Kenya’s growth prospect remain hostage to the current political environment and is increasingly growing less immune from a potential recession if the current political uncertainty is not addressed.
Businesses have lost almost Sh700 billion in the past four months as due to continued political unrest in the country majorly attributed to frequent disruption of transport and industrial operations, Kenya Private Sector Alliance (Kepsa) has said in a report released thisTuesday.
Investors at the Nairobi Securities Exchange topped the list of losers – having lost Sh227 billion paper wealth in the past six weeks. Market capitalisation dropped from Sh2.54 trillion on August 25 to Tuesday’s Sh2.31 trillion offering yet another measure of the ongoing erosion.
Kepsa Trustee Patrick Obath said in a statement that wholesale and retail businesses have been hard hit by political protests that have become frequent in recent weeks since they are usually the first victims of violence with looting and destruction of their property. Most business have remained closed for the better part of the days the demos are held.
The 2016 MSME survey establishes that 60% of all the 7.4 million MSMEs in Kenya are engaged in Wholesale and Retail trade. This means that the effect of a harsh political environment as is prevailing has serious implications considering MSMEs employ 85% of Kenya’s labor force.
Kepsa’s statement was in line with the Kenya Association of Manufacturers’ (KAM) 3rd Quarter Barometer, which said most factories were operating at half capacity with 47 per cent of those managers indicating possible layoffs if the situation persists.
More than 53 per cent of the industrial firms have also deferred expansion plans with 75 per cent expecting a further dip in profits, the KAM report said.
The Federation of Kenya Employers, another private sector lobby, said its members were shedding off jobs as a survival tactic in the wake of constrained circulation of money and sharp reduction in customer orders.
The report by Kepsa, said transport of people and goods had been adversely affected. Matatu Owners Association reported losses in revenue of up to Kshs 700million in the week following with a daily lose of Sh75 million daily hurting their ability to service loans.