As parts of Kenya went up in flames over disputed elections and politicians engaged in political grandstanding and chest-thumping, nobody seemed to be thinking about the effect their actions would have on the economy. The market, on the other hand, was quick to react to the unrest. Estimates indicate that about 5% was wiped off the value of companies listed on the Nairobi Stock Exchange. Commodity prices shot up – the New York Times reported cabbages being sold for almost 10 times the pre-election value.
The region’s economies also felt the pinch. Kenya’s ports and airports are transits for goods worth a quarter of the GDP of Uganda and Rwanda and one third of Burundi’s. It is no wonder that fuel prices shot up in these countries following the outbreak of violence that disrupted supplies through Kenyan roads. It is clear that when analyses are done the effect will be far worse than just the increase in fuel prices.
The long term effects may even be more damaging. A great amount of goodwill and confidence have been lost. Investor confidence will, understandably, plummet. Many had previously viewed Kenya to be above the kind of violence witnessed in the week following the Dec. 27 polls. Kenya’s near breakdown will definitely raise concerns over countries that have been deemed to be even less stable – countries like Rwanda, Uganda and Burundi – and this may result in these countries attracting less investment than they would have.
Kenyan leaders, and by extension the continent’s leaders, should realise that the rest of the world will not wait for them as they continue to epitomise poor governance and perpetual unrest. They should know that peace and stability are essential ingredients in the quest for economic and social development. If the trend continues – undemocratic governance, poor economic policies and morally bankrupt leadership – Africa will as sure as death continue to slip behind as other regions of the world continue to accelerate towards economic nirvana.