Tuesday, October 09, 2012
By MWANIKI WAHOME
Kenya is expected to gain from increased trade and reconstruction after a stable government is established in Somalia following 21 years of fighting that has left that country basically operating an informal economy.
Experts said Kenya was well positioned to reap peace dividends from the establishment of a stable government in Mogadishu due to the historical ties and sharing of a border.
The Kenya Defence Forces, acting under Amison, captured Kismayu, the last frontier in the liberation of Somalia from the grasp of Al-Shabab militia, heralding a new era of opportunities in a country that has operated without a central government for two decades.
“When the reconstruction starts in large scale, there will be significant financial outflows that could in the short-term be disruptive but the bigger picture is that it will translate to business for many Kenyans,” said Mr Gitau Githogo, an economist.
He noted that Kenyans were well positioned to trade with Somalia, and with highly skilled personnel, many will find niches in that country.
“Despite lack of effective government, Somalia has maintained a healthy informal economy largely based on livestock, remittances, money transfer companies, and telecommunications,” said the Central Intelligence Agency on its website.
The country received $1.6 billion in remittances in 2010 from its citizens who fled the country over the years due to insecurity.
Kenya is the third largest exporter of goods to the country, accounting for 7.3 per cent, after Djibouti’s 27.8 per cent and India’s 13.7 per cent. According to 2010 estimates by CIA, the country imported goods worth $1.263 billion.
Transport minister Amos Kimunya last week said that among the benefits Kenya would get is increased business at the port of Mombasa as shipping companies that had re-routed their freight to other ports return after the wiping out of piracy.
He said insurance premiums and security costs had started to decline after piracy attacks declined in the first half of this year to 69 compared to 163 registered in the same period last year.
Although no immediate statistics are available, the Kenya Revenue Authority is expected to get more revenue after the cutting-off tax evasion that has been going on taking advantage of the porous border and lack of government in Somalia.
According to the Kenya Bureau of Statistics, exports to Somalia have doubled in the past five years from Sh8.3 billion to Sh16.6 billion, mostly dominated by miraa, which is widely used in the country.
On the other hand, imports have grown significantly from a measly Sh12.1 million to Sh143.9 million over the same period.
There is expected expansion of agriculture in Somalia that could improve food security in North Eastern Kenya through trading.
“With peace in Somalia, we expect the ships to resume the shorter route that they abandoned due to piracy. This will reduce sailing time by between three to four weeks and eventually we expect the tariffs to come down and the number of maritime tourists to increase,” said Mr Gilbert Langat, chief executive of the Kenya Shippers Council. This might translate to lower commodity prices.