By Juliet Njeri
BBC News, Nairobi
No Kenyan Christmas would be complete without a roasted goat to feed the family, but the global credit crunch means some look set to miss out this festive season.
Orders for “Mbuzi ya Jamii” (goat for the family) are down sharply at Mama Mikes, an online store that allows Kenyans living abroad to pay for a range of products and services which are then delivered to their families back home.
These include goats, medical check-ups, supermarket shopping vouchers, school fees and others gifts.
“We have customers who are cancelling [orders] and most of them are saying that times are hard so they can’t do it anymore,” says Muthoni Machanga, the firm’s finance and accounting manager.
The firm’s customers typically spent between $60 and $100 per order three months ago, but this has now dropped to $45-60. Revenue has dropped by 30%.
Even the firm’s loyal customers, who maintain monthly accounts for shopping vouchers and school fees payments have started cancelling or reducing their orders.
Ms Machanga says they are getting at least two cancellations a month and this is worrying for them, and also for the families in Kenya who rely on the remittances.
“It’s putting families back home in Kenya under pressure at a time when they’re already under pressure from very, very high inflation. One can sense these pressures occurring in the economy,” says financial analyst Aly Khan Satchu.
This is just one of the ways that the global financial crisis has started to affect Kenya’s economy.
Remittances play a key role in Kenya’s economy
While analysts say Africa will be relatively cushioned from the worst effects of the global crisis, Kenyans are definitely starting to feel the squeeze.
Kenya relies heavily on the American, European and Asian economies for remittances, tourism and development aid and the sale of tea, coffee and horticulture exports.
A steep decline in these sectors could seriously affect the rest of the economy.
Mr Satchu says remittances have been a powerful anchor for the Kenyan economy.
In 2007, Kenya received $1.3 billion in remittances.
But the flow is starting to slow.
The Central Bank of Kenya says Kenyans abroad sent $36.5 million in August compared to $44 million in July – 38% less than they sent during the same period last year.
The drop in remittances and dollar inflow has affected the shilling, which is now trading at a three year low.
This has placed yet another burden on Kenya’s import-dependent economy, which is still recovering from the effects of the post-election crisis earlier this year, runaway inflation and rising food prices.
The prices of imported goods such as cars and electronic goods are up, and despite a significant drop in the global oil prices, Kenyans are still paying high fuel prices.
The Central Bank has maintained that Kenya’s economy will not be directly hit by the global crisis, but the Nairobi Stock Exchange tells a different tale.
The stock market has suffered a downward spiral for the last three months, and fingers have been pointed at the global crisis.
Prime Minister Raila Odinga has already sounded the alarm, saying the global financial crisis will hit Kenya’s economy badly.
This week, President Mwai Kibaki set up a team of experts to develop a plan to shield the country’s economy from the “inevitable” effects of the crisis.
Mr Satchu says the president is right to be worried and it is time for the government to get on top of the situation.
“If our policy-makers step up to the plate and actually start looking at the situation and dealing with it, I see a bright future and I see us getting back to six or seven per cent growth, notwithstanding what’s happening outside.”
No free lunch
For Mama Mikes, a local start up which is only five years old, the developments in the global financial markets are worrying.
Ms Machanga says the company is not getting new customers, and this has forced them to start cutting down on their operating costs.
The company’s 18 members of staff are no longer provided with a free lunch, and are not allowed to use taxis to get around.
“We’re trying to cut down on costs as much as we can, because in some areas you can’t do very much. We can’t tell people to get salary cuts with the current inflation,” she says.
Nevertheless, the company is optimistic about the future and doesn’t think it will to have to sack any of its staff.
With analysts saying that Africa could fare better than the rest of the world, Mama Mikes is hoping their orders for mbuzi will pick in time for the next festive season.
Goats, on the other hand, may be hoping for a continued slump so they can escape the Christmas pot.