The Financial Cost of Kenya's Misadventure

[Che -Guevara]

Ministries face budget cuts to finance war in Somalia

 

By DAVID MUGWE, dmugwe@ke.nationmedia.com (email the author)

 

Posted Wednesday, October 19 2011 at 22:21

 

“The government felt that there was need for this line of action in view of what happened in the past couple of months.”

 

The PS said that although the war would initially pose a challenge to tourism it, will secure the industry in the long term.

 

The war on al-Shabaab comes three months after the Treasury added nearly Sh7 billion on the Ministry of Defence budget, pushing the military’s total spending to Sh51.3 billion.

 

This does not include the Sh13 billion allocated to the National Security Intelligence Service.

 

It also comes on the back of a Sh236 billion budget deficit that Finance minister Uhuru Kenyatta left in his Sh1.2 trillion Budget.

 

Although the full impact of the war on Kenya’s economy is yet to be felt, it is expected to add a new layer of the many shocks the country has faced since January, including exchange rate turbulence and high rate of inflation.

 

The cost of importing goods into East Africa has been going up as shipping companies invest more in security and insurance companies increase their premiums due to increased risk of hijacking in the Indian Ocean.

 

A report by the International Maritime Bureau (IMB) that was released this week shows that the number hijackings off the East African coast dropped by 31 per cent since the beginning of the year indicating that efforts to contain the piracy menace was bearing fruit.

 

Somali pirates only managed to hijack 24 vessels off the country’s coastline in the nine months to September compared to 35 in a similar period last year.

 

Hijackings were successful in just 12 per cent of all 199 attempts this year, down from 28 per cent in a similar period in 2010 when 126 were taken over, the IMB said.

 

Kenya Association of Manufacturers chief executive Betty Maina yesterday told the Business Daily that instability in Somalia was one of the main catalysts of piracy in the region and needed to be dealt with.

 

“Restoring stability to Somalia is critical to lowering the cost of imports,” she said.

 

The Treasury has not indicated which areas of the Budget would be targeted for cuts but Eric Aligula, the programme coordinator at the Kenya Institute for Public Policy Research and Analysis said social spending faced the highest risk if the incursion turned into a protracted war.

 

The cost of maintain a soldier in the battlefield, including the cost of moving the troops, supplying them with food and water, communication and medical care is estimated to cost be Sh7,000 a day.

 

The country could end up spending more than Sh210 million per month or a Sh1 billion every six months to keep 1,000 soldiers in the battlefield.

 

 

continue

[Somalia]

Kenya is going downhill while Uganda is rising. I wish Somalis wouldn't invest in Nairobi and invest in their own country, it isn't all about money.

[Che -Guevara]

Nairobi CBD losing Sh100m daily due to Al Shabaab threats

 

By Felix Olick

 

Nairobi city is losing close to Sh100 million daily due to threats of Al Shabaab, the Nairobi Central Business District Association (NCBDA) has said.

 

A joint statement from NCBDA and security firm, SENACA warns that terrorism in Kenya is real and it is becoming a serious threat to businesses.

 

The NCBDA chairman, Mr Timothy Muriuki said a survey carried out by the organisation indicated a sharp decline in business within the city.

 

He said that activity has gone down in malls, bars and supermarkets due to what he termed as ‘uncalled for fear’.

 

"Some malls that used to record close to 1,000 people especially in the evening are now facing tremendous challenges. At times now, they only have 30 people, half of whom are security officers," said Muriuki.

 

Speaking at International Life House in Nairobi on Thursday, he warned that if the situation is not contained thousands of jobs could be lost.

 

Muriuki challenged business owners to install modern surveillance systems.

 

He said the association would not allow Nairobi, which is the economic hub in the region to operate like the lawless Mogadishu and watch as mega businesses collapse.

 

"We are asking the police to concentrate in preventing proliferation of dangerous weapons through borders. However as citizens we must also be vigilant and weed out suspicious people in our midst," he said.

 

SENACA Group Chief Executive Officer Terry Downes said that businesses in the city must take a leading role in containing the prevailing situation urging businesses to train their personnel on security management.

 

Downess said a number of security personnel manning business premises in the city do not have a clue of what a bomb looks like.

 

He said that that the business community should work in partnership with local security providers to ensure coordinated security within the entire CBD.

 

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