POLITICS AND THE ECONOMY
The current political stalemate has seen the country steadily plunge into an incipient economic crisis. Together with other factors like drought and the exponentially rising public debt, we are falling into the abyss economically. The national debt as of now stands at about Ksh 4.42 trillion and counting, meaning that Kenya borrows Ksh 86Bn monthly is negatively impacting on the economy. The figure, analysts say, is more than half of the country's GDP.
Since the Supreme Court's ruling on September 1st that annulled the presidential election, there has been a major political standoff between the ruling Jubilee party (JP) and the opposition coalision (NASA) with both holding tough stances as to when and how the repeat-elections must be held. The Independent Electoral and Boundaries Commission (IEBC) slated the repeat elections on October 26th, 2017.
Jubilee has since sort to ammend the election laws in a move deemed to seal the ''loopholes'' while NASA has taken to the streets demanding among other "irreducible minimums", an overhaul of the IEBC whose officials are accused to have conspired with JP to rig the election in favour of the incumbent President Uhuru Kenyatta. The opposition Chief Hon. Raila Odinga has threatened a "no elections" should their demands not be satisfactorily addressed. Nationwide peaceful demonstrations have hitherto been carried out weekly on Mondays and Fridays, something that isn't going down well with the business community which has complained of losing their goods to looters masquerading as protesters and property destruction. A good example, sadly, is a case where Tumaini Supermarket was broken into during the demos and goods of unknown value made away with. They have also been forced to close down their shops thereby cutting their profit margins due to low sales volume.
The transport sector is also not spared as major public roads are blocked by the demonstrators. As a consequence, stability of the economy is threatened owing to low income if any to help sustain it. Most businesses also operate on loans from banks and other financial institutions and hence reduced profit margins or losses hinders them from repaying their debts thus end up defaulting. Figures from the Central Bank of Kenya put nonperforming loans (NPL) at Ksh 230.6bn this year, approximately 10.4 pc up from 9.9pc according to Financial Standard magazine. This has seen banks repossess property attached as security by the defaulters as a way to recover their money. Mr. Muiriri George, the managing director of Leakey's Auctioneers in Nairobi, says the number of auctions they hold per month has increased to 10 from 4 the previous year. Analysts say that Kenya's economic growth has fallen to 5pc in the 2nd quarter of 2017, below the initially stated forecast of 5.5 pc by the World Bank.
This is a bad state for Kenya, being the regional headquarters of global companies like IBM, Google and General Electronic. "The number of vehicles in our possession has hit about 1500 cars. A figure that is almost twice what we had in 2016." Says Mr Muiruri. What's more worrying is the fact that even with the high number of auctions, there are no prospective buyers since there is no free flow of money and consumers are hence not willing to buy luxuries. The dwindling economy has seen banks slow lending with some announcing job cuts and putting on hold new employee recruitment while others have shut their branches therefore hurting the economy. It is worth noting that the financial sector contributes approximately 10pc to the country's GDP. Other once large retailers like Nakumatt have shut down more than six of their major branches countrywide. Many businesses now want the elections over before they can make further investments , having in mind the 2007/08 PEV.
The current political stalemate has seen the country steadily plunge into an incipient economic crisis. Together with other factors like drought and the exponentially rising public debt, we are falling into the abyss economically. The national debt as of now stands at about Ksh 4.42 trillion and counting, meaning that Kenya borrows Ksh 86Bn monthly is negatively impacting on the economy. The figure, analysts say, is more than half of the country's GDP.
Since the Supreme Court's ruling on September 1st that annulled the presidential election, there has been a major political standoff between the ruling Jubilee party (JP) and the opposition coalision (NASA) with both holding tough stances as to when and how the repeat-elections must be held. The Independent Electoral and Boundaries Commission (IEBC) slated the repeat elections on October 26th, 2017.
Jubilee has since sort to ammend the election laws in a move deemed to seal the ''loopholes'' while NASA has taken to the streets demanding among other "irreducible minimums", an overhaul of the IEBC whose officials are accused to have conspired with JP to rig the election in favour of the incumbent President Uhuru Kenyatta. The opposition Chief Hon. Raila Odinga has threatened a "no elections" should their demands not be satisfactorily addressed. Nationwide peaceful demonstrations have hitherto been carried out weekly on Mondays and Fridays, something that isn't going down well with the business community which has complained of losing their goods to looters masquerading as protesters and property destruction. A good example, sadly, is a case where Tumaini Supermarket was broken into during the demos and goods of unknown value made away with. They have also been forced to close down their shops thereby cutting their profit margins due to low sales volume.
The transport sector is also not spared as major public roads are blocked by the demonstrators. As a consequence, stability of the economy is threatened owing to low income if any to help sustain it. Most businesses also operate on loans from banks and other financial institutions and hence reduced profit margins or losses hinders them from repaying their debts thus end up defaulting. Figures from the Central Bank of Kenya put nonperforming loans (NPL) at Ksh 230.6bn this year, approximately 10.4 pc up from 9.9pc according to Financial Standard magazine. This has seen banks repossess property attached as security by the defaulters as a way to recover their money. Mr. Muiriri George, the managing director of Leakey's Auctioneers in Nairobi, says the number of auctions they hold per month has increased to 10 from 4 the previous year. Analysts say that Kenya's economic growth has fallen to 5pc in the 2nd quarter of 2017, below the initially stated forecast of 5.5 pc by the World Bank.
This is a bad state for Kenya, being the regional headquarters of global companies like IBM, Google and General Electronic. "The number of vehicles in our possession has hit about 1500 cars. A figure that is almost twice what we had in 2016." Says Mr Muiruri. What's more worrying is the fact that even with the high number of auctions, there are no prospective buyers since there is no free flow of money and consumers are hence not willing to buy luxuries. The dwindling economy has seen banks slow lending with some announcing job cuts and putting on hold new employee recruitment while others have shut their branches therefore hurting the economy. It is worth noting that the financial sector contributes approximately 10pc to the country's GDP. Other once large retailers like Nakumatt have shut down more than six of their major branches countrywide. Many businesses now want the elections over before they can make further investments , having in mind the 2007/08 PEV.
Comments
Post a Comment