ministry was about to release its own economic survey, probably before the end of the year.

“Horticulture has done extraordinary well contrary to our expectations given the post-election violence as did the dairy sector,” he said.

According to the Statistics bureau, cut flower exports rose to 19,316 metric tonnes, representing a 1.9 per cent growth, while vegetables and fruits exports stood at 19,611 and 5,258 metric tonnes respectively. This represented declines of 16.5 per cent and 5.2 per cent respectively.

There was improved growth in tea production but, according to Dr Kiome, “selling tea in the global market was difficult because of lack of money.”

He said the biggest decline was recorded in cereals due to unpredictable weather, high cost of farm inputs and the post-election violence.

“But, the overall decline in agriculture cannot be huge,” he said.

In manufacturing, the production of food, beverages and tobacco dropped by 2.9 per cent compared to a growth of 9.1 per cent in a similar period last year.

This decline is mainly attributed to reduction in the production of wheat flour, domestic sugar and milk. However growths were realised in the production of beer, cigarettes, mineral water and soft drinks.

Economics professor Frias Mwega said the false start of the year affected all major sectors of the economy.

“With the current global crisis, stock markets went down and that too affects the growth domestic product,” he said.