Guarding economy against Kenya’s election tensions

Kenyans conducting party primaries. Already pockets of violence have been reported. FILE Photo.

What you need to know:

What lies ahead. As Kenya approaches the 4 March election date, the rest of East Africa, particularly Uganda is keenly watching and anticipating that the country does not have a repeat of 2007/08 that nearly forced the region on its knees. The 2007/08 post election violence claimed about 2,000, injured about 10,000 and displaced over 120,000. It caused an acute shortage of supplies to countries including Rwanda, DR Congo and parts of South Sudan.

In less than two months, Kenya will be going to the polls, however, East Africa particularly Uganda remains jittery considering the violence that masked the region after the 2007/08 elections.
After a disputed election in 2007/08, a section of Kenya went haywire, accusing Mwai Kibaki, the then incumbent president of snatching Raila Odinga’s victory.

The resultant melee struck Uganda hard as rioters blocked the movement of merchandise destined for the country and uprooted rail slippers linking Uganda to Kenya.

The violence in equal measure affected trade in Rwanda, DR Congo, Burundi and parts of South Sudan.

All the above landlocked countries apart from South Sudan rely on Mombasa Port as the main link to the sea and an entry point for much of their merchandise and trade.

As rioters took charge of some routes along the northern corridor – blocking road links to Uganda, trade in the country was forced on its knees causing an acute shortage of essential commodities including fuel, sugar and other consumables.

It is understood that the government could have lost Shs1.5 billion in daily revenue collections during the violence, which took about a month to fizzles.

Meanwhile, according to Kacita, about 20 traders lost goods and other properties in the melee amounting to about Shs56 billion.
Fuel prices shot through the roof selling for an average of Shs10,000 for every litre of petrol and Shs7,000 for diesel down from Shs3,300 and Shs2,700 respectively.

With a volatile price environment and the resultant shortage of key commodities, a spike in inflation hurt Uganda’s economy, forcing Kampala into panic as it searched for solutions that could end further damage.

However, upto now, there are so many traders who are yet to be compensated for losing goods and property estimated at about Shs128 billion ($48 million).

The Kenyan government and authorities at the East African Business Council have reportedly been in negotiations that seek to compensate 12 Ugandan and one Rwandese trader who lost their merchandise during the post-election violence.

In an interview with Prosper, Mr Everisto Kayondo, the chairman Kampala City Traders’ Association, said the violence is still fresh in the minds of some traders who five years down the line have not been compensated for the losses incurred in the process.

He says traders who had been told they would be compensated by the Kenya government have been kept waiting with nothing coming their way.

Thus with such a sticky background, it remains to be seen how Uganda has prepared itself in the event that violence breaks out again during or after the March general elections.

The Jinja Fuel Reserves, which had for years remained empty, are some of the major pointers that are likely to vindicate the government on how it is prepared for any eventuality during March.
A recent research conducted by Prosper indicated, according to available information that the reserves would most likely be filled with fuel before the March.

However, it remains to be seen if government will achieve the ultimate goal of filling the reserves this month.
When contacted about the matter, the Energy state minister, Simon D’Ujanga, said: “I can not discuss this matter with you but be sure all thing are being taken care of.”

At the close of last year Mr Bashir Musa, the Hared Petroleum chairman – the lead contractor for the repairs, told Prosper that they expected to complete the works on the reserves before the elections.
The repairs and the subsequent fuel stocking seeks to safeguard Uganda from supply shocks in the event of any form of both short term and long term disruptions.

In regard to developing an alternative sea route to Mombasa, Mr Lawrence Bategeka, a research fellow at the Economic Policy Research Centre, argues that this would be a hard feat for Uganda because this is a venture that is likely to take a long time to achieve.

The Uganda government has been in negotiations with its Tanzania counterpart as the two seek for ways through which Ugandan traders can use the Southern Route [Dar es Salam Port] as an alternative to Mombasa Port.
However, Mr Bategeka says the establishment of the southern route is not an overnight project but rather a long term plan that needs both time and capital investment.

Thus he concludes: “It would be hard for Uganda to divorce itself from any enventuality that might come during or after the elections.”
Mr Gideon Badagawa, the Private Sector Foundation Uganda executive director, is equally worried of events that will fold out in Kenya.
He says: “I fear we will be exposed again because between now and March I don’t see much being done in terms of safeguarding ourselves against any eventuality.”

Nevertheless, the government has for about three years now embarked on the promotion of the southern route that would act as an alternative to Mombasa.

Worth mentioning is the disadvantages associated with the route including cost and distance.
It is understood that the route is more expensive compared to Mombasa.

For instance, a trader would need between $4,100 and $4,500 to transport a 20 feet container from Dar es Salam to Kampala compared to about $3,500 for the same container through Mombasa.
Recently Ms Maria Kiwanuka, the minister of Finance, told traders that the government was working on making the southern route less expensive.

The route’s road network has in the recent past been worked on and negotiations between development partners and the Tanzania government are ongoing to develop the rest of the road network.
Therefore as it appears, Ugandans might have some sense of optimism considering the level of preparedness that has been exhibited this time round.

However, considering what is happening currently it is not easy to dismiss a repeat of 2007/08 as tensions of tribal violence coming from party primaries have already been witnessed.
It would thus be inexcusable if Uganda, which has had about five years to plan, succumbs to the outcomes of the events in Kenya general elections.