Ratio Blog: What to Look out for in 2011
Tuesday, 04 January 2011
Now it’s by no means ideal if cabinet and parliament are full of thugs and thieves, or combinations thereof: Thieving thugs. Thugging thieves. It really doesn’t help, even if it has some entertainment value – we have Wikileaks to thank for this, but also Moreno Ocampo and a few other people who issued lists. They have set a couple of foxes in the chicken coop, and there’s been plenty of flustered flapping and clucking, accompanied by paid-up statements in the papers. They are becoming a little dull in the predictable shrinking-violet persona that they portray: ‘What? Me? Preposterous. Laughable. A stain on my unblemished record. I am pure as driven snow.’ Yada yada yada.

But this is background noise, annoying but anticipated, like the hum of the generators when KPLC yet again conk out: MPs and their assorted cronies will be on the take, everyone and their pet fish will announce presidential campaigns in 2012 (I chortled when parliament reacted to Eugene Wamalwa’s statement ‘As you know, Mr Speaker, I am a presidential candidate …’ with mirth. By which I mean hysterical laughter). This is what you describe as ceteris paribus: all other things being equal.

So what’s to look out for in 2011? Of course everyone has their own specific interests – some may want to look at, say, changes in narcotics law enforcement -, but I’ll be watching out for the following:
  • The ICC prosecutions: No doubt there will be ‘bribes, intimidation or threats’ as anticipated by Moreno Ocampo, but as the cases proceed, will any of this spill over into significant disruptions that affect the economic country risk outlook?
  • The implementation of the new constitution and decentralisation: I expect there to be more delays, more horsetrading, and other legislative work falling by the wayside – not the least because Kenyan MPs aren’t exactly dynamite in attending to their parliamentary duties. Will the decentralization be meaningful – or merely a decentralization of incompetence and corruption?   
  • Neighbouring crises: I don’t anticipate change in Somalia’s two decade old conflict, but will Kenya and the international community find a way of pushing back the Somali pirates who venture out ever further? This affects shipping costs, but there is another dimension to this: How realistic is it to plan such a strategic asset as the Lamu port complex if it’s placed conveniently in front of Islamic militants – and hope that the vessels seeking to berth will somehow, miraculously, sneak past the pirates?
  • Regional infrastructure will generally be an issue to watch: Citadel Capital have rearranged the ownership of the Rift Valley Railways (RVR) consortium, but will RVR now finally pull up its figurative socks? Uganda will need to get its oil – refined or crude – to global markets, so that will create a little more urgency. Rwanda is keen to lower transport costs by having rail access to a seaport, and Southern Sudan will urgently have to look into alternative infrastructure links:
  • Southern Sudan’s referendum and the impact: A vote in favour of secession seems inevitable, but even if Khartoum is pushed into accepting it, this is not going to resolve Southern Sudan’s myriad problems, starting with the fact that they will still be heavily dependent on the north for their oil infrastructure - and oil accounts for the vast majority of their revenues. The years since the CPA have demonstrated that warlords don’t necessarily make a good civilian government (nor good business people), and there is a distinct risk of more southern infighting, all of which will affect investments from the EAC.
  • Kenya’s buzzy ICT sphere: Lots of press, lots of visits of Silicon Valley types, lots of ‘challenge fund’ and awards, lots of potential. Which of those new entities will make the transition to money-earning, staff-employing, tax-paying ventures?
  • Mobile wars: How low can you go with tariffs – and still make money? In 2011, voice won’t be the excitement, but data services will be, and that ties in with the development of the ICT industry.
  • Banking and finance: Many people have been eagerly sniffing around Kenyan stockbrokers, banks and other financial firms. Consolidation in Kenyan banking sector is only happening slowly, and mostly amongst local companies. Will there be an entry by an international bank, or a foreign investment? Also to look out for: the continued integration of banking and mobile money services, and the growth of the mortgage financing industry.
  • Shifting trade and investment relations: Brazilian ALL who will manage RVR are just one example of growing south-south trade, investment and business links. China, India, Malaysia and others will continue to rearrange the traditional economic links. Kenyan firms also have broader ambitions than just to excel in their home market, and are pursuing regional strategies.
  • Mining: Despite Kiraitu Murungi’s giddy expectation, no major announcements yet, but oil and gas exploration continue, and the discovery of commercially viable oil reserves in Uganda has drawn more interest to the entire region. But I also expect more interest in the rest of Kenya’s mining sector – except that the current mining code still dates from colonial days, and the new one has been stuck in the AG’s office for a while, and will continue to sit there whilst everyone is fighting over the ICC or the new constitution.

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