Economy faces bad weather and terrorism shocks

Money Markets

A vehicle that was targeted by terrorists in Nairobi last Sunday. Photo/FILE 

By Geoffrey Irungu, girungu@ke.nationmedia.com

In Summary

• Kenya's economic growth seen missing the 6.2pc target if the rains do not fall and attacks continue.
• President Uhuru Kenyatta’s government has made public its intention to increase the pace of growth to 6.2 per cent this year – its first full calendar year in office.
• But analysts see the twin risks as continuing to pose a major challenge to the Jubilee government’s ambitions in the coming months.

Bad weather and sustained terrorist attacks have cast a dark cloud over Kenya’s quest to expand its economy by 6.2 per cent this year, analysts said.

Kenya’s farming belt that covers Central and North Rift, and the Western region has received lower than normal rainfall in the past couple of months that usually marks the onset of long rains and the main planting season, putting a damper on growth prospects.

On Tuesday, the Department of Agriculture warned that the production of maize could fall by up to 5.8 million bags if the prevailing weather conditions persist.

Director of crops Johnston Irungu said that should the unfavourable weather conditions persist to the end of the week, most maize fields will be adversely affected diminishing the output.

“Unless rainfall pattern improves before the end of the week, we are estimating that between 15-20 per cent of the projected national output of 29 million bags will be affected,” said Mr Irungu.

READ: Failed rains to cut maize output 20pc

Agriculture is Kenya’s single largest productive sector whose performance has traditionally determined the overall health of the economy.

Its reliance on rain has, however, remained a big window of exposure that the government has tried to fix with the shift to irrigation.

Insufficient rains are also a threat to the supply of the cheaper hydro-electric power that forces the country to rely on expensive thermal power.

Kenya is also struggling with a major security threat in key sectors such as retail outlets and public transport that have come under sustained attacks from the Somalia-based Al-Shabaab terrorist group.

The terrorists captured global attention last September with a deadly attack on a Nairobi mall that left more than 60 people dead and have since continued intermittent attacks on churches and public transport vehicles killing more than 20 people since January.  

Besides the rising number of casualties, the attacks are seen to have a negative impact on key sectors of the economy such as tourism, which lost 2.1 per cent of its earnings last year as tourist arrivals diminished in the wake of security threats.

READ: Long rains failure exposes agriculture sector to losses

President Uhuru Kenyatta’s government has made public its intention to increase the pace of growth to 6.2 per cent this year – its first full calendar year in office.

But analysts see the twin risks as continuing to pose a major challenge to the Jubilee government’s ambitions in the coming months.