Is economic stability always a good thing? Well, yes, of course it is. But
look at what’s happened to Kenya over the past few years, which have seen what
JP Morgan, in a recent research note (yes! a research note on Kenya!) calls
"broad-based, accelerated economic growth" – a crazy stock-market
bubble, with prices up 787% in dollar terms since 2002. The Guardian’s Xan
Rice has the story:
Stories of overnight wealth creation have created a huge frenzy for shares
from people who have never invested in the stock market before. When KenGen,
the state’s biggest electricity company, listed its shares last year, there
were queues at brokerages all over the country. Local media reported how small-scale
farmers were selling their cattle to buy the shares. Banks suddenly offered
"share loans" to people who had been considered unworthy of credit.
The KenGen offer was more than three times oversubscribed, and 70,000 people
were allocated shares. The price quadrupled on the first day of trading.
Both the strong economy and the soaring stock market date to the departure
of strongman Daniel arap Moi at the end of 2002, and his replacement by the
democratically-elected Mwai Kibaki, who is favored to be re-elected this year.
But now we can add a stock-market crash to all the other risks facing Kenya:
it borders the likes of Sudan and Somalia, for one thing, and of course there’s
the long-term toll of HIV/Aids. All the same, it seems that Kenya is much better
off now than it has been at any point in recent history – which is not
something which can be said of most sub-Saharan countries.
(Via Alphaville)
Man dear, it comes to a day when people are willing to sing the praises of Kenya. I wonder if our man at JP Morgan has been to Kenya?
When you say ‘Kenya is much (!) better off than at any time in its recent history’, the operative word is recent. Maybe things are better than a year ago, but not by much, I’d wager. Living standards have fallen pretty much year on year since 1975, they have extremely unstable neighbours to the north on the verge of war, severe drought and food shortages in many regions, corruption is as bad as it’s ever been, despite Kibaki’s promises and the country’s politics remains riven with tribalism and cronyism.
Sure, the stock market may be booming, but the rest of the country is a bloody mess.