Business backs continued separation of Kenya's powers
Friday, 28 December 2007
Barney Jopson, FT Syndication Service
NAIROBI: Business people in Kenya, which has been gearing up for Thursday's presidential election, say the new -government must maintain a hands-off approach to the private sector but take urgent action to tackle transport problems and to streamline decision-making.
Optimism among executives, however, is in short supply. They fear that a second term for Mwai Kibaki would be unlikely to yield big improvements in the business environment while victory for Raila Odinga, his challenger, could herald radicalism and uncertainty.
Kenya has east Africa's most open political system as well as the region's most diverse and energetic economy, powered by a strong manufacturing base and fast-growing tourism, telecoms and horticulture sectors.
Betty Maina, head of the Kenyan Association of Manufacturers, says the chief demand of her members is that the new government should consolidate one of Mr Kibaki's biggest achievements: putting an end to government interference in big business.
Under the venal regime of Daniel arap Moi, his predecessor, executives were regularly strong-armed into dishing out jobs and contracts to enrich the political elite. "You still get requests but it's not so overt," says Ms Maina. "No one is going to use proximity to the president to exert pressure."
The government's laisser faire approach, together with better macroeconomic management, has helped lift economic growth steadily from 0.6 per cent in 2002 to a forecast of about 7.0 per cent this year. The main stock index at the Nairobi bourse has more then trebled since the previous election.
Executives worry that Mr Odinga would disrupt the formula. Fear has been stoked partly by the Kibaki campaign's allusions to his time as a student in communist east Germany and his alleged involvement in an attempted coup in Kenya in 1982. But Mr Odinga has also played a part by complaining that the fruits of economic growth have flowed primarily to Mr Kibaki's Kikuyu tribe, which dominates the business scene.
"Is he a socialist, communist, a democrat, a social democrat?" asked James Wangunyu, vice-chairman of the stock exchange, after a bout of market jitters in October prompted by Mr Odinga's rise up the polls. "Is he likely to nationalise privatised organisations? Is he likely to take wealth from others? How certain are we with a Raila leadership?"
Ms Maina says: "His promises have been promises of expenditure rather than asset accumulation. The concern I've heard expressed about Raila is that the real agenda on business development has not been very effectively spelt out."
Mr Odinga, who has business interests of his own, stresses his belief in the private sector and his opposition to nationalisation.
The message from the Kibaki camp, according to Ms Maina, is: "You know us, you know what we've been doing and what we can do - and frankly we have fewer problems with that."
However, a long-time adviser to foreign companies operating in Kenya says: "This government will be remembered for what it hasn't done, not what it has done. It initially raised huge expectations but the private sector soon woke up to the realisation that if it was going to progress, it would have to do it itself. The roads were awful, so companies had to deal with them. The congested port wasn't going to be fixed, so they had to live with it."
Partly because of poor infrastructure, as well as high crime and a lack of tax incentives, Kenya attracted just $50m (€34.8m, £25m) of new foreign direct investment on average in each of the four years to 2006 - less than a quarter of that which Tanzania and Uganda received.
Mr Kibaki and Mr Odinga both promise the big budget infrastructure investments that business says are needed to lift economic growth to a new level but they are vague both on funding and the mechanics of delivery.
NAIROBI: Business people in Kenya, which has been gearing up for Thursday's presidential election, say the new -government must maintain a hands-off approach to the private sector but take urgent action to tackle transport problems and to streamline decision-making.
Optimism among executives, however, is in short supply. They fear that a second term for Mwai Kibaki would be unlikely to yield big improvements in the business environment while victory for Raila Odinga, his challenger, could herald radicalism and uncertainty.
Kenya has east Africa's most open political system as well as the region's most diverse and energetic economy, powered by a strong manufacturing base and fast-growing tourism, telecoms and horticulture sectors.
Betty Maina, head of the Kenyan Association of Manufacturers, says the chief demand of her members is that the new government should consolidate one of Mr Kibaki's biggest achievements: putting an end to government interference in big business.
Under the venal regime of Daniel arap Moi, his predecessor, executives were regularly strong-armed into dishing out jobs and contracts to enrich the political elite. "You still get requests but it's not so overt," says Ms Maina. "No one is going to use proximity to the president to exert pressure."
The government's laisser faire approach, together with better macroeconomic management, has helped lift economic growth steadily from 0.6 per cent in 2002 to a forecast of about 7.0 per cent this year. The main stock index at the Nairobi bourse has more then trebled since the previous election.
Executives worry that Mr Odinga would disrupt the formula. Fear has been stoked partly by the Kibaki campaign's allusions to his time as a student in communist east Germany and his alleged involvement in an attempted coup in Kenya in 1982. But Mr Odinga has also played a part by complaining that the fruits of economic growth have flowed primarily to Mr Kibaki's Kikuyu tribe, which dominates the business scene.
"Is he a socialist, communist, a democrat, a social democrat?" asked James Wangunyu, vice-chairman of the stock exchange, after a bout of market jitters in October prompted by Mr Odinga's rise up the polls. "Is he likely to nationalise privatised organisations? Is he likely to take wealth from others? How certain are we with a Raila leadership?"
Ms Maina says: "His promises have been promises of expenditure rather than asset accumulation. The concern I've heard expressed about Raila is that the real agenda on business development has not been very effectively spelt out."
Mr Odinga, who has business interests of his own, stresses his belief in the private sector and his opposition to nationalisation.
The message from the Kibaki camp, according to Ms Maina, is: "You know us, you know what we've been doing and what we can do - and frankly we have fewer problems with that."
However, a long-time adviser to foreign companies operating in Kenya says: "This government will be remembered for what it hasn't done, not what it has done. It initially raised huge expectations but the private sector soon woke up to the realisation that if it was going to progress, it would have to do it itself. The roads were awful, so companies had to deal with them. The congested port wasn't going to be fixed, so they had to live with it."
Partly because of poor infrastructure, as well as high crime and a lack of tax incentives, Kenya attracted just $50m (€34.8m, £25m) of new foreign direct investment on average in each of the four years to 2006 - less than a quarter of that which Tanzania and Uganda received.
Mr Kibaki and Mr Odinga both promise the big budget infrastructure investments that business says are needed to lift economic growth to a new level but they are vague both on funding and the mechanics of delivery.