Columnists

Fight terrorism will all our might

attack

Kenya has suffered the far-reaching effects of repeated attacks by Somalia-based Al-Shabaab terrorist group for years. FILE PHOTO | NMG

When I recently met Mr Chirag Sanghrajka- one of the directors of both Tile and Carpets Ltd and Cape Holdings Ltd - the developers and owners of 14 Riverside Park - the six luxury office block where Dusit Hotel is located- his biggest concern was the negative reputation generated by a protracted court case.

This week, I tried- without success- to reach him to express my sympathies for first, the horrific human tragedy that had happened within the group’s property and secondly, to get first- hand, insight into the depth of pain that terrorist attacks do to businesses.

Terrorism, the damage to human life, the senseless murders of innocent people – is first and foremost- about human suffering. However, as a society, we tend to give inadequate attention to its impact on the economy and businesses.

I wanted appreciate the predicament the business had found itself in and to get an insight on how the terrorist attack had disrupted the business model behind this massive six block luxury office development project. The Sanghrajkas are a rags-to riches local business group, solid entrepreneurs who built a fortune from a business that started from cutting floor tiles from a small shop on Biashara Street to grew into one of the largest local conglomerates.

The terrorist attack threatened to sweep away wealth that has been built through generations through hard work, painstaking savings and investment of profit and surpluses. Mark you, developing a facility as massive as 14 Riverside Park, negotiating and putting together the financing of such an extensive property development undertaking is not an easy task. This is especially so in our context where finding cheap and long-term capital for such large property development projects is not easy.

In countries like South Africa, the big malls and large property development projects of this kind are mainly funded by pension funds. Here, the typical financier will demand to see signed long-term leases with several anchor tenants and big brands before committing to give you the money. Indeed, the terrorist attack at 14 Riverside Park has the potential of unravelling the whole project. Perhaps we should start a debate about compensating victims of terrorist attacks- human beings and businesses.

Without a doubt, private insurance will continue playing a central role. Yet the truth of the matter is that policies covering terrorism are just too complex and not easy to craft. As we all know, insurance is feasible under conditions where the aggregate loss can be predicted with relative accuracy and where chances of very large single event losses are negligible.

Maybe we should be debating about victim compensation funds. I say so because if the frequency of terrorist attacks we are witnessing today do not subside soon, all those extravagant growth predictions the government has been making will come to zero.

The main goal of today’s terrorist is to cause fear and kill confidence in the economy. When they attacked Dusit, their aim was to make us lose confidence in the ability of our security systems to protect us.

They want us to be scared and to lose confidence in going to shopping malls, they want us to fear travelling by bus, or going to places of worship. Is it not a sign of the times that we are today frisked when we enter a matatu, walk into a shopping mall, a night club, a restaurant and even places of worship.

But perhaps the most vulnerable sector to terrorism is the tourism sector. As things stand, these attacks have the potential of wiping away the gains we have recently made in the industry.

We all know how the success of the tourisms sector is critical to our recovery. In an economy with a weakening export sector, a drastic fall in tourist arrivals and bed occupancy rates in hotels can create major pressures on the macro economy.

When –like us-you persistently run a huge external account gap, your national currency becomes vulnerable to speculative attacks.

And when you have a situation where travel and movement of people is curtailed by fear, trade cannot possibly thrive. We must fight terrorism with all our might. We owe it to the economy.