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Page last updated at 00:08 GMT, Thursday, 7 February 2008

Kenyan economy reels from crisis

By Adam Mynott
BBC News, Nairobi

A market seller in Eldoret in Kenya
Prices in Kenyan markets have increased sharply

Angela Mukoni shops for fruit and vegetables at Kangemi market on the outskirts of Nairobi.

Last year, her family was living on about 9,000 Kenyan Shillings ($130) a month.

Her husband sold bracelets and masks to tourists, but his income has dried up.

Violence across the country has scared off visitors and now the Mukonis' monthly income is down to about $86 a month.

Agriculture

The chaos in Kenya has increased the prices of people's staple needs.

Transport costs have soared, crops are rotting in the fields and the dislocation of agricultural workers has cut farm output.

RISING FOOD PRICES

Prices in KSh/Kg

  Dec-07 Feb-08
Garlic 150 180
Potatoes 25 35
Onions 35 60
Tomatoes 30 50
Marrow 40 80

As she looks for tomatoes in the market, Angela gasps at the price.

"Everything has gone up," she says, "we cannot afford to feed ourselves properly."

The impact on the purchasing power of Kenya's population of 37 million is just one of the woes hitting the country.

The disastrous effects of the violence and fighting have killed 1,000 people and forced more than 250,000 from their homes.

But the economic damage to Kenya is equally serious and threatens to stretch away into the future.

Tourism

On the coast, where the blue waters of the Indian Ocean caress white sandy beaches, it is no better.

Tourism was on the crest of a wave. It was the country's top foreign revenue earner and brought in about $1bn last year.

There should be more than 30,000 visitors at the height of the season. But the hotels lie empty.

The industry used to employ a quarter of a million Kenyans directly and about 3m indirectly. Tourists buy souvenirs, use taxis and dine at cafes and restaurants.

But over the last month, 20,000 people working in tourism have lost their jobs.

The head of the Serena Hotels chain, Mahmud Jan Mohammed, says despite the devastation, holiday venues could recover by the end of this year, but only if the violence stops now.

Horticulture

Kenya's other big earner is horticulture. It used to rely on tourism too.

A Kenyan horticulture employee tends to flowers at a firm in Thika
The flower industry has suffered from the decline in tourism

Sixty-five per cent of Kenya's flowers and vegetables would reach Europe in the holds of tourist flights returning after delivering cabins full of holidaymakers.

Stephen Mbithi from the Fresh Produce Exporters' Association of Kenya says they have lost 20% of the export capacity, because of a cut in tourist flights.

Public transport is operating at 40% of its usual levels - costing operators over $7m a day - and 20,000 employees in the sector have been laid off.

Other businesses

Michael Joseph, the head of the mobile phone company, Safaricom, organised a meeting of more than 300 heads of industry.

They gathered to draw up a list of proposals for the politicians.

Soon there will be no country to govern; and no people to tax
Michael Joseph
Safaricom

They calculated that the chaos of the past few weeks would cost $3.6bn by the end of the year, and as many as half a million people could lose their jobs.

"Soon there will be no country to govern; and no people to tax," he says.

He says every day of delay in sorting out the election crisis plunges Kenya deeper into trouble.





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