Landlocked neighbours worried by possible Kenya poll violence

Wed Feb 20, 2013 7:01pm EST

* Regional economies hit by Kenya's 2007 poll violence

* Kenyans votes March 4 in first vote since the fighting

* Companies, aid agencies talk of contingency measures

* Plans on to cut over-dependence on Mombasa port

By Kevin Mwanza

ATHI RIVER, Kenya, Feb 21 (Reuters) - Kenya's landlocked neighbours are stocking up on fuel and food to prevent the kind of disruption they suffered after being cut off from the port of Mombasa by angry rioters following a disputed election five years ago.

About 200 million people in Uganda, Rwanda, Burundi, South Sudan and eastern Congo could be affected if Kenya goes through a fresh bout of fighting when it holds presidential and parliamentary elections on March 4.

The port of Mombasa serves its wide hinterland with imports that include oil, clinker which is used to make cement, steel, bitumen for road construction and second-hand cars, while the main exports include tea, coffee, and horticultural products.

Some 95 percent of all the cargo coming in through the port is trucked by road. Truck drivers at a weigh bridge in the small town of Athi River on the fringes of the capital Nairobi said there were already fears of violence.

"Everybody is scared about the elections, especially the foreign truck drivers. Last time some of us were attacked and goods were lost," said Charles Mburu, 36, who has driven trucks for the last eight years.

"Our employers are not just insuring the goods and trucks, but also the drivers. You have to be certain that they will compensate you in case of an attack."

Supporters of Prime Minister Raila Odinga, the opposition leader at the last vote, claimed he lost his bid for the Kenyan presidency after President Mwai Kibaki rigged the vote, setting off a bloodbath in which more than 1,200 people were killed and 300,000 displaced.

After the December 2007 election, machete-wielding youths blocked roads and looted trucks they had hijacked. They burnt tyres to cut the road from the port and uprooted railway lines, strangling trade to Uganda, Rwanda and Burundi for weeks.

Odinga is back in the race for the presidency, and has a narrow lead over Deputy Prime Minister Uhuru Kenyatta, according to opinion polls, raising the spectre of a close vote and a possible dispute over the result.

Kenya, Uganda and Tanzania all suffered inflationary pressures in 2008 due to the impact of the post-election crisis that damaged regional growth.

This pushed Uganda's headline inflation rate to over 10 percent in January 2008, while the country's revenue body reported daily revenue losses of up to $600,000.

Burundi's top hard currency earners coffee and tea were also hit hard - the tiny landlocked country transports over 80 percent of its produce through Kenya.

"Our tea stocks in Bujumbura expired for consumption because we could not export or send it to Mombasa," said Jacques Bigirimana, commercial director at state-run tea board.

PLAN B

Banks and importers have been taking defensive positions by buying dollars in Kenya and Uganda, traders said.

The Uganda shilling hit a 14-month low against the dollar on Jan. 4 due to aid cuts by at least five western countries, including Uganda's biggest bilateral donor Britain, after officials in the prime minister's office were accused of embezzlement, and jitters over election violence in Kenya.

The Kenyan shilling has also taken a knock from the cautious importers stockpiling dollars, and is down 1.7 percent so far this year, despite the central bank selling dollars to shore up the local currency.

"If chaos breaks out in Kenya again, both the currencies will come under serious pressure due to investor flight," said Ignatius Chicha, head of markets at Citibank in Nairobi.

To mitigate against disruption of the supply of goods, the company operating Kenya's railway system has bolted down the railway track to prevent any chance that it may be damaged.

Opposition supporters in Nairobi's Kibera slums, one of Africa's largest urban settlements, manually uprooted miles of railway tracks in protest at what they said was a stolen vote, preventing the cargo from reaching Uganda.

"There is a learning curve from what happen in 2008," said Karim Sadek, the managing director of Egypt's Citadel Capital, owner of a Kenyan company that manages its railway line.

"God forbid, if anything happens, we will of course have contingencies. I won't be sitting here, saying it won't affect the business, it will affect the business, seriously," he said.

"In the flash areas where violence happened last time, we've welded the rail. So 10 km of rail is a heavy proposition to lift," he said.

Companies with a regional presence also said they would take steps to prevent being caught unawares again.

The Ugandan unit of Shell is building large reservoirs of fuel as a back up at Jinja, east on the capital Kampala on the shore of Lake Victoria.

"... We're building up some reserves on our own and some other oil companies are doing the same, and that collective effort gives a good back up," Ivan Kyayonka, Shell Uganda's country manager said.

Abid Alam, managing director of one of Uganda's biggest constructions firms, the Alam Group, said his firm had bought huge stocks of raw materials to prepare for any disruptions.

Alam said last time around his company suffered badly, with fuel and other supplies disrupted.

"This time there's a lot of uncertainty surrounding the forthcoming elections and it is scary to use the Mombasa-Uganda-Rwanda transport corridor," Alam said. "Mombasa must not be looked at as a Kenyan port but a regional port that must be secured from any internal political strife."

Kenya's Bidco Oil Refineries, one of the largest consumer goods maker with exports across the region, said it has already moved stocks to neighbouring countries to avoid disruption.

"We've taken measures to ensure that all our clients are well stocked both in Kenya and outside," said Vimal Shah, its chief executive officer.

'NOT A SINGLE DROP'

Worsening security in Kenya would also mean aid groups could be unable to reach millions of people displaced in fighting in eastern Congo who may be going hungry, a spokeswoman for the World Food Programme (WFP) said.

The United Nations agency, which distributes more than 400,000 tonnes of food to nearly seven million people in east, central and southern Africa annually, has also made plans for supplies to be moved through Kenya to Uganda.

The agency also plans to have its ships dock in the port of Dar es Salaam in Kenya's neighbour Tanzania, and Djibouti.

"We have moved most of the food stocks we will need downstream to Eldoret and Tororo," Challiss McDonough, WFP's spokeswoman in the region, said, referring to the north-western town of Eldoret near the border with Uganda, and Tororo, just inside the landlocked country. The stocks could last for two months, she added.

The Mombasa port handled 22 million tonnes of cargo last year, up from 20 million tonnes in 2011, with about two-thirds of the total traffic of cargo destined to its neighbours, meaning they almost totally depend on its smooth operation.

(Additional reporting by Drazen Jorgic in Nairobi, Joseph Akwiri in Mombasa, Elias Biryabarema in Kampala, Jenny Clover in Kigali and Patrick Nduwimana in Bujumbura; Writing by James Macharia; Editing by Giles Elgood)