Kenya: Kisumu’s economy in trouble
Kenya, January, 11 2008 -
A group of financial experts are casting doubts on the economic recovery of Kisumu, after protesters destroyed several businesses rendering thousands of people jobless. As a result, micro-finance and enterprise development institutions have appealed for international aid to bring the town’s battered economy back on track.
The organisations have asked the donors to consider soft-funding in terms of grants to the affected business owners to help them recover from the effects of the unrest.
“Donor support to micro-finance institutions and other affected groups can help alleviate these problems and save us from collapse,” Mr Samuel Deya, the executive director of Adok Timo, one of the micro-finance institutions in the group, said.
The appeal comes after another one by Kenya National Chamber of Commerce, Kisumu branch, asking for suspension of tax obligations of affected business owners until they put their houses in order.
Mr Deya estimates that small and medium business owners suffered Sh50 million loss in revenue due to missed business opportunities and destruction of property.
The losses resulted from violence sparked by the Electoral Commission’s declaration of Mr Mwai Kibaki as President amid disputes in poll tallying.
Close to 80 per cent of the small and medium enterprises (SMEs) were affected by the violence, he said.
“Most have lost their businesses completely while others might have salvaged little.”
The institutions estimate that 184 shops were looted and destroyed in Kisumu during the week-long fracas, in addition to an estimated loss of 5000 jobs.
Mr Deya said this might not augur well for micro-finance institutions in terms of outstanding loans repayment, and interests and other loan-related charges.
While some of their members may have been displaced, others died in the riots, leaving the micro-finance organisations with a huge bill of unpaid loans and interests.
As a result of the violence, he says, SMEs still have a long way to go to match the escalating operating costs with a dwindling revenue base.
Some business premises that have started their operations have to incur the extra cost of armed security personnel, Mr Deya said.