Post by Ed on Jun 19, 2007 9:37:18 GMT 3
KENYA: Uneven spoils of economic revival
By Barney Jopson, Financial Times
Published: Jun 13, 2007
From the unconventional platform of a wheelchair, where he sat with one leg in plaster, President Mwai Kibaki roused Kenyans four-and-a-half years ago with a pledge to rebuild a country ravaged by mismanagement and corruption.
He had won a crushing election victory over the protégé of his predecessor, Daniel arap Moi, a few weeks after being injured in a car crash.
"You have asked me to lead this nation out of the present wilderness and malaise to the promised land." Mr Kibaki told hundreds of thousands of people squeezed into Nairobi's Uhuru park. "And I shall."
The end of Mr Moi's venal regime, which had sapped the country's spirit, released a wave of euphoria. Expectations were sky-high. This year comes the reckoning. Before the end of 2007, and most probably in December, Kenyans will vote in another presidential election in which the 75-year old incumbent is expected to stand once more. If the fractious opposition unites behind a single candidate, he is likely to face a tight race.
The record of the Kibaki administration is mixed - and judged wildly differently depending on where you are in the social strata and whether you live in the country's parched semi-desert north, its lush central highlands or the muggy coast. To its critics it has failed to deliver on key issues such as corruption and crime.The ruling coalition has often appeared paralysed by division, while Mr Kibaki's grip on the tiller has been a matter for debate amid persistent worries about his health.
For the private sector, however, the Kibaki era has helped to advance one significant change: a gradual delinking of business from the melodrama and intrigue of politics. In the lean years of the 1990s many Kenyan businesses had to restructure and spread beyond national boundaries to survive. With a more laissez-faire administration in power, some are now beginning to thrive.
Titus Naikuni, chief executive of Kenya Airways, the country's flagship carrier, says: "I think we've sort of separated the politicians, who are making noise, from those of us who want to make money. Because the politicians realise that without this money we won't have development." Of the election, he says: "It's time people realised Kenya has become very mature, in the sense that the business community couldn't care less about what happens. I don't put our business plans in place based on whether we're going to elect Kibaki or someone else."
Such attitudes go some way to explaining why Kenya's economy, dominated by agriculture, light manufacturing and tourism, is looking sprightly compared with its wretched performance in the 1990s. From a paltry 0.6 per cent in the final year of Mr Moi's rule, annual gross domestic product growth has risen steadily and last year hit 6.1 per cent.
Kenya's young stock market has also been buoyed. The Nairobi stock exchange's main index soared 432 per cent in a four-year period that kicked off just after the 2002 election and, following an abrupt correction this year, has stabilised.
While industry battens down the hatches in many African countries ahead of polls, business confidence in Kenya appears to be growing. Yet it is a moot point whether economic growth, promoted by the president as the best in 30 years, has come in spite of, or because, of the government. The Kibaki administration has not launched any sweeping reforms. But the peaceful transition to a different regime inspired a fresh optimism in the country.
Three things, broadly, have created a better environment for business. The first is a decline in political interference in company affairs. Second, the government has begun to tackle a mass of rules and regulations that are stifling productivity and innovation, most notably a thicket of 1,325 business licences required for all manner of things. Dozens have been cut or simplified already and Amos Kimunya, the finance minister, says he wants no more than 400 to remain.
Nicholas Nesbitt, chief executive of KenCall, a call centre group, says: "The government has said: 'We have to create an environment for business and get out of the way.' But it does take a while to get out the way because some politicians think differently."
Third is macroeconomic stability. Though the government is probably claiming credit for the results of some measures putin place during the Moi era, underlying inflation, interest rates and the value of theshilling have steadied. The risk of nasty economic shocks has thus fallen, giving industrialists more confidence to plan and invest for the future.
Some of the more basic foundations for growth, however, are part of the country's fabric. Beyond its sunshine-and-safari image, Kenya has long had a more developed industrial base than its neighbours.
It has a stronger bankingsector, a reasonably deep wellof management and labourskills, and multinationals suchas Barclays, Unilever and Diageo have had big operations in the country for years. It is east Africa's biggest economy and a pivotal trade hub. It has been largely free of the big ethnicconflicts that have beset mostof its neighbours, and it is not
search.ft.com/ftArticle?queryText=Kenya&y=4&aje=true&x=15&id=070613000209
By Barney Jopson, Financial Times
Published: Jun 13, 2007
From the unconventional platform of a wheelchair, where he sat with one leg in plaster, President Mwai Kibaki roused Kenyans four-and-a-half years ago with a pledge to rebuild a country ravaged by mismanagement and corruption.
He had won a crushing election victory over the protégé of his predecessor, Daniel arap Moi, a few weeks after being injured in a car crash.
"You have asked me to lead this nation out of the present wilderness and malaise to the promised land." Mr Kibaki told hundreds of thousands of people squeezed into Nairobi's Uhuru park. "And I shall."
The end of Mr Moi's venal regime, which had sapped the country's spirit, released a wave of euphoria. Expectations were sky-high. This year comes the reckoning. Before the end of 2007, and most probably in December, Kenyans will vote in another presidential election in which the 75-year old incumbent is expected to stand once more. If the fractious opposition unites behind a single candidate, he is likely to face a tight race.
The record of the Kibaki administration is mixed - and judged wildly differently depending on where you are in the social strata and whether you live in the country's parched semi-desert north, its lush central highlands or the muggy coast. To its critics it has failed to deliver on key issues such as corruption and crime.The ruling coalition has often appeared paralysed by division, while Mr Kibaki's grip on the tiller has been a matter for debate amid persistent worries about his health.
For the private sector, however, the Kibaki era has helped to advance one significant change: a gradual delinking of business from the melodrama and intrigue of politics. In the lean years of the 1990s many Kenyan businesses had to restructure and spread beyond national boundaries to survive. With a more laissez-faire administration in power, some are now beginning to thrive.
Titus Naikuni, chief executive of Kenya Airways, the country's flagship carrier, says: "I think we've sort of separated the politicians, who are making noise, from those of us who want to make money. Because the politicians realise that without this money we won't have development." Of the election, he says: "It's time people realised Kenya has become very mature, in the sense that the business community couldn't care less about what happens. I don't put our business plans in place based on whether we're going to elect Kibaki or someone else."
Such attitudes go some way to explaining why Kenya's economy, dominated by agriculture, light manufacturing and tourism, is looking sprightly compared with its wretched performance in the 1990s. From a paltry 0.6 per cent in the final year of Mr Moi's rule, annual gross domestic product growth has risen steadily and last year hit 6.1 per cent.
Kenya's young stock market has also been buoyed. The Nairobi stock exchange's main index soared 432 per cent in a four-year period that kicked off just after the 2002 election and, following an abrupt correction this year, has stabilised.
While industry battens down the hatches in many African countries ahead of polls, business confidence in Kenya appears to be growing. Yet it is a moot point whether economic growth, promoted by the president as the best in 30 years, has come in spite of, or because, of the government. The Kibaki administration has not launched any sweeping reforms. But the peaceful transition to a different regime inspired a fresh optimism in the country.
Three things, broadly, have created a better environment for business. The first is a decline in political interference in company affairs. Second, the government has begun to tackle a mass of rules and regulations that are stifling productivity and innovation, most notably a thicket of 1,325 business licences required for all manner of things. Dozens have been cut or simplified already and Amos Kimunya, the finance minister, says he wants no more than 400 to remain.
Nicholas Nesbitt, chief executive of KenCall, a call centre group, says: "The government has said: 'We have to create an environment for business and get out of the way.' But it does take a while to get out the way because some politicians think differently."
Third is macroeconomic stability. Though the government is probably claiming credit for the results of some measures putin place during the Moi era, underlying inflation, interest rates and the value of theshilling have steadied. The risk of nasty economic shocks has thus fallen, giving industrialists more confidence to plan and invest for the future.
Some of the more basic foundations for growth, however, are part of the country's fabric. Beyond its sunshine-and-safari image, Kenya has long had a more developed industrial base than its neighbours.
It has a stronger bankingsector, a reasonably deep wellof management and labourskills, and multinationals suchas Barclays, Unilever and Diageo have had big operations in the country for years. It is east Africa's biggest economy and a pivotal trade hub. It has been largely free of the big ethnicconflicts that have beset mostof its neighbours, and it is not
search.ft.com/ftArticle?queryText=Kenya&y=4&aje=true&x=15&id=070613000209