Terrorism, graft and polls big risk issues for 2016

Kenya’s business climate will this year continue to suffer sentiments associated with terrorist attacks, corruption.

Wednesday February 10 2016

Parts of the explosive that was found in the Kutus Catholic Church on December 20, 2015. Terrorism is undermining GDP growth and weighing down overall economic performance in the affected African countries. PHOTO | GEORGE MUNENE | NATION MEDIA GROUP

Parts of the explosive that was found in the Kutus Catholic Church on December 20, 2015. Kenya’s business climate will this year continue to suffer sentiments associated with terrorist attacks, corruption, a shaky judiciary and upcoming general elections. PHOTO | GEORGE MUNENE | NATION MEDIA GROUP 

By EDWIN OKOTH
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Kenya’s business climate will this year continue to suffer from sentiments associated with terrorist attacks, corruption, a shaky judiciary and upcoming general elections.

Control Risks, a global business risk consultancy firm, says these will be the key challenges all businesses need to factor in as they chart their plans for the year.

The “RiskMap 2016” report also highlights some of the most significant trends in global risk, as well as political and security concerns that private and public organisations need to be aware of in 2016.

The firm’s senior managing director for East Africa, Mr Daniel Heal, said terrorism ranks among the five top risks of doing business not only in Kenya but globally. 

“Terrorism is a risk that is not going away. The actual terror attacks aside, a major concern to businesses is the threat of these attacks which has the effect of deterring foreign investors from entry, investment or partnership with Kenya or Kenyan companies,” Mr Heal said.

READ: Eurobond 'noise' may raise Kenya's risk profile

The report says Kenya will suffer from a fruitless anti-graft campaign carried out in all sectors, including from government and the opposition. There will be little or no cultural shift nor a decrease in the prevalence of corruption.

Consequently, the politicisation of the anti-graft narrative is increasing momentum ahead of the 2017 elections, meaning that any prosecution of graft perpetrators would be perceived to be politically skewed.

POLITICAL DYNAMICS

The report anticipates that both national and regional elections will be hotly contested in 2017 and likely to result in a recurrence of electoral malfeasance, including the likelihood of recruitment of youth gangs and militias.

Companies are also likely to come under pressure to meet local demands for benefits like employment. This might play out at the national and county levels, exposing the businesses to a more complex environment than before.

The report, however, says that for cross border businesses, risk will be low because the threat from piracy has subsided.

“Though Somali piracy remains in the headlines, in reality it has gone quiet. After several years as the primary maritime security issue, activity off the coast of Somalia by late 2015 had fallen to just 1 per cent of its 2011 high point and the trend is positive.

"Governments and shipping companies face the challenge of responding to the diminished threat without unravelling the work that helped to curtail the problem,” the reports states.

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