* Tourism seen as vital source of employment
* Kenya needs hydrocarbon, infrastructure investment
* Businesses put post-2007 vote violence behind them
* Corruption, red tape still hinder business
By Drazen Jorgic and Joseph Akwiri
NAIROBI/MOMBASA, Kenya, April 1 Kenya's tourism
industry may be a swift winner from the election of Uhuru
Kenyatta, owner of hotels and a vast business empire, as east
Africa's biggest economy seeks to benefit from a vote that
avoided a re-run of bloodshed of five years ago.
Tourism is a vital sector for the nation of more than 40
million people and was one of the worst hit after a disputed
presidential poll in December 2007 led to weeks of tribal
blood-letting, scaring away investors and tourists by the
This time, a row over who won the vote was led by lawyers
instead of armed thugs. A reformed judiciary that reviewed the
case commands more respect than it ever did, a victory for the
rule of law that could also lift business confidence.
As well as seeking more visitors, Kenya wants oil and gas
investment to develop hydrocarbon discoveries, funds for a major
new port planned in Lamu and other infrastructure, and investors
to boost the nation's position as a regional manufacturing hub.
"Kenyan investment plans previously put on hold because of
election-related uncertainty are now likely to be realised,"
said Standard Chartered economist Razia Khan.
Foreign investment "may take a while longer to see a
meaningful increase but that should also start to rise in the
near-term," she said.
Old problems that annoy business, such as corruption and red
tape, have not changed with Saturday's ruling that confirmed
U.S.-educated Kenyatta won in a fair vote against Raila Odinga,
who studied in the former communist state of East Germany.
And a Kenyatta presidency comes with other baggage. He is
charged with crimes against humanity at the International
Criminal Court (ICC). That indictment complicates his personal
relations with Western states, although diplomats talk of a
"pragmatic" approach that should avoid harming trade ties.
"There is still the broader uncertainty of the ICC case.
Whether the charges stand will be closely watched," Khan said.
"GOOD TO GO"
Yet from the small-time shopkeeper who ran down stocks for
fear of renewed looting to five-star hotel executives fretting
about reservations, the nightmare of another spasm of violence
has been averted, with just pockets of unrest marring the calm.
"We have clients who were watching to see the outcome of the
petition and the reaction that would follow," said Mohammed
Hersi of luxury Whitesands hotel, Mombasa's biggest resort. "Now
we are good to go. We definitely will have more bookings."
Two people were killed when dozens of protesters took to the
streets in the western city of Kisumu, an Odinga stronghold. But
in Mombasa, another base of Odinga support, a desire to move on
outweighed disappointment that their man lost.
Some businesses said 51-year-old Kenyatta, whose family owns
the Heritage Group of hotels that range from a beach resort in
Mombasa to an Indian Ocean island hideaway in Lamu, could be a
boon for tourism. His family's empire extends to dairies, a
major bank and education.
"When Kenyatta was chairman of Kenya Tourism Board (KTB), he
was someone we could talk to," said Suresh Sofat, chief
executive of Somak Travel, one of Kenya's biggest tour firms.
"He understood tourism and was fighting hard for us all."
Challenges remain, not least how Kenyatta will juggle a case
in the Hague while running a country. He has insisted he can do
both and says he will cooperate with the court to clear his
name, welcome words for Western states that have a policy of
holding only "essential contacts" with ICC indictees.
Aides of Kenyatta, son of Kenya's founding president, talk
of looking east if Western nations spurn their president.
But both sides may work hard to avoid that. Chinese imports
may almost match those from Europe but 26 percent of Kenyan
exports in 2011 headed to the European Union compared to 0.7
percent that went to China.
"We have been partners for many years, we will continue to
be partners for many years," said one European diplomat in
Nairobi, adding that it was "not realistic" for Kenya to swiftly
switch its economy towards China.
Chinese influence has grown sharply across Africa, Western
firms may push to ensure their position in Kenya is not eroded.
Big names in the country include Diageo, Vodafone
, Tullow and Canada's Simba Energy.
Kenya's economy took a pummelling five years ago when weeks
of post-election violence led to the killing of more than 1,200
people. About 350,000 people were displaced from their homes.
Growth has still not returned to the 7 percent level it
reached in 2007 before the bloodbath began. The economy grew 4.5
to 5 percent in 2012, the International Monetary Fund estimated,
forecasting before the election that it could reach at least 5.5
to 6 percent in 2013. Prospects could now improve further.
But it still puts Kenya behind some African neighbours,
which were equally concerned by the vote because their economies
were hit after 2007 when trade routes through Kenya shutdown.
"We expect to see increased capital inflows and especially
foreign direct investment," Finance Minister Robinson Githae
said soon after Kenyatta was declared winner on March 9.
And, even as his victory was challenged in court following
the calm voting on March 4, Kenya seized on positive sentiment
to announce plans for a debut $1 billion Eurobond.
Kenya's initial plans to issue a $500 million Eurobond were
delayed by the post-election violence in early 2008.
Tourism earned Kenya $1.12 billion in 2012 and was the third
biggest foreign exchange earner behind tea exports ($1.31
billion) and remittances from Kenyans abroad ($1.17 billion).
But the industry is particularly valuable because it is a big
employer, vital for a nation with an expanding population.
"If the country is going to develop in a balanced way, there
has to be an emphasis put on the tourism sector," said Phumelele
Mbiyo, head of macroeconomic research at CFC Stanbic Bank.
Kenya drew in 1.23 million tourists in 2012, far fewer than
the 8 million or so a year that visit South Africa, a nation
that offers a similar mix of beach resorts and safaris.
Kenyatta's Jubilee coalition pledged to hike that to 3
million visitors a year. It could be helped by growing interest
in Kenya as a destination.
"I was at the world tourism trade fair in Berlin and all we
did was to sign new contracts and renew old ones," said Hersi,
referring to a meeting in March. "Things are looking up, and
everyone is suddenly very interested in Kenya."
Seven global firms are among those showing interest in
Kenya, including Best Western, Country Lodge, Accor,
Carlson Rezidor, Dusit, easyHotel and Kempinski.
Lagos-based consultancy W Hospitality Group said they would
add 1,500 rooms to Nairobi, with 700 opening in 2013.
"This country holds huge promise," said the European
diplomat. "It can grow much faster than it has been growing."