Uhuru’s budget plans face dry weather test

The weathermen last week announced that they had spotted unusual temperature changes in the tropical Pacific Ocean, signalling that eastern Africa may be headed for yet another prolonged drought similar to last year’s that left the economy in tatters.

Peter Abenje, the deputy Director of Meteorological Services, warned of a possible return of La Nina – the prolonged dry spell that hit Kenya in the third quarter of last year – leaving nearly 10 million people starving and thousands of livestock dead.

“La Nina conditions have formed in the tropical Pacific, but the extent of our vulnerability will be made clearer in the August/September forecast,” he told Business Daily last week.

The World Meteorological Organisation (WMO) raised the pitch last Tuesday with an announcement that it had picked weak La Niña signals in the tropical Pacific.

“These conditions are more likely than not to strengthen into a basin-wide La Niña over the coming months,” said the WMO in an update sent to newsrooms from its Geneva headquarters.

The UN agency said sea-surface temperatures had by June decreased to approximately 0.5 degrees Celsius below normal over the Central and Eastern equatorial Pacific, setting the stage for La Niña conditions.

Kenya’s continued reliance on rain-fed agriculture means that any turbulence in weather patterns throws all plans, including public spending, up in the air as budgets are revised to care of the resulting emergencies.

Agriculture is the largest single segment of the Kenyan economy, whose performance continues to determine the pace of growth and overall economic welfare making the weatherman’s latest warning a major economic policy issue.

The drought also left the country’s key hydro-electric power dams dry, forcing the economy to rely on the expensive thermal power and sending food prices rising beyond millions of households, a situation that pushed up inflationary pressure which depressed consumer spending and slowed down the uptake of goods and services across the economy.

Runaway inflation that peaked at more than 20 per cent also forced banks to push up interest rates and tighten their lending conditions, setting monetary policy makers on an expansionary path they are yet to start rolling back.

Kenya’s economy grew by a narrow margin of 2.6 per cent last year nearly one percentage point lower than the target 3.5 per cent, confirming agriculture’s place in the country’s welfare.

This year, Treasury has set a growth target of 4.5 per cent – a projection that was informed by an uptick in economic activity in the first and second quarters of the year helped by good weather that yielded increased food supply and low inflation.

“Severe drought will definitely slow down the projected growth because the service sector growth alone cannot sufficiently cover the gap left by reduced agricultural production and a disruption in electricity supply,” said Judd Murigi, head of research at CFC Stanbic Investment Bank

Finance minister Uhuru Kenyatta has pegged most of his financial plans on continued reliability of rains.