Kenya’s Bright Financial Future Clashes With a Grim Present

A poster of President Uhuru Kenyatta of Kenya in the outskirts of Nairobi

A poster of President Uhuru Kenyatta of Kenya in the outskirts of Nairobi

The line at the water tank in the Kibera slum is not as long as it used to be. It’s not because of a sudden advent of indoor plumbing. It’s because fewer people can afford a 10-cent jerrycan of water.

The cost of just about everything here is going up: rice, wood, rent, gas, minibuses. Hundreds of thousands of young men remain jobless, marooned in the muddy slums, selling garbage or hunting for casual work. And their ranks are only growing because a pillar of Kenya’s economy — tourism — has been walloped by a wave of terrorist attacks, including a brazen raid on a coastal village last week that killed more than 40 people.

Adding to the woes are rising political tensions, with critics accusing the government of trying to snuff out dissent and Kenya’s opposition leaders threatening to stage nationwide protests. The opposition has vowed to go ahead with a large rally on Friday, despite a police declaration that it is illegal.

“I’m not talking small protests,” Raila Odinga, an opposition leader, said, his eyes glowing. “I’m talking massive.”

But even as anxiety, fear, malaise and pessimism are spreading here, and many speak of a dark cloud settling over Kenya, the outside world still sees mostly clear skies.

Glass towers are rising across the capital, Nairobi, many financed by investors in Europe and the Middle East, and chugging bulldozers have become nearly as commonplace as minibuses. There are new roads everywhere, new bridges and huge new malls being dug out of red-earth hillsides. There is even a snazzy new Jaguar dealership.

Much of Mr. Odinga's support comes from Kibera

Much of Mr. Odinga’s support comes from Kibera

Just this month, Kenya issued Africa’s biggest debut Eurobond for an impressive $2 billion, and the deal was so oversubscribed — Morgan Stanley was among the investors — that the cost of the loan was substantially lower than expected.

But at 51 years old, Kenya, which just celebrated its anniversary of self-rule from Britain, is a bit like a classic car: beautiful on the outside and nice to look at. But under the hood, many Kenyans say, the wiring, and especially the steering, need serious work.

“There’s a pretty big bifurcation right now,” said Aly-Khan Satchu, a Nairobi investment adviser who bought more than $10 million of the recent bond for overseas clients. “The capital markets are showing they can look through a lot of this noise. But there’s a great divergence between the markets and how people feel on the ground. It worries me.”

Pension funds and other institutional investors are attracted to Africa because of low yields in the more established markets. But Kenya’s bond issue was much bigger than a recent one in Rwanda — and many would argue that Kenya has more demons in its political closet than Rwanda, which is a tightly controlled autocracy. Kenya’s bond also had lower interest rates than a similar deal by Zambia, one of the world’s biggest copper producers.

One reason for this confidence is Kenya’s diversified economy. This is not a commodity country, like Nigeria or Ghana with their oil, or Zambia with its mountains of metal. There are agriculture, horticulture, tourism (usually), new discoveries of oil and gas, an expanding service sector, a far-reaching national airline and a major African port, with a second one under construction. Kenya’s ruling party prides itself on its commitment to infrastructure.

While the terrorist attacks are worrisome, investors say, Kenya’s track record of business development, and the size of its middle class, indicate years of growth.

“Kenya is exceptional,” said Josh Ruxin, an American who has written about entrepreneurship in Africa and is investing in a multimillion-dollar pharmacy chain with plans to open more than a hundred Duane Reade-like stores across Kenya.

The biggest concern remains government rule. And it’s not only the recent moves by President Uhuru Kenyatta’s administration to solidify control, threatening to pass a punitive news media bill and to start a nationwide neighborhood watch program that critics say is tantamount to an internal spy network. It’s Kenya’s whole system, which can best be described as an ethnocracy; it’s a democracy, but politics are determined almost exclusively along ethnic lines and are often highly polarizing.

People vote for members of their own group, however sullied the politicians’ reputations are, and coalitions among the five or so major ethnic groups are held together, somewhat tenuously, by doling out posts, often to people grossly unqualified.

“Everybody knows the interior minister is an embarrassment, but the government can’t fire him because he’s Maasai and they need a Maasai,” said Boniface Mwangi, a young artist who had been leading protests until he said he received death threats — from the police.

He waved his hand dismissively.

Boniface Mwangi, a young artist who had been leading protests until he said he received death threats.

Boniface Mwangi, a young artist who had been leading protests until he said he received death threats.

“Tribal arithmetic.”

That tribal arithmetic can be explosive, as in 2008 when more than 1,000 Kenyans were slaughtered in ethnic clashes after a bungled election.

Not since then have Kenyans been so worried about the direction of their country. Public safety seems to be deteriorating rapidly. Five workers were recently bludgeoned to death at a gas station, a schoolgirl was decapitated this month and a recent newspaper headline blared: “Hyena unearths four bodies in secret graves.”

Kenya’s poorly paid and deeply corrupt security forces hardly inspire confidence. Last September, Islamist militants killed scores of people in a Nairobi shopping mall. While some of the terrorists may have been still lurking inside, Kenyan soldiers went on a shopping spree, looting suits, televisions, earrings, even Tusker beers. Then they blew up a grocery store. There have been a half-dozen bombings since then.

In the attack last week, two truckloads of militants roared into the coastal village with black flags, black scarves, AK-47s, bazookas, grenades and illumination flares. They shot dozens of people, slit throats, then burned down a good chunk of the town. It seemed more akin to an insurgency. Though the Shabab militant group from Somalia claimed responsibility, Mr. Kenyatta blamed “local political networks.” On Wednesday, his police services arrested the governor of that area in connection with murder.

All of this raises the question of how much more a business community, however talented, can accomplish in a place that is increasingly insecure.

African terrorist groups seem to have suddenly realized how vulnerable many states are at their core. Nigeria is a cautionary tale. It boasts one of the fastest-growing economies on the continent, but at the same time, Boko Haram, a Nigerian militant group, is growing even faster. Nearly every week it stages bold attacks, including the kidnapping of more than 200 girls, still missing. But Nigeria produces nearly two million barrels of crude oil per day. It does not live or die on outside investment.

Mr. Odinga, the opposition leader who handily lost Kenya’s last presidential election, remains the most potent shaper of the rising discontent. He holds no official government position, he is dismissed by many as having no clear plan, and he is 69. Still, he can instantly stir up the passions and loyalty of millions of fellow Luos, among others.

In a recent interview at a hotel cafe, while slurping the froth off a cappuccino and snacking on peanuts, he said the people were fed up — so much so that they were “willing to take the bullet.”

And you? he was asked.

Mr. Odinga tossed a few more peanuts into his mouth, paused, chewed and then grunted yes.

Kibera slum is his base. People there barely get by. Boys wheel battered carts up sloppy paths, and women fry sardines in a drop of oil in gummy, tarred skillets. Some men in recent days were moving from shack to shack, banging their fists on the flimsy, corrugated metal doors, warning people to send their kids upcountry, speaking excitedly about the coming “tsunami.”

Others were more sober. Not far from the water tank sat Peter Mutunga, vendor of secondhand pipe fittings. He wore a pair of old rubber boots and a peeling, gold-colored wedding band. He had carefully laid out his wares on a plastic tarp, but nobody was buying. Nairobi’s fancy new malls seemed a million miles away.

“There are really only two tribes in Kenya,” he said wistfully. “The poor and the rich.”

NY Times



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