Kenya looks for economic peace reward after calm vote

Nairobi – Kenya’s tourism industry may be a swift winner from the election of Uhuru Kenyatta, owner of hotels and a vast business empire, as East Africa’s biggest economy seeks to benefit from a vote that avoided a re-run of bloodshed of five years ago.
A tourist rides on a camel’s back at the Jomo Kenyatta public beach in Kenya’s coastal city of Mombasa. Kenya’s tourism industry may be a swift winner from the election of Uhuru ....
A tourist rides on a camel’s back at the Jomo Kenyatta public beach in Kenya’s coastal city of Mombasa. Kenya’s tourism industry may be a swift winner from the election of Uhuru ....

Nairobi – Kenya’s tourism industry may be a swift winner from the election of Uhuru Kenyatta, owner of hotels and a vast business empire, as East Africa’s biggest economy seeks to benefit from a vote that avoided a re-run of bloodshed of five years ago.

Tourism is a vital sector for the nation of more than 40 million people and was one of the worst hit after a disputed presidential poll in December 2007 led to weeks of tribal blood-letting, scaring away investors and tourists by the planeload.

This time, a row over who won the vote was led by lawyers instead of armed thugs. A reformed judiciary that reviewed the case commands more respect than it ever did, a victory for the rule of law that could also lift business confidence.

As well as seeking more visitors, Kenya wants oil and gas investment to develop hydrocarbon discoveries, funds for a major new port planned in Lamu and other infrastructure, and investors to boost the nation’s position as a regional manufacturing hub.

“Kenyan investment plans previously put on hold because of election-related uncertainty are now likely to be realised,” said Standard Chartered economist Razia Khan.

“Foreign investment may take a while longer to see a meaningful increase but that should also start to rise in the near-term.”

Old problems that annoy business, such as corruption and red tape, have not changed with Saturday’s ruling that confirmed US-educated Kenyatta won in a fair vote against Raila Odinga, who studied in the former communist state of East Germany.

From the small-time shopkeeper who ran down stocks for fear of looting, to five-star hotel, executives fretting about reservations, the nightmare of another spasm of violence has been averted.


“We have clients who were watching to see the outcome of the petition and the reaction that would follow,” said Mohammed Hersi of luxury Whitesands Hotel, Mombasa’s biggest resort.

“Now we are good to go. We definitely will have more bookings.”

Some businesses said 51-year-old Kenyatta, whose family owns the Heritage Group of hotels that range from a beach resort in Mombasa to an Indian Ocean island hideaway in Lamu, could be a boon for tourism. His family’s empire extends to dairies, a major bank and education.

“When Kenyatta was chairman of Kenya Tourism Board (KTB), he was someone we could talk to,” said Suresh Sofat, chief executive of Somak Travel, one of Kenya’s biggest tour firms. “He understood tourism...”

Aides of Kenyatta, son of Kenya’s founding president, talk of looking east if Western nations spurn their president.

But both sides may work hard to avoid that. Chinese imports may almost match those from Europe, but 26 per cent of Kenyan exports in 2011 headed to the European Union compared to 0.7 per cent that went to China.

“We have been partners for many years, we will continue to be partners for many years,” said one European diplomat in Nairobi, adding that it was ‘not realistic’ for Kenya to swiftly switch its economy towards China.

Chinese influence has grown sharply across Africa, Western firms may push to ensure their position in Kenya is not eroded. Big names in the country include Diageo, Vodafone, Tullow and Canada’s Simba Energy.

Kenya’s economy took a pummeling five years ago when weeks of post-election violence led to the killing of more than 1,200 people. About 350,000 people were displaced from their homes.

Positive sentiment


Growth has still not returned to the 7 per cent level it reached in 2007 before the bloodbath began. The economy grew 4.5 to 5 per cent in 2012, the International Monetary Fund estimated, forecasting before the election that it could reach at least 5.5 to 6 percent in 2013. Prospects could now improve further.

“We expect to see increased capital inflows, especially foreign direct investment,” Finance Minister Robinson Githae said soon after Kenyatta was declared winner on March 9. Even as his victory was challenged in court following the calm voting on March 4, Kenya seized on positive sentiment to announce plans for a debut $1b Eurobond.

Kenya’s initial plans to issue a $500m Eurobond were delayed by the post-election violence in early 2008.

Tourism earned Kenya $1.1b in 2012 and was the third biggest foreign exchange earner behind tea exports ($1.31b) and remittances from Kenyans abroad ($1.2b). But the industry is particularly valuable because it is a big employer, vital for a nation with an expanding population.

Kenya drew in 1.23 million tourists in 2012, far fewer than the eight million or so a year that visit South Africa, a nation that offers a similar mix of beach resorts and safaris.

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