South Sudan unrest to impact Kenyan economy

July 13, 2016
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Those who spoke to Capital FM Business said heavy fighting that erupted in South Sudan's capital on Sunday and has so far claimed 272 lives will have a spill over effect to the economy both from currency exchange and business losses/FILE
Those who spoke to Capital FM Business said heavy fighting that erupted in South Sudan’s capital on Sunday and has so far claimed 272 lives will have a spill over effect to the economy both from currency exchange and business losses/FILE

, NAIROBI, Kenya, Jul 13 – The civil unrest in South Sudan could negatively affect the Kenyan economy if it’s not contained, according to economic experts.

Those who spoke to Capital FM Business said heavy fighting that erupted in South Sudan’s capital on Sunday and has so far claimed 272 lives will have a spill over effect to the economy both from currency exchange and business losses.

Spire Bank Chief Executive Tim Gitonga observed that the unrest will see Kenya lose revenue in terms of taxes and exports to South Sudan.

“Kenyan businesses were beginning to sprout will be shut, there a lot of Kenyans who are working there and supporting our local economy… think about the Kenyan exports to South Sudan which will be curtailed,” Gitonga observed.

In 2015, South Sudan was the sixth largest export destination for Kenyan goods in Africa behind Uganda, Tanzania, Rwanda, Egypt and Democratic Republic of Congo.

Value of exports to South Sudan in 2015 hit Sh17 billion down from 2014’s Sh19.8 billion.

Kenya’s exports to the South Sudan market include pharmaceutical products, food, edible oils and other manufactured products.

Africa remained the leading destination of Kenya’s exports accounting for 41.7 percent of total exports at Sh242 billion in 2015.

The EAC partner states accounted for 52.3 percent of the total exports to Africa.

He however believes that the ceasefire will bring back operations to normality, but this may take a while.

“Kenya cannot watch as South Sudan goes to war, the country should be playing a bigger role in bringing South Sudan back to its feet, it’s is to our interest that the country is stabilised,” Gitonga told Capital FM Business.

Kenya Airways has already suspended flights to Juba following the unrest.

“Think about the Lamu Port Southern Sudan-Ethiopia Transport (LAPSSET) project, this project will continue to stall if Southern Sudan doesn’t stabilise,” he said.

He says Kenya’s Foreign Affairs office should be rallying the international community to address the issue of Southern Sudan once and for all.

On his part, Kevin Kiprono Senior Portfolio Manager at Pan Africa Asset Management says local banks with a footing in South Sudan are also affected.

Kiprono cited four Kenyan local banks that have regional exposure to South Sudan that have been forced to close their operations indefinitely in that region and some staff have been evacuated back to Kenya.

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