UN presence buoys Kenyan economy

The United Nations in Kenya brings in more foreign exchange than horticulture, tourism or coffee, a report says. Page 4

The United Nations in Kenya brings in more foreign exchange than horticulture, tourism, coffee or petroleum products, an analysis of the organisation's operations in East Africa has revealed.

In 1998, direct and indirect benefits to the country amounted to more than Dollars 350m (œ210m), second only to tea as source of exchange and equivalent to 3 per cent of the country's gross national product, or 19 per cent of exports.

The amount exceeded the government's combined budget allocations to roads, health and social welfare, said the report by the UN Development Programme.

The findings, in response to questions from the Financial Times, follow months of consultations among the 23 UN offices and agencies operating from Nairobi. They are all the more notable given criticism by donors of the country's poor economic governance - which led to the suspension of IMF support in 1997.

They reveal the extent to which Kenya's strategic advantage as a regional hub has shielded the economy from isolation in spite of years of declining infrastructure, economic mismanagement and rampant crime.

Nairobi is one of the United Nations' four global headquarters, and hosts the head offices of the UN's Environment Programme (UNEP) and Habitat, the UN Centre for Human Settlements.

Kenya offices of leading agencies such as the World Food Programme, Unicef and UNHCR co-ordinate activities in Sudan, Somalia and the Great Lakes, and their imports of humanitarian supplies form a significant proportion of Mombasa port's business.

Lokichogio, formerly a dusty camel town near the Sudan border, has mushroomed into the country's second busiest airport, housing hundreds of UN and non-governmental workers.

Of the Dollars 350m, less than half comes from direct programme assistance. The rest accrues from myriad spin-offs from transport, salaries, international conferences and secondary employment.

The UN employs 1,291 national and 922 international staff - excluding short-term contracts - at a salary cost of more than Dollars 130m. Almost Dollars 6m of that is distributed via secondary employment of UN house staff, including servants, gardeners, guards, and drivers.

House rents around the Gigiri area of Nairobi have soared, with popular UN residential areas fetching almost Dollars 1,700 a month, compared to around Dollars 750 for properties in other affluent suburbs. The combined rent premium amounts to more than Dollars 10m.

In 1998, Kenya received over Dollars 3m for mailing and telecoms services, water and electricity bills and security services. The cost of transport services to regional programmes - including airdops, the rehabilitation of railways and road construction - topped Dollars 32m.

In fact, Dollars 350m probably understates the UN's impact. Many NGOs have regional centres in Nairobi, consultants abound and several diplomatic missions might not exist without its presence.

In addition, Kenya is sub-Saharan Africa's second largest media hub. And local companies do good business with the agencies, supplying them with drugs, blended foods and blankets. Total UN procurement of supplies in Kenya exceeds Dollars 20m.

As one economic analyst quipped, only half in jest: "Whatever the donors think of Kenya, the UN's presence ensures the economy will always scrape by."