Tag Archives: inflation

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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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.

Museveni defends Gaddafi while inflation soars in Uganda

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Museveni reiterated his defense of Gaddafi this week in The Daily Monitor:

President Museveni has reiterated his criticism of the West and attacked Nato for disorganising a friend, whose 42-year rule faces a humbling end.

Speaking at the annual Muslims Iftar dinner at State House, Entebbe on Saturday, Mr Museveni addressed himself on two fundamental issues: The economic crisis at home and the battle for Libya. He accused the West of greed and defended Col. Gaddafi’s mistakes even though, he said, the Libyan leader attempted to go behind his back to hijack his chiefs in Kampala.

“Gaddafi had his own mistakes, he came here and organised my chiefs without telling me. We cancelled that meeting and I warned chiefs because it was wrong,” Mr Museveni said. “But Gaddafi built a mosque for us and as a leader, he had his mistakes, but those Europeans have more mistakes and problems. They think the rest of us are fools except themselves. When there are riots in Africa, they call them pro-democracy and in London, they call them, criminals.”

While inflation in Uganda has hit a 20-year high of 21.4%:

Ugandans will be bracing themselves for even harder times ahead as the continued depreciation of the local currency, rising prices for fuel, essential commodities and food combined to push inflation to a new 20-year high, further threatening the economy’s growth.The Consumer Price Index (CPI) released by the Uganda Bureau of Statistics yesterday indicates that inflation rose from a revised rate of 18.8 per cent in July to 21.4 per cent in August.

This represents a 2.6 percentage point rise, which, though lower than the 3.1 percentage point increase registered in July, still dragged the battered economy over another double digit threshold.

The Director for Macro-Economics Statistics at Ubos, Dr Chris Ndatira Mukiza, said food inflation, which rose to 42.9 per cent from 40.7 per cent, remains the main driver of inflation.

Back in May when Museveni was sworn in for another five year term after 25 years in power, Think Africa Press noted “For the first time in decades, inflation has hit the two digit mark to settle at 11%,” and asked “President Museveni:  Africa’s Marie Antoinette?“

One is reminded of Marie-Antoinette of France. Are these leaders in touch with reality? Do they understand the condition of ordinary people of Uganda? And how many Ugandans really depend on land, and how productive is that land? What percentage of farmers are producing for the market? Even for those who have access to land, can they get all that they need from that land? In any case, the root of this inflation can be traced to the colossal amount of money poured into the country during the recent election campaigns. And this was largely by President Museveni himself.

Let them eat cake . . .

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From the “Corridors of Power” feature in Nairobi’s The Star:

Caddies at Muthaiga Golf Club have reportedly appealed to the club management to rescind their decision to suspend Ugali from the menu. Our mole tells us that the attendants who carry golf clubs for players have been begging to have the staple food reinstated on the menu at least once a week. The golfers banned the meal a few weeks ago when Kenyans under the banner “Unga Revolution” took to the streets to protest high food prices. …

Sorry, but you don’t have to be at all politically to the “left” in the way that would be understood in the United States (or in France today for that matter) to recognize that Kenya has a problem with the divide between the lingering neo-colonial elite and the other, say 99% of Kenyans.  Skyrocketing food prices have continued to be one of the major factors that prevents the typical hard-working, entrepreneurial Kenyan from being able to make it into the new “middle class”.  Poor performance in government over years by officials who, by virtue of their political power have great resources at their personal disposal (and use those resources to perpetuate that power) is a big part of the reason access to affordable food is so unreliable relative to Kenya’s agricultural potential–and in fact, relative to Kenya’s actual agricultural output.  The Muthaiga Club is one of the places these officials like to separate themselves from their constituents.