The sick man of the south

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THE INSIDE VIEW

This week Kenya is battling with the economic consequences of its post-election fallout as the spotlight moves south to Zimbabwe’s polls. For those advocating negotiations and power-sharing as the way out for Zimbabwe, developments in Kenya are a key test. Expectations about the longevity of the grand coalition between Mwai Kibaki and Raila Odinga are low; each new row over a minister’s job description prompts more doubts. The economic fallout of 1,500 deaths and the displacement of 300,000 Kenyans is working its way through the economy. Finance Minister Amos Kimunya just cut the 2008 GDP growth forecast to 6% from 7%. Kimunya linked recent economic improvements such as improved food distribution and lower inflation to political progress. The political deal has its own costs: a bigger cabinet with some duplication of functions. The Treasury needs more money for land reform; gross inequities in distribution have sparked clashes over the past four decades. Political differences cut deep into economic policy such as the privatisation of Safaricom’s cellular phone network. The Nairobi Stock Exchange wants to push ahead to help re-establish market confidence; Safaricom is valued at US$3.1 billion. But Odinga wants more transparency at the NSE and stronger regulation; for Safaricom, many want to identify the beneficial owners of Mobitelea, an entity which mysteriously holds a 5% stake in the main company.