Election riots ‘cost Kenya up to $1bn’

Election riots ‘cost Kenya up to $1bn’
George Obulutsa
Reuters
NAIROBI — Kenya’s post-election violence might have cost the economy up to $1bn, Finance Minister Amos Kimunya said , as Kenyan opposition leader Raila Odinga rejected bilateral talks with the country’s president yesterday.

“It’s an estimate of the slowdown in the economy because of loss of production. My estimate was that about $1b n may have been lost,” Kimunya said. He said the estimate did not factor in destruction by looters who went on the rampage when President Mwai Kibaki was pronounced the winner of the December 27 vote, but did take into account two extra election-related public holidays. “I expect whether it’s within the next couple of months or within a year ... that people will be able to recoup all that,” Kimunya said.

Three days after the election Kenya’s business community said the government was losing taxes worth 2-billion shillings ($30,42m ) a day due to the unrest. But there has been a gradual return to normality in east Africa’s biggest economy, with currency and stock markets reporting higher volumes as trade resumed in earnest this week. The weekly tea auction, which serves Burundi, Uganda and Tanzania among others, resumed on Monday after being postponed. Kimunya later told a news conference the economy was forecast to grow about 7% this year, similar to growth estimates for last year — but slightly lower than the central bank’s projection of 8% growth this year. Official growth figures for last year have not yet been released.
“We are encouraged that Kenyans are actively bringing to an end the recent unrest, and the growth forecast … may not be significantly affected.”

Affected sectors include tourism, transport, telecommunications, agriculture, manufacturing and the financial sector. Kimunya said emergency government relief to the hundreds of thousands of people uprooted by the unrest would not greatly affect its budget deficit, put at 109,8- billion shillings in the 2007-08 fiscal year, thanks to extra revenues. “Fortunately we have also had some windfalls. For example, we sold Telkom Kenya for much more than we expected,” he said. Last month a consortium led by France Telecom paid $390m for a 51% stake in Telkom Kenya. The government had a reserve price of $300m .

Kimunya said higher tax revenue collections would also help cushion the extra spending, while plans for a $300m Eurobond early this year would boost infrastructure projects. Meanwhile, Odinga yesterday rejected bilateral talks with Kibaki, dimming hopes for a breakthrough to end turmoil that has led to almost 500 deaths. Odinga insists on international mediation and a new poll. Kibaki had invited Odinga to talks on Friday, but the opposition leader said he would only go to negotiations mediated by African Union chairman John Kufuor, who was expected in Nairobi yesterday.

“We want to engage in the negotiations under Mr Kufuor with utmost seriousness to make sure no stone remains unturned in the search for electoral justice,” Odinga said.