The economic impact of the Kenya attacks

A new generation of Islamist militants is seeking to undermine a recent recovery of the tourism sector and to frustrate Kenya’s economic trajectory by staging a high-profile attack on expatriates and foreign businesses.  This is according to Dr Robert Besseling of EXX Africa.

“The target selection of Nairobi’s 14 Riverside Drive complex indicates that the attackers sought to specifically attack expatriates and foreign businesses in an area also frequented by affluent Kenyans. The attack seems aimed at undermining Kenya’s economic performance, including foreign investment and the important tourism sector, he says.

“Al-Shabaab has selected a target that is highly symbolic of Kenya’s economic success and its latest attack is aimed at undermining foreign investment and the recovery of the country’s tourism sector,” he adds. Kenya’s earnings from tourism jumped by almost a third in 2018 from the previous year to USD 1.55 billion.

Besseling believes that the latest attack on foreigners, international companies, and hotel assets is likely to trigger a fresh review of travel advisories by countries such as the US that will have a significant impact on Kenya’s tourism sector.

“A now likely drop in tourism earnings is expected to make a broader economic impact this year. Tourism is the second-largest source of foreign exchange revenue following agriculture. The country has already cut its revenue target for this fiscal year by five percent.”

Kenya recently decided to no longer pursue an International Monetary Fund (IMF) programme. “EXX Africa previously assessed that the prudence of this approach in the context of uncertain external circumstances and local drivers of risk, such as tourism earnings vulnerable to a volatile security environment, is highly questionable. Should a shock occur without firm IMF endorsement, Kenya will be left exposed to any ensuing market onslaught whose effects could be compounded, especially given the country’s short and long-term debt position.”

Besseling points out that heavy-handed tactics such as extrajudicial killings and indefinite detentions or kidnappings by security forces in Muslim communities in the northeast and coastal regions have facilitated the radicalisation of a new generation of Islamist militants.

“EXX Africa has consistently maintained over the past few years that commercial assets in major cities like Nairobi and Mombasa are aspirational targets for militant groups like al-Shabaab.

“However, such groups’ operational capability has been significantly downgraded as a result of multiple security operations in both Kenya and Somalia. However, the security operation in the northeast region has been heavy-handed, often inflicting violence on civilians. The region has also failed to reap the benefits of Kenya’s recent economic and investment boom, while many communities remain marginalised and unable to cope with internal displacement of ethnic Somali people. The region has therefore again become a breeding ground for groups such as al-Shabaab,” he says.

 

 

 



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