Somali Islamist rebellion al-Shabaab claimed responsibility for the four-day siege of the Westgate upper-class Nairobi shopping mall that killed dozens of people, Kenyans as well as expatriates. Kenya invaded southern Somalia in October 2011 for containing insecurity by fighting al-Shabaab and for protecting its nascent economic interests in bordering northern Kenya. This retaliation attack has been the largest terrorist incident in Kenya since 1998 - when an attack on the US Embassy killed 300 Kenyans - and symbolises the price the country pays for being a major player in the fight for sub-regional security.
Impact on country risk
Over the coming months the government is likely to demonstrate its security credentials by scaling up the military campaign in southern Somalia. Security operations are likely to find increased support from foreign governments, as the Westgate attack might have reversed the trend of international isolation due to the ICC (International Criminal Court) trials against President Kenyatta and Deputy President Ruto for their involvement in post-election violence in 2007-08. Domestically, security forces are expected to clamp down on ethnic Somalis (both refugee and indigenous) and the Muslim community. Such crackdowns will further marginalise these communities and foster the risk for home-grown retaliatory attacks. In the short term, the Westgate attack creates uncertainty regarding the safety of Nairobi - a regional business and tourist hub - and might directly affect tourism in Kenya, which accounts for 12.5% of GDP and 11% of total employment. Should the attack eventually remain an isolated event, it is expected for confidence in Nairobi to recover in the longer run. Nevertheless, Kenya’s economic growth performance and government finances are likely to be affected by lower tourism revenues and higher security spending in the near term. The bidding for the country’s upcoming sovereign bond debut is not expected to be affected.
Analyst: Louise Van Cauwenbergh, email@example.com