Although I am an overly optimistic person, I am now getting increasingly depressed over the situation in Mombasa.
The city on a sharp downwards spiral. And as it sinks, it will drag down the whole coast with it.
Last week, a private hospital fired 50 per cent of its workers. This is not because people have suddenly become healthier. It is because people cannot afford to go to hospital anymore. Unemployed people cannot afford to get sick.
Container Freight Stations have already let go of more than 3,000 people who were employed either directly or indirectly. The transport sector is dead. Thousands of trucks have no work and drivers and support staff have lost jobs. The logistics business has all moved to Nairobi.
My city is dying. Despite denials, the truth is that the port, which was the mainstay of our economy, has moved to Nairobi.
Tourism is struggling. While the big hotels are still surviving, the small ones that served the port have all lost clientele and are in deep distress. Their employees and suppliers have become collateral damage.
The recent violence in Kisauni, while inexcusable, is a reflection of the loss of hope amongst the youth. Next you might see a rise in cases of radicalization.
Things will get worse before they get better. A global recession is surely coming. We can already see it in Germany, Europe’s strongest economy.
For Kenya, this will surely mean less trade, less tourists, lower commodity prices, more unemployment. Recession will lead to unemployment abroad and many Kenyans there will lose jobs and remittances will reduce.
It is the remittances that are holding up the strength of the shilling. As the shilling depreciates, it will lead to inflationary pressures. Automatically our economic growth will decline. Our borrowing will increase – the classic case of the broke man borrowing to stay afloat. Political and social pressures will definitely increase.
What must we do?
There is nothing unique about our situation. It has happened in other countries and history tells us what happens next. We must find solutions. The worst thing is to pretend that things will get better without taking action.
The national government must implement a Marshall Plan for Mombasa. Without such intervention, things will only get worse. Crisis is an opportunity to try creative solutions. I see opportunities in the following areas which can give some quick results.
First, the Dongo Kundu Special Economic Zone (SEZ) is finally gathering steam. However, like all government infrastructure projects, this will take long before we see results in the Mombasa economy. It is important that the government immediately starts inviting private sector to start developing the SEZ. Government, with its bureaucracy, cannot move at the required speed.
Just allow and encourage private sector investment as the government finishes the required infrastructure.
Second, the closure of the CFSs creates an interesting opportunity to use them as experimental free ports. Instead of closing the CFSs, they should be turned into 10 mini free ports.
Let them import various items duty free and allow foreigners to come to Mombasa to shop just as it happens in Dubai.
Set up free zones for electronics, cars, building materials and other fast moving goods. Local customers will pay duty while those re-exporting to regional countries will pay duty at their respective border points.
Of course there will be problems. Kenyans will find a way of doing their normal ‘magendo’ and duty evasion, but these are teething problems that we must confront.
If we turn parts of Mombasa into a free port, this will immediately create thousands of jobs and business opportunities. Let us allow our neighbors to come and shop here as a prelude to setting up a free port in Dongo Kundu.
Third, to promote tourism, we should allow international airlines to land in Mombasa. We are busy protecting Kenya Airways but the results show this monopoly is neither improving the condition of the airline nor are our tourism numbers.
If more tourists come to Mombasa the entire tourism industry will improve across Kenya. The current protectionist strategy doesn’t work, so why are we continuing with it?
Fourth, the fishing industry is a great opportunity. For years, foreigners have been stealing our fish. Now we have set up a coast guard. This is a good start. Government has to put some cash into setting up a fishing fleet and hire people.
Let us ensure that bureaucracy is reduced and fishing licenses are quickly issued to Kenyan investors.
Fifth, we must aggressively start marketing and sending our youths to work abroad. They have better chances of getting jobs in a recession-hit Dubai or the United States than they will have when the recession tsunami hits Kenya.
Fortunately we still have an opportunity to turn things around. The Government must quickly take action.
Mr Shahbal is Chairman of Gulf Group of Companies [email protected]