News Analysis: East Africa Bombs and Country Risk Implications
Friday, 16 July 2010
East Africa suffered a worrying string of explosives incidences in recent months: In Rwanda, several hand grenades exploded in Kigali in February 2010 and again in early March 2010, leading to at least three casualties and tens were injured. In Kenya, two different explosives at a political and religious rally in the downtown Uhuru Park caused six casualties and injured more than 100 people in June 2010. The most drastic event, however, were the two bombs detonated towards the end of the World Cup final match, targeted at the crowds assembled to watch the game in the Kyadondo Rugby Ground and the Ethiopian Village respectively. More than 70 people died, and an even larger number had been injured. Since then, another undetonated device has been found.

Local Politics vs. Geo-Politics?
Both the incidences in Rwanda and Kenya point to a domestic political background, related to the upcoming elections in Rwanda and the referendum on the proposed constitution in Kenya, both scheduled for early August 2010. As regrettable as they were, they are unlikely to affect the immediate security risk outlook in itself: Foreign embassies will reiterate warnings to stay away from crowds, especially in the run up to both votes.

The blasts in Kampala, currently investigated as an attack by Somali Islamic militants, draw renewed emphasis to the fact that the region is exposed to threats from the Horn of Africa. Uganda is the only country providing significant troop levels to the UN Mission in Somalia that supports the ineffectual and isolated Transitional Federal Government (TFG), and has previously received threats. Somalia’s Al Shabaab had initially just expressed pleasure over the bombings, but later claimed responsibility.

Weak Public Security Services
The security outlook is worsened by the fact that across Kenya and Uganda, the police are largely ineffectual. In both countries, they are underequipped, underpaid and corrupt – hiring private security is routine for businesses and residents in both Kenya and Uganda. As a consequence, the local police are not in a strong position to deal with such threats from Somalia. In Kenya, the police have effectively admitted that they did not expect to resolve who bombed the rally, and in Uganda, the US have promised support in the investigations. Kenya has worked with US security support for years, but its inability to arrest e.g. a key suspect in the embassy bombings who had allegedly repeatedly traveled through Kenya shows that this may not solve the problem.

Uganda’s exposure to threats from Islamic militants rose after it sent troops to Somalia, but Kenya has been affected by this for years: The 1998 embassy bombings in Tanzania’s capital Dar es Salaam and Nairobi had been linked to Al Qaeda, as were an attack on a coast hotel and an airliner in 2002. Kenya shares a long and porous border with Somalia, and despite US support, has not been able to control this border. Foreign embassies are alert to the security risks and popular shopping malls as e.g. Village Market near the UN have taken additional security precautions.

Perspectives: Business Implications
General security risks are factored in by anyone doing business in East Africa, and this includes awareness that these may rise in the run up to any election or other vote. Different foreign investors have different levels of sensitivity to Islamic terrorism threats, but for many business people, Islamic terrorism is one concern amongst many, and while the Kampala attacks will have refocused attention, it will not be a deal breaker (Terrorism and Insecurity: Breaking Down the Risks for East Africa ). In addition, political risk insurance covering both political violence and terrorism is now readily available eg. from the Africa Trade Insurance Agency (ATI) throughout the region.

But even though it is unlikely that any potential or current investor will be swayed by the Kampala bombings alone, there are some implications for the economy:

Anecdotal evidence shows that in particular the Kampala bombings may have a knock-on effect on leisure tourism as far as the Kenyan coast, despite the considerable distance between both places and the fact that they are in two different countries. A general perception of heightened insecurity is bad news for leisure tourism.

The Kampala bombs also raise some interesting questions regarding Kenya’s ambitious plans for infrastructure development in northern Kenya that centre around the construction of a port at Lamu, and include such ventures as a pipeline and a refinery. Lamu is close to the Somali border and to date, piracy along the Somali coast and into international waters has not been resolved despite international support. How will the Kenyan government insure that such key infrastructure ventures in the immediate vicinity of Islamic militias will be protected? Somalia has been in a state of civil war for nearly two decades and it is not likely that a solution will be found anytime soon.

Kenya’s and Rwanda’s grenades, in contrast, are a reminder of the political risks across the region: In Rwanda, the grenades preceded a series of events, including the arrest of several journalists and the suspension of two publications, the assassination of one journalist and of an opposition leader, an assassination attempt on a dissident general. The government has categorically denied any responsibility, but there are concerns over the political outlook for Rwanda. Although Kenya’s referendum on the draft constitution is not expected to lead to any large-scale disturbances, the underlying causes of the post-election violence in early 2008 remain unresolved and can trigger both incidences of unrest as well as wider tensions in the next election in 2010.

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