Tag Archives: economy

New Ipsos Kenya poll: Major loss of confidence in institutions; cost of living remains dominant concern

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Today’s release of the latest quarterly “barometer” poll of public opinion from Ipsos Kenya indicates two cross-cutting themes in how Kenyans see public affairs.

First, since November, public confidence has declined in essentially all major institutions, from already generally low levels. Conspicuously, in a measure of progress of reforms under the new constitution, only 12% of Kenyans expressed “a lot” of confidence in the judiciary versus 19% who had “none”.  For the police, 11% had “a lot” of confidence versus 29% who had “none”.

Second, the cost of living remains the most important issue to far and away the largest percentage (50%) of Kenyans. This has been the case for years, and the lack of focus on this issue in the Kenyan and international media, in Kenyan politics and government, and in international policy discussions may well give insight into why Kenyans have little confidence in their institutions. Unemployment (19%) and corruption (9%) are second and third in the “most important issue” question.

See the Ipsos Kenya summary statement and the entire detailed poll presentation.

Worth noting:  Oxford’s Dr. Nicholas Cheeseman offers a critique of ODM’s slide to it’s current low ebb. The latest poll indicates a wide field for a strong opposition party, with continued economic stress facing most Kenyans and little satisfaction with the institutions in power, but ODM will need to find a coherent message and credible voice to rebuild its stature.  The Standard editorializes that “Chaos in ODM is a matter of national concern.”  The Star says “Time for ODM to Re-Invent Itself.”

Also of interest: Andrew Sullivan asks “Why Doesn’t USAID Win Any Friends?”.  Sullivan cites a Reuters piece by Paul A. Brinkley entitled “How to fix foreign aid”:

.  .  .  .

The first step is to end the State Department’s management of foreign assistance, and return to an earlier organizational system in Washington.

The Foreign Service plays a crucial role in the establishment and implementation of U.S. foreign policy. But diplomats are not program executors. The culture of diplomacy, so crucial to negotiation and resolution of conflict, is completely wrong for managing economic development programs. Much less the tactical business development necessary for economic growth.

The primary instrument for implementing foreign assistance, the United States Agency for International Development (USAID), was moved into the State Department in 2005 — in a misguided effort to better align its programs with security and counterterrorism policies. The verdict is now in on this transition. USAID is not effective in carrying out its principal mission: delivering cost-effective outcomes that advance U.S. foreign policy goals.

.  .  .  .

The priority of the State Department — from staffing, to allocation of resources, to a forbidding security posture that inhibits local engagement of war-torn populations — is to fulfill a diplomatic mission. Not to run foreign assistance programs. Realigning organizations, like this move of USAID into State’s sphere, is a poor means of carrying out presidential policy.

Some Notes from Kenya (updated)

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As Kenyans and Kenya watchers in the U.S. are recognizing the increasing number of challenges in the political system in preparing for next year’s critical transition election, another key driver of frustration and instability among the wananchi has been high inflation at a time of slower growth.  There is some positive news in that inflation has continued to arc downward after peaking at over 20% last November.  From The Standard, “Cost of living eases as inflation falls to 5.3%”:

But even as the economy continues to paint a grim outlook, the cost of living dropped with the overall month-on-month inflation falling   to 5.32 per cent in September from 6.09 per cent in August.

According to data from the Kenya National Bureau of Statistics (KNBS), the economy expanded by 3.3 per cent compared to a growth of 3.5 per cent in a similar period last year.

Agriculture and forestry slowed substantially growing by 1.6 per cent compared to a growth of 4.2 per cent in the second quarter of last year.

The decline in performance of agriculture was mainly an outcome of a decrease in exports of cut flowers, fruits, vegetables and tea.

Although job prospects for young Kenyans will remain extremely problematic, some relief from the escalation of staple food prices in particular, if it continues, will help reduce pressure on the poor.

Meanwhile, Members of Parliament took care of themselves by amending the Elections Act to allow “party hopping” as reported by The Star:

The MPs approved the  Election (Amendment) (No 2) Bill and effectively changed Section 34(8) of the Elections Act which required that a member should be in the party list on which to contest the election three months before the list is submitted to the Registrar of Political Parties.

Now the parties are required to submit their lists not later than January 4. Only those on these lists will be allowed to vie or be nominated to the National Assembly or Senate. Those vying as independent candidates however are guided by a different regulation.

The original Act required that members belong to the party through which they will vie for seats by yesterday, which was three months to January 4.

The changes made yesterday mean that the over 100 MPs who want to leave parties which sponsored them to Parliament will serve their full term without any legal challenge.

According to this story from IRIN, the Kenyan Ministry of Agriculture reports that 90% of the food consumed in Kenya comes from smallholder farms. The number of smallholders practicing irrigation has increased from 400,000 to an estimated 700,000 over the past two years, according to the Ministry. Stil just 1.7 percent of the country’s arable land is irrigated, while the UN Food and Agriculture Organization estimates it has 300,000 hectares with irrigation potential.

On the healthcare front, doctors in Kenya’s public hospitals agreed to end their strike in it’s third week as reported by Capital FM from allafrica.com:

Nairobi — The Kenya Medical Practitioners, Pharmacists and Dentists Union (KMPDU) on Thursday called off its three-week strike after the government pledged to address all the grievances that had been raised by the medics.

After talks with the union officials, Medical Services Minister Anyang’ Nyong’o announced that he had revoked all disciplinary measures that the government had taken on the medics for taking part in the strike.

At a joint press conference with union officials at Afya House on Thursday evening, Nyong’o said the government would also release the salaries that had been withheld from the striking doctors.

The meeting agreed to set up a committee that would address the doctors’ grievances, which included demands for fastracking of a return-to-work formula that had been signed to end a similar strike late last year. . . .

While Parliament had continued to fail to prepare to implement the legislative “gender sharing” requirements of the new constitution for the next Parliament, the National Council of Churches of Kenya has selected its first female chairman:

Canon Rosemary Mbogo, the Provincial Secretary of the Anglican Church of Kenya has been elected the National Council of Churches of Kenya (NCCK) Chair.

The position is significant as the Rev. Rosemary is the first woman chair person elected in that capacity since the history of NCCK. Rev. Rosemary will serve in the post for three years. Archbishop TImothy Ndambuki of Africa Brotherhood Church was elected as the Vice Chair. The elections took place during the 61st General Assembly at the Jumuia Conference and Beach Resort, Kanamai in Mombasa. Hundred of delegates from all over the country represented their respective member churches. Currently, NCCK has 26 member churches, among them Methodist Church, Presbyterian Church of East Africa, Africa Brotherhood Church, Episcopal Church of Africa and Evangelical Lutheran Church of Kenya.

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Tariff Tussles–those bales of used clothes and the Kenyan economy

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Sometimes an unheralded item in Nairobi’s business press tells a larger story of policy, politics and economics in Kenya.  Until the 1990s import of used clothing was banned in Kenya.  With liberalization, it was allowed, along with other cloth imports.  Domestic manufacturing has been hurt, thus the Kenya Associations of Manufacturers supports a new tariff increase, but a whole sub-economy itself has grown up around the import and subsequent distribution of the bundles of used clothing:

“Dealers in used clothes brace for hard times as taxman raises duty”

Which way dealers in second-hand clothes? This is the question thousands of traders in used clothes are grappling with as the increased cost of doing business hits home.

After doing booming business for many years, the sector now faces some of its worst challenge which threaten its survival.
The traders should brace for hard times following a decision by the Kenya Revenue Authority (KRA) to raise import duty on used clothes.

The taxman has nearly doubled the duty to Sh2.1 million per container from the previous Sh1.3 million.

The new charges have pushed the cost of each bale to about Sh22,000.
Continued delays at Mombasa port have not helped the situation either as shippers are set to raise charges to factor in extra costs incurred over the clogging.

The shippers want to increase charges on each container by at least Sh70,000, bringing the total cost to Sh495,000.

The trend will force importers to increase the price of clothes to factor in the new charges.

Such a move is likely to be risky for businesses, especially coming at a time when consumers are battling eroded disposable incomes.
Inflation, which is hovering near 20 per cent on the back of high food and fuel prices, has left consumers with little to spend on goods outside essentials such as food.

This means that any rise in prices of clothes could turn off potential buyers, denying traders much needed income. “Already, the number of buyers has decreased over the past six months,” said Solomon Kagwe who sells clothes at Sunbeam, one of the most popular outlets for second-hand clothes in Nairobi’s Central Business District.

.  .  .  .

The trade has led to the setting up of huge markets in the country’s big towns that deal exclusively with used clothes, such as Nairobi’s Gikomba.

Retailers source second-hand clothes from such markets and sell them through stalls and shops across the country. Government statistics show that the second-hand clothes business employs more than 200,000 people countrywide and generates billions of shillings annually for the economy.

“The new tax is going to kill the entire industry.

The way out is to renegotiate with KRA and shippers to bring down the costs,” said Abdi Mohammed who sells second hand clothes at a stall along Moi Avenue in Nairobi. “The government can’t just watch as a whole industry is wiped out,” said Mr Mohammed.

The second-hand clothes sub-sector has not gone down well with investors in the textile industry.

Relocation of factories

The investors together with cotton farmers blame the used clothes sector for leading to closure and relocation of factories leading to job losses over the years.

“Efforts must be put in place to ensure that all second-hand clothes and new garments coming into the country are properly levied in order to reduce unfair competition,” said Kenya Association of Manufacturers CEO Betty Maina.

She said that 41 textile making firms had closed shop in the last three years partly due to an influx of cheap second-hand clothes.

 

Kenya shilling continues to fall after hitting record low; food prices continue to rise

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Economic conditions remain far more challenging in Kenya in the pre-election period than they were in 2006-2007, as policy makers struggle to respond to another 20 percent decline in the Kenya Shilling versus the dollar this year.  Business Daily reports “Kenya shilling falls to 97.20 against dollar”:

At an emergency meeting last week, the Central Bank of Kenya said it would defend the shilling. But some traders said its
absence from the market on Tuesday when the shilling fell through 96.0 for the first time showed its resolve was weak.

“The central bank needs to back up its words,” said another trader. “The trend has been talk big, don’t act.”

Some market players said, however, that if the bank simply offloaded hard currency the reprieve could be short.

“If central bank comes in (to sell hard currency), you may see a reprieve, the shilling may come off its all-time low, but
it’s not sustainable. The shilling will just slip back,” the trader said. “The shilling is on its own.”

Double-digit inflation, deteriorating balance of payments and a crisis of confidence in Kenya’s monetary policy-making
have battered the shilling this year.

Kennedy Butiko, deputy Treasurer at Bank of Africa, said the central bank might not intervene because the shilling’s demise was driven by strong demand for the dollar both at home and abroad.

Another example of the bite of food inflation, also from the Business Daily:

Kenyan households are paying the highest price for breakfast in two years after this week’s double digits rise in the cost of milk.

Leading processors of fresh milk on Monday announced a 10 per cent increase in prices, adding weight to last month’s doubling in the price of sugar and a steep rise in the cost of energy needed to prepare breakfast – the day’s most important meal.

KCC, Brookside and Limuru effected the price changes citing acute supply shortages, and the steep rise in the cost of transportation and packaging.

A half-litre packet of KCC Fresh milk, Ilara and Fresha now sells at Sh33, adding pressure to household budgets – especially at the bottom end of the income bracket.

Some optimistic observations on development and democracy, and some more aid-trade stories

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“A New Dawn for Africa” from Johnathan Dembleby in the Daily Telegraph.

The boss of the call centre was born in Nairobi but left for the States to make his fortune. He became a big player in corporate America but now he is back home, running Kenya’s largest call centre, which has contracts with Britain and the United States as well as domestically. What brought him back? “I saw a chance to make serious money here. If they can do it in India, why not Kenya?” He abhors Africa’s “begging-bowl image” and the cronyism and corruption that bedevil his own country, but he is an optimist. “Of course we need better leadership but Kenya is full of entrepreneurs – that’s the way forward.”
. . . .
There are scores, hundreds, thousands of such examples. It is not yet a flood but it is more than a trickle as a steady stream of African émigrés return to make a better life for themselves and their families in their own countries. This “brain gain” does not yet balance the “brain drain” but it is a symptom that much of Africa is changing for the better. While the fundamental conditions for a thriving economy – the rule of law and transparency – are not yet deeply rooted in any African state, the foundations are at last being nurtured in many of them.
. . . .
Democracy is still a fragile flower but has started to bloom in many parts of the continent including Nigeria. Though instability is a constant predicament, tyrants and military dictators are now the exception not the rule. Freedom of expression, dramatically enhanced by Twitter and Facebook and the ubiquitous mobile phone, is proving exceptionally difficult to suppress except by the kind of brute force that only a tiny minority of African regimes are nowadays willing to exercise. Whether it is for these reasons or because they have been voting with their feet to confirm the latest New Scientist survey – which reports that regardless of their multiple tribulations, Nigeria is home to the happiest people on earth – some 10,000 Nigerians returned home last year. A similar flow is reported in many other countries.

None of this is to magic away the desperate circumstances that millions of Africans endure. Over the past 40 years, I have witnessed far too much hunger and too many deaths from disease, conflict and tyranny to be a Pangloss about this continent. The suffering is heart-breaking, the inequities are offensive, and the corruption is corrosive. My point is that these miseries are very far from being the whole story. The Africans I met on my 7,000-mile journey through nine countries resent the pitying and patronising attitudes that are so often adopted towards them by a Western world which – from their perspective – doles out aid with one hand while nicking the oil and minerals (by which the continent is blessed in super-abundance) with the other.

Again and again, at every level, people told me: “Don’t give us aid – trade with us fairly. Stop ripping us off.” Of course, most of them don’t mean that literally; they simply want a relationship with the rest of the world that is grounded in greater respect and understanding. Well-meaning sound bites like Tony Blair’s “Africa is a scar on the conscience of the world” inadvertently label as “victims” hundreds of millions of energetic and hard-working individuals who are resilient, inventive and enterprising – and who live in vibrant and peaceable communities that have much to teach our own dysfunctional societies.

On the aid front, “Dar rushes to spend $700M as U.S. official jets in”, from The East African. Worth noting that this $700M from the Millennium Challenge Corporation for Tanzania approaches twice the amount of the annual budget for AFRICOM. A BBC report asks five years after the Gleneagles Summit: “Did more African aid deliver fewer coups?”

And back on the entrepreneurial side, see “Trader in grasshopper delicacy hops to fortune” from the Standard.