Recent happenings in the Kenyan economic sector have left investors worried, future investor scared, economic analysts predicting doom and many tongues both electronic and print wagging about it. What is the exact state of the economy of Kenya? Is the economy of Kenya moving in a jet-like speed towards the land of no return? Are those in power trying to give us false hope by struggling to convince us that everything is in order while nothing appears to be? What is the appearance of the future for Kenya?
Someone said that numbers don’t lie. Numbers are silent witnesses that tells no lies. Since they are silent witnesses that tells no lies, they, therefore, need a person who is bold enough to speak on their behalf. They are ever silent. They never talk when someone tries to change them or manipulate them but they always stick to their course: the truth.
With the National Youth Service struggling to put on a brave face, Uchumi Supermarket kicking and trying to convince us that it is still alive, National Bank of Kenya jumping out of the blues and declare a 1.2 billion loss without a prior warning, Chase Bank giving its customers heart attacks and sleepless nights after being placed under receivership and hotels closing down business at the coast, how can one say things are okay? How can one say that the economy is stable? How can one say that the government is committed in ensuring that the rate of unemployment is reduced?
Let us set off with the Kenyan banking sector. With what has been happening in the banking sector lately, everyone whose money is in the bank has a reason to worry. In a span of one year, three financial institutions have been placed under receivership after failing to wade through the financial waters facing the sector at the moment. These banks were:
These coupled with the National Bank of Kenya registering losses, Barclays Bank being in the process of selling its businesses in Africa with many other banks predicting a doom future due to escalating non-performing loans has left the banking sector ailing. According to some sources which appear to be closer to the source, apart from pressure from the Social Media, Chase Bank had at least 16.6 billion shillings that were deemed irregularly advanced to various entities with half of them being linked to insiders as well as to assets that were not clearly benefiting the bank. The closure of the bank left over 55,000 depositors in limbo without access to their money. The coming down of Imperial bank according to sources privy to the matter was as a result of massive fraud practices that were executed by the staff at the bank.
The National Bank of Kenya came into the public limelight after it announced 1.2 billion loss without prior warning to investors and shareholders as stipulated in the law. The law stipulates that a firm, upon realizing that its profits will be lower than 25 percent, has to make it public within 24 hours through media outlets prior to the release of the final financial results, something that National Bank did not adhere to. Is the banking sector ailing? Do Kenyans still have the confidence to bank their money with the 42 + banks currently operating in the country?
Uchumi Supermarket, the once largest retailer not only in Kenya but in the East African region is now a wounded buffalo struggling to remain afloat. The retailer closed down its subsidiaries in Uganda and Tanzania in what was seen as a recovering strategy after a wave of losses. The management said that it aimed at concentrating on the Kenyan market so as to make a strong comeback. Back home things remained even worse, some branches were closed and people lost their jobs with some matters still pending at the court. It is said that Uchumi came down because it operated under the falsehood of hoodwinking people that it was financially health. In 2013 for instance, it is said that the management said that the retail had made 357 million shillings as profit yet the true profit was 123 million shillings. In 2014 also, the retailer is said to have made a profit of 384 million shillings when the reality was 336 million shillings. These, coupled with the stiff competition on the market, Uchumi came down and though still kicking, analysts see no future for the once vibrant retailer.
The National Youth Service Scandal, who does not know about it? The fact is that people know about the scandal but many don’t know about what transpired and what really happened. It is said that a total of 791 million shillings were mismanaged at the National Youth Service. National Youth Service is under the Ministry of Devolution. Under the same, is the Youth Fund with more than 400 million said to have mysteriously disappeared. The hard questions are; how much money was allocated to the Ministry of Devolution? Apart from the NYS and the Youth Fund, what other channels have siphoned money at the Devolution ministry? What is the government doing to try and recover the looted funds? Most young people who were the beneficiaries of the NYS have now been rendered jobless. Some 800 hundred who had been trained at NYS with paramilitary skills were sent home after money to graduate them failed to come by. What happens when you sent back into the village such young and vibrant people?
President Uhuru Kenyatta, during the State of the Nation Address said that hotels at the Coast are fully booked. Are they really fully booked? It has now emerged that at least 40 per cent of hotels across the Coastal Region have been reported to either been closed or scaled down its operations due to low tourist season. Malindi and Watamu are the worst hit after Chartered airlines from Italy ended flights to Mombasa due to low passenger turnout. 80 per cent of hotels in Kilifi County have shut down due to an international tourist drought while over 5,500 workers in Malindi and Watamu have been laid -off following the closure of hotels since last week.
Out of the workers sent home, 3,000 are said to be permanent and contracted workers while 2,500 are casuals. About 10 hotels in Diani are also in the process of closing down for the low season or renovations.
According to Kenya Union of Domestic, Hotels, Educational Institutions, Hospitals and Allied Workers (KUDHEIHA) North Coast branch, more workers are expected to lose jobs since more hotels are in the processing of closing down by the end of the month of April up to mid-July, when they will re-open for the high season.
Article by Juma Fred and Vera Shawiza.