the poultry project

Security, Stability Necessary for Economic Growth

July 20th, 2010

Following the July 11 terrorist attacks that rocked the Ugandan capital of Kampala, billionaire Kenyan businessman Chris Kirubi discussed how instability brought about by the threat of terrorism can cause great harm to the economic climate of the region. In a July 19th opinion piece for Business Daily Africa Kirubi said,

“Take for example the average Kenyan, who after many years of saving and visualising being self-employed, decides he wants to establish an up-market eatery that can be frequented by all nationalities.

Apart from the usual fixed overhead costs, he now has to contend with additional insurance costs to cover terrorism and the re-building of his business in the event of such a catastrophe.

He is obviously going to think harder and longer before starting up any such venture which puts at risk his whole livelihood.”

Kirubi notes that in East Africa small to medium market enterprises are some of the biggest creators of jobs in the region. In order for entrepreneurial-minded people to go about starting such small to medium-sized businesses political stability within a country, as well as within neighboring countries, is essential. Such a statement may seem obvious but it’s difficult to overstate the importance of peace, stability, and a competent government for developing economies. Without the assurance that their businesses will be secure from the presence of any external threats seeking to damage them (terrorists or a civil war for example), entrepreneurs are much less likely to start their own businesses. Fewer small businesses mean fewer employment opportunities that in turn mean lower levels of consumption. Lower consumption levels hurt already existing businesses leading to a downward cycle in economic activity. All in all instability reduces the likelihood developing countries will experience economic growth.

You can check out Kirubi’s full piece here.

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