Business
Kenya: Little negative impact expected to economy due to Mall attack
(Reuters) – Security worries are nothing new in Kenya and so the country is unlikely to see long term investors pull money out after the deadly attack on a Nairobi shopping mall, analysts say.
However, the tourism industry, a big earner of foreign exchange, may suffer some damage, especially if governments warn their citizens from travelling to the east African country.
This weekend’s hostage crisis, in which more than 60 people have been killed, is a sharp reminder of the threat from war-ravaged Somalia on the doorstep, however, Kenya’s previous encounters with Islamic militancy – in 1998 and 2002 – suggest the economic impact will be limited.
“It will hit investor confidence but having said that the areas which are most likely to be impacted are tourism and in the shorter-term consumer goods,” said Joseph Rohm, a portfolio manager of African equity portfolios at Investec Asset Management in Cape Town.
“People are likely to stay away from the malls for a week or two, but the long-term structural story – the growth, regional integration, political achievements – investors recognize those and an event like this is unlikely to change those views.”
Even though the ferocity of the assault was unexpected, Kenya had been bracing for some sort of attack since it sent its troops into Somalia, joining the African Union, in 2011 to help the fledgling government’s war against the al-Shabaab Islamic militant group.
Nairobi took the decision only after the al-Shabaab gunmen started kidnapping tourists at an Indian Ocean resort town near the border.
