It has been described as the greatest movement of people since the Second World War – hundreds of thousands of desperate people taking huge risks in order to gain entry into Europe. The international media regales us daily with their plight but few realise that the largest refugee camp in the world is located in Kenya – Dadaab – which has been in existence for around 25 years.
REFUGEE OR ECONOMIC MIGRANT?
There are many hundreds of thousands now on the move, not because they are necessarily in immediate fear of their lives but because they are in search of economic betterment for themselves and their families. That is a noble ambition and no one can be faulted for seeking a better future.
According to the UN, fully half of all the population increase globally in the next 35 years is expected to be in one continent, Africa. What is more, that increase will mainly be in poorer, less stable countries, alongside a massive growth in numbers from the war-torn areas of the Middle East, such as Yemen and Iraq.
The grim fact is that migration and terrorism go hand in hand and that Europe now has in its midst many people whose lives are devoted to doing society harm and many more who are susceptible to the lies being told.
THE THREAT OF TERRORISM
The recent horrific terrorist attacks in France have added a new dimension to the crisis and one that has meant the focus of EU policy will now be less on the migration issue and more about heightened security concerns. There are undoubtedly links between the two, as most of the perpetrators appear to have been trained in Syria and a couple even travelled by boat across the sea as refugees to land in Greece and then move their way on to France.
What the world is now faced with is a hysterical death cult which has fallen on the fertile ground of global circumstances – chaos in the Middle East, confusion and a lack of resolve in the West. The indiscriminate mass murder of civilians must put an end to discussions about alternative ways of living and the sane people of the world will need to join together now to stamp out this evil threat to civilised life.
THE INTERNATIONAL ORDER
The tides of humanity washing up on Greek and Italian shores, driven by the violence in Syria and northern Africa, underlines the utter failure of international institutions and accords put in place since the end of the second World War, either to forestall such crises or solve them when they explode.
Basically, almost everywhere, policymakers have run out of road and have no idea what to do next – a real lack of international leadership when it is so desperately required.
THE EUROPEAN UNION
An “action plan” devised by EU leaders to strike a deal with African counterparts over the migration crisis it currently faces can be summarised as follows : “take back your huddled masses, and send us instead your students, researchers and entrepreneurs and we will give you lots more money”.
A new agenda needs to be forged and, whilst there is clearly no simple solution, it does seem that greater efforts need to be made to tackle the problems at source. Intervention did not work in Iraq or Libya but no-one could sensibly argue that non-intervention is currently working in Syria. It is time for some new, more innovative thinking.
THE DOHA ROUND
The WTO’s 10th Ministerial Conference will be held in Nairobi, the first time one has been held on the African Continent, from 15th to 18th December. It will be chaired by Kenya’s Cabinet Secretary for Foreign Affairs and International Trade, Amina Mohamed. One of the key issues under discussion will be the long-stalled Doha Development Round, which was officially launched by the WTO way back in November 2001 and has been dogged by vested national interests ever since.
Two years ago, the G20 leaders agreed an entirely fatuous plan “to boost their combined economy” by the pleasingly round number of “US$2 trillion, through a mixture of restructuring, infrastructure spending and productivity enhancement” but no-one has a clear idea, or even bothered to measure, what has actually been achieved over the past two years.
INTERNATIONAL TRADE RULES
The belief in free markets in an international context is central to the concept of globalisation and that, in an ideal world, all countries behave in a “gentlemanly” fashion. However, in times of global economic stress, like today, the most apt description of behaviour in international markets is “every man for himself”.
At the moment, each country is free to do what it pleases so there is a need for clarity and precise rules for international trade and a policing effort that is free from manipulation and conflicts of interest – precisely what the WTO was established to do. Efforts need to be aimed at working to persuade governments to get out of the way and on making decisions about which companies are to live or to die.
GLOBAL GROWTH AND TRADE
The OECD has trimmed its world growth outlook lower amid warnings that trade has slowed to a pace usually associated with a global recession. They are now forecasting 2.9% for 2015, representing the slowest pace of expansion since 2009. Trade growth is expected to reach just 2% this year, with China “at the heart” of the subdued forecasts.
World trade may be down but it is certainly not out. There is still much to be optimistic about, we perhaps just have to get used to a “New Normal” of lower growth rates after an extended period of very high ones.
Growth on the continent has also weakened markedly and is now projected at 3.75% this year for sub-Sahara and 4% in 2016, down from an overall rate of 5% in 2014. Of the three factors that have underpinned the region’s solid performance over the past decade or so – a much improved business and macroeconomic environment, high commodity prices and highly accommodative global financial conditions – the latter two have become far less supportive.
The good news first
Pope Francis visited Kenya from 25th to 27th November, en route to elsewhere in Africa, and brought with him messages of goodwill and high hope.
In all, a thoroughly successful visit and one that, in differing ways, was uplifting for all Kenyans.
The big political news is that following mounting public pressure, President Kenyatta, on 24th November, announced a significant reshuffle within his Cabinet. At the same time, he created one further Government Ministry, to make 20, all told, by separating out Tourism, previously administered jointly with East African Affairs.
A coalition battlefield
Seldom has there been so much open aggression and criticism between the opposition coalition, CORD and that governing the country, Jubilee.
The rise and rise of corruption
For one thing, as mentioned, it is the blatant, now mind-boggling corruption in the country which, despite repeated threats by the President and a number of other key figures in government, of stern legal action against the perpetrators, continues to rise and rise.
The cost of government
Closely linked to corruption, is another rising challenge for the Cabinet, and one that draws repeated criticism from Kenyans throughout society. That is the need to deal with profligate government spending – spending as though there is no tomorrow; certainly spending with no reference to or heed of prior budgets.
The International Criminal Court (ICC)
Here now is a hot topic – how dare the ICC Prosecutor prejudice Deputy President Ruto’s defence by trying to seek a fair and balanced judgement in using recanted witness statements.
Meanwhile, the lack of dignity in repeatedly sending delegations large and small to The Hague when the Court comes up with unpalatable findings, does the country no favours.
Whilst the threat of terrorism remains a constant, security on the whole is stable. Indeed, to the point where the UK has recently softened its travel advisory and the USA has lifted its travel warnings along much of Kenya’s coast.
Accept it for what it is
And now for the economy; do not worry about it, “the turbulence over the economy will soon be over”. An assurance by the President himself;
The third and fourth quarters will be disappointing too, so the country will be lucky to reach an average of 5% – more likely 4.7% to 5% for the year. (The World Bank say 5.4% and the Treasury, with its head in the clouds, still say 6%). Not a disaster, but patently short of the government’s earlier optimistic projection of 6.5%.
Traditional economic measures
Meanwhile, take a look at some of the other economic measures.
However, as an indication of the volatility, investors lost a whopping Kshs 40 billion (US$400 million) in a single week in mid-October.
Doing Business Survey
Against this background, it is refreshing to find that the World Bank’s “Doing Business Survey” published in October, made known that Kenya has risen 21 places to 108 out of 180, or so, countries reviewed in their ease of doing business ranking.
Imperial Bank saga
The collapse of the Imperial Bank for one, with the plight of 53,000 depositors and their Kshs 54 billion deposits now out of reach. There are many tragic tales surrounding this scandal, with few true facts about the reasons why the Central Bank invoked its powers to put the company into “Statutory Management”.
Local company performance
A review of local company performance throws up a mixed bag – no surprise in current circumstances.
Meanwhile, there is continued interest from abroad in investing in Kenya, with a steady stream of trade and investment missions visiting the country.
The Government must get its management of the economy act together; its planned austerity measures are welcome, but with 40,000 public service jobs on the line, it won’t be popular. The ever-growing debt has to be contained, profligate government spending slashed and corruption dealt with as a priority.
The election campaign begins
Campaigning for the 2016 election by the three leading Presidential Candidates, the incumbent President Museveni, and NRM candidate, the Go Forward candidate, former Prime Minister, Amama Mbabazi, and, the FDC candidate, serial challenger Kizza Besigye, is now seriously under way.
Hoe, Hoe, Hoe
Predictably, all the candidates are making lavish promises to the electorate at their rallies and press conferences.
It would, however, be wrong not to suggest that the opposition is potentially any better, but they simply do not have the cash available to match the NRM’s largesse.
Both Mbabazi’s and Besigye’s rallies are very well attended. This groundswell of support is clearly causing the President concern, hence his personal attacks on his rivals.
The election is being fought against a backdrop of an increasingly gloomy and worrying economic situation. Most of the traditional indicators are negative. The Ugandan shilling continues to weaken against the US dollar and is currently trading at around UGShs3,600. The slide is no longer as steep as earlier in the year but the downward trend is expected to continue.
There is still no positive movement on the oil production front and therefore no early prospective revenue to bridge the shortfall.
The Pope’s visit
The Pope visited Uganda between the 27th and 29th of November. The country has an estimated 14 million Roman Catholics, but his visit was also welcomed by other denominations.
Many Ugandans are hoping that as the Pope’s visit gave Uganda international prominence there will be a longer term dividend in the form of increased tourism and investment. This could however be a double edged sword as it could also focus outside attention on more controversial issues, like human rights, electoral irregularities and corruption.
As the elections approach, the campaigning on all sides is likely to become nastier and potentially violent.
The ruling party Presidential candidate, John Pombe Magufuli, duly won the election on October 26th, with nearly 60% of the vote out of a lower-than-expected turnout of just 67% of registered voters (although this was significantly higher than for the previous election). He therefore becomes Tanzania’s fifth President-elect at the age of 56 in what was a hotly-disputed, closely-fought and, at times, acrimonious contest as the main opposition candidate, former Prime Minister, Edward Lowassa, refused to recognise the result, claiming he had won.
THE ECONOMY AND BUSINESS
Economic growth continues at around 7% pa although a decline was probable during the two-month build-up to the election. The putting together of a new government administration and the uncertainty surrounding this will also mean a slowdown but things should pick up again in the new year.
There is clearly growing optimism but insecurity remains a concern, with frequent incidents of street violence and robberies being reported, and this obviously has a bearing on foreign investor sentiment.
THE EAA TRADE AND INVESTMENT MISSION TO TANZANIA
The Eastern Africa Association has planned a Trade and Investment Mission to Dar-es-Salaam, Tanzania for 9th to 12th March 2016, following on from the successful national elections in late October 2015.
The benefits of visiting in an organised group have been demonstrated by the popularity of previous EAA Missions, to Rwanda in early 2015 and Ethiopia and Uganda in the years prior.
More specific information will be distributed early in the new year.
Meanwhile, all are welcome to join us.
President Paul Kagame has advised certain international diplomats that he “has not yet made up his mind” regarding standing for a third term, despite the current ongoing constitutional process paving the way for him to do so. This can be viewed in two, possibly three ways, especially given the very unstable situation in Burundi.
Economic growth continues at around 6-7% pa and the country’s inflation rate has declined from 3.7% year on year in September to 2.9% in October, well below the National Bank’s target.
As is so often the case with Rwanda, it is way ahead of most African countries in terms of technology and often ahead of the developed countries as well.
It is difficult to keep track of what is happening in this desperately poor country but what is clear is that more than 200 people have so far died and over 200,000 have fled because of the violence triggered by President Pierre Nkurunziza’s decision to run for and subsequently secure a third term in office.
There is inevitably rapidly declining foreign investor interest in the country itself because of the continued security concerns.
Prime Minister Hailemariam Desalegn, re-elected as the Head of the ruling Coalition in October, was given a relatively free hand to overhaul the Government but there have been few really significant changes. The main focus now for the Government is the El Nino-impacted drought weather patterns in parts of the country, limiting agricultural production, severely straining livelihoods and exacerbating food insecurity among poor and vulnerable households.
The country’s economy is based very much on the Chinese development model, with public sector investment driving high rates of growth over the past decade.
To sum up, the IMF reports that “Ethiopia’s state-led development model has delivered rapid economic growth (of over 8% per year over the past decade), reduced poverty and improved social welfare. However, structural transformation has proceeded less quickly and slow export growth has increased external vulnerabilities. In addition, over the past years the economy has faced a sharp appreciation of the real exchange rate, a significant widening of the current account deficit and (more recently) an increase in inflation”.
The World Bank recently released its 2016 “Ease of Doing Business” Report, with some changes in the parameters used to assess the way it measures the various countries. In the aggregate sum of the rankings, Ethiopia climbed two places to 146th out of the 189 covered, in part because several other African countries are reforming their business environments more quickly.
As noted earlier, ambitious plans to increase power generation and expand the road network across the country to help farmers to market their produce and to improve access to various mining activities continue to be implemented very impressively.
As usual with this vast and intriguing country, the future looks increasingly favourable for business, which is why the EAA continues to monitor events closely on behalf of members.
The country continues to be governed by an extremely repressive regime headed by long-standing President Isaias Afewerki, with no immediate prospect of change.
The Government claims it “is open for business” but little is done to promote opportunities which apparently exist in energy, mining, agriculture, fisheries, travel and tourism and capacity-building, so few foreign investors have shown any interest.
A recent African Union enquiry has perhaps not surprisingly concluded that the current civil war taking place in the country “was inflamed by a co-ordinated and possibly planned attack by state officials supporting President Salva Kiir”, and that “there was no evidence of a coup attempt by the opposition”. The report also details “numerous accounts of systematic murders, rapes, torture and other atrocities perpetrated by members of the South Sudan army and security forces”.
By any measure the humanitarian situation is as bad as anywhere else in the world, despite the substantial amounts of aid still being handed over to feed the many thousands of starving people. Peace is desperately required if the country is to have any chance of moving forward but this remains a distant prospect.
Preparations for national elections scheduled to take place in August 2016 are underway and gathering momentum. President Hassan Sheikh Mohamoud has confirmed his candidacy saying he wants to “start a new culture and, if I am elected, I will continue; if not, I will hand over power to whoever is”.
Although still relatively unstable and with continued security concerns, progress is undoubtedly being made and foreign investor interest should begin to grow.