Treasury upbeat on economy after Westgate attack


National Treasury PS Kamau Thugge during the signing of a Sh850 million loan with the director general of Khartoum-based Arab Bank for Economic Development (BADEA) at the Treasury on September 24, 2013. DIANA NGILA

Kenya’s economy is expected to suffer only a slight bump in the wake of Saturday’s deadly terrorist attack at the heart of Nairobi that left more than 60 people dead and an unknown number of hostages in the hands of the invaders.

Principal Secretary at the Treasury Kamau Thugge said no government programme had been significantly affected by the twin disasters of terrorist invasion and last month’s fire at the country’s main airport.

“These are isolated incidents that should not have any negative impact on the economy. They have not stopped us from carrying out infrastructure and other projects to grow the economy,” Dr Thugge said.

The PS spoke after signing a Sh850 million loan with the director general of Khartoum-based Arab Bank for Economic Development (BADEA), Abdel Aziz. The bank, owned by 18 Arab nations, is financing a water and sewerage projects in Oloitoktok, Kajiado County.

Dr Thugge reckoned that although the attack could impact on tourism, its overall effect on growth would be minimal since the sector accounts for only a small proportion (two per cent) of the gross domestic product. 

“Tourism’s share of the GDP, though increasing, is still quite small. It is agriculture and manufacturing that determine the plight of our economy,” the PS said. Agriculture accounts for 25 per cent of Kenya’s GDP while manufacturing contributes about 10 per cent.

Kenya’s economy is expected to expand at the rate of 5.6 per cent this year and there has been fear that the two major security incidents in two consecutive months could slow down the pace of activity in key sectors such as tourism.

Independent analysts said last month’s airport fire and the terrorist attack on the mall should awaken the authorities into taking national security more seriously if growth is to remain on track.

“If it is a one-off incident then it should reflect as a small bump on the growth path, but should there be a series of similar attacks then we could soon be talking about the great promise in the Kenyan economy that never materialised,” Aly- Khan Satchu, an independent analyst, told the BBC in an interview.

Signs of the bump that the attack may cause on the economy came from yesterday’s trading at the Nairobi Securities Exchange (NSE) where turnover nearly doubled to Sh547 million from the previous day’s Sh277 million, but the NSE 20 Share Index dropped 10.13 points to stand at 4729.30 points.

Analysts attributed the outcome to the four-day siege that persisted at the end of the fourth day.

The money markets were resilient allowing the shilling to gain marginally against the US dollar after opening at Sh87.30/60 to the dollar and closing at an average of 87/50. The Westgate Mall stand-off persisted at the end of the fourth day even as the Kenya Defense Forces (KDF) said one more terrorist had been shot dead in an early morning gun battle.

State House spokesman Manoah Esipisu told NTV that the terrorist was felled during a confrontation with the Kenya Defence Forces who are taking part in a joint rescue operation that also involves Israeli Special Forces.

KDF confirmed that 11 soldiers were wounded in the confrontation and three succumbed to their injuries.

Sporadic gunfire erupted inside the mall throughout the day, but there was no communication from the government. White smoke continued to billow from the corner of the building where explosions occurred on Monday followed by thick black smoke.

Though the government had on Monday announced it had rescued all hostages and taken full control of the building, the movement of security personnel on the ground showed that some of the attackers were still inside.

The Al-Shabaab group used the social media to announce that its fighters remained in control of the building with a number of hostages.

Its spokesman was also quoted as saying that more dead bodies remained trapped inside the shopping mall where a fierce battle had persisted since Saturday.

Meanwhile, mobile service provider Safaricom’s initiative to help Westgate terrorist attack victims through the M-Pesa platform had raised Sh57,932,709 by midday. Safaricom chief executive Bob Collymore said he expected the attack to have little impact on the economy.

“I do not believe this attack will have any effect on the economy other than a slight turbulence,” he said. “This is just a one-off attack and not a trend. We will continue to see strong foreign investment and confidence in Kenya as East Africa’s hub.” 

International Criminal Court prosecutor Fatou Bensouda on Tuesday said that she is ready to try Westgate’s attackers in The Hague, describing their actions as against international law and amounted to crimes against humanity.

“Such attacks by armed groups upon innocent civilians are contrary to international law and may constitute a crime under the Rome Statute, to which Kenya is a State Party,” she said in a statement.

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