Election blues take huge toll on businesses

Sunday August 13 2017

Traders at Ol Kalou Market, Nyandarua. This week, the food value chain that drives urban and rural economies has been disrupted. PHOTO | JOHN GITHINJI

Traders at Ol Kalou Market, Nyandarua. This week, the food value chain that drives urban and rural economies has been disrupted. PHOTO | JOHN GITHINJI 

By JAMES KARIUKI
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The past week has witnessed serious disruption of economic activities, with many Kenyans staying indoors to monitor election results on social media, radio and television screens.

Badly hit are businesses that had their doors closed over the period, awaiting announcement of the presidential election results and the subsequent reaction. From mama mbogas, mikokoteni pushers, car washers to matatus operators, the story has been the same.

The week has seen food, money transfer outlets and other businesses shut while transport services have been withdrawn, hurting movement of people and goods. Consumers are currently paying heavily to put food on the table.

Now pundits say that sending Kenyans to the polls in August is economically more harmful than during the traditional December date when most companies have closed down for repairs and stock-taking, allowing workers to travel upcountry for the Christmas season.

The Kenya National Chamber of Commerce and Industry called for the election day to be moved back to December, arguing that the August date set by the Constitution was bad for business.

“The first half of the year has been a wait-and-see period. Most businesses will be shut for a week. Yet we’re in the second half of the year. We need to revert to the December date so that we don’t strangle the economy and productivity,” said Mr Kiprono Kittony, who chairs the lobby group.

“Due to past incidents, there’s a justification for business owners to be worried,” Mr Kittony said in an interview on Tuesday.

This year’s exercise also disrupted the education calendar, forcing all institutions to close early, with some universities deferring their activities to facilitate participation of staff and learners in elections.

The business community called for a quick restoration of normalcy, saying further disruption of economic activities would hurt Kenya’s stature globally, driving away investments across various sectors and hurting tourism, which has witnessed a rebound.

“In the interest of lives, livelihoods and prosperity, normalcy should resume immediately. Politicians and leaders from across the divide should be careful with the statements they make as this is a charged atmosphere,” said the business community in a statement released by its lobby Mkenya Daima Initiative.

The initiative’s chairman, Mr Vimal Shah, who heads edible oils and detergents maker Bidco Africa, said Kenyans could not afford to lose another day sitting at home awaiting election results.

Early this month, a large number of people living in Nairobi and other major towns moved their families upcountry fearing an outbreak of violence. In the process, this disrupted the food value chain that drives urban and rural economies.

A spot check on Thursday revealed that prices of foodstuffs such as maize, beans, green grams and vegetables — including onions, tomatoes, carrots and cabbages — had risen, with demand outstripping supply in major markets across Nairobi.

On the regional front, the uncertainty before and after the polls saw Uganda, Tanzanian and Rwandan importers and exporters shift operations to Dar port in Tanzania, hurting Kenya’s Mombasa port — the third busiest facility in Africa.

Releasing their 2017 First Quarter East Africa Trade Report, shipping conglomerate Mersk Line said Kenya’s rising star as a suitable containerised cargo transit point could be dimmed if the August election disrupts operations on the Kenya-Uganda and Kenya-Tanzania trans-shipment corridors.

Mersk’s East Africa managing director Steve Felder said developments on the Northern Corridor highly depend on the Kenyan elections.

Interestingly, many companies across various sectors close for Christmas holidays. It remains to be seen whether the new parliament will revive the elections’ calendar Bill and have the polls date reversed to December.

“Political instability in various regions and the interest rate capping on bank lending rates in Kenya are some of the factors impacting trade on the Northern Corridor,” added the Mersk report.

In its pre-poll month-long assessment of the business environment, Kenya Association of Manufacturers (Kam) noted a slump in demand for non-food items that saw rubber and plastic products manufacturers scale down production.

Fifty five per cent of the companies surveyed deferred capital injection for the remaining part of the year while fresh produce markets around Nairobi also saw vendors reduce orders to curb losses associated with poor demand during the post-election period.

Kam said that owing to fears of violence in some regions, transport service providers had withdrawn from some routes.

In an interview, Gikomba Market secondhand clothes wholesaler Peter Mundi said they had withdrawn credit services, thereby reducing uptake of their products by retailers.

“Most retail traders have built trust with us and usually collect goods on credit and pay later. But during this period, no wholesaler is giving clothes on credit since we are fearful of the polls’ eventuality,” he said.

A survey in Nairobi showed that many shops were shut, with matatus withdrawing services due to reduced demand and fear for violence.