Kenya stands to lose $24b in South Sudan conflict

Wednesday January 14 2015

Kenyans evacuated from South Sudan arrive in Nairobi in December last year. FILE

Kenyans evacuated from South Sudan arrive in Nairobi on December 26, 2013 following intense fighting in Juba. Kenya stands to lose as much as $24 billion in economic output if the war in South Sudan continues at high intensity for another five years, says new report. FILE PHOTO | NATION MEDIA GROUP 

By Kevin J Kelley

Kenya stands to lose as much as $24 billion in economic output if the war in South Sudan continues at high intensity for another five years, a London-based economic consulting firm warned on Wednesday.

Much of that cost would take the form of sharply reduced trade between Kenya and its troubled neighbour, said the report by London-based Frontier Economics.

"Kenya has substantial commercial interests in South Sudan," notes the 26-page study titled "South Sudan: The Cost of War."

"These reflect Kenya’s role as a major source of South Sudan’s imports, and the significant investments made by Kenyan enterprises in several services sectors, notably banking, communications and retail."

Continued conflict in South Sudan also presents the prospect of Kenya being threatened militarily by another "failed state" on its border, in addition to Somalia, Frontier Economics says.

"A second failed state in the region is likely to increase the difficulty and costs Kenya faces in controlling insurgent activity," the report suggests. It estimates that Kenya would commit an additional $200 million in military expenditures if the fighting results in long-term instability inside South Sudan.

The report bases that projection on an estimated $200 million increase in Kenya's military spending since late in 2011 when it intervened in Somalia in response to al-Shabaab's attacks.

Unabated conflict in South Sudan will also increase the influx of refugees into Kenya, which already hosts some of the world's largest camps for refugees.

About 44,000 South Sudanese have already fled to Kenya since the start of the civil war late in 2013, the economic consulting firm notes. It says the presence of these refugees will cost about $93 million this year, with the expense likely to be borne primarily by donor nations and institutions.

All of South Sudan's neighbours will experience negative economic consequences from a conflict that remains unresolved, the report says, estimating that Kenya, Ethiopia, Sudan, Tanzania and Uganda could collectively save up to $53 billion if the war were to end this year rather than continuing until 2019.

The cost to Kenya alone would be negligible under a "moderate conflict scenario" in South Sudan, according to Frontier Economics. Kenya's gross domestic product would be unaffected if the war were to end soon, the report says.

It calls on the Intergovernmental Authority on Development to heighten diplomatic pressure on the warring sides in South Sudan.

Frontier Economics prepared the report in conjunction with South Sudan's Centre for Peace and Development Studies and Uganda's Centre for Conflict Resolution.