Police clampdown costs Nairobi economy Sh10.4b

The closure of businesses on Monday may have cost Nairobi City County an estimated Sh10.4 billion, as economic activity ground to a halt following a heavy police blockade of the capital.

For a city that seldom sleeps and is typically bustling at sunrise, Nairobi’s streets were eerily deserted for much of Monday amid planned protests to mark Saba Saba Day. The only notable activity involved police vehicles on patrol and plainclothes officers roaming the streets on foot.

Data from the Kenya National Bureau of Statistics (KNBS) shows Nairobi City’s Gross County Product (GCP) stands at Sh3.8 trillion annually. This translates to approximately Sh10.4 billion generated daily — a figure potentially lost on Monday due to the shutdown of commercial activity.

This estimate excludes the ripple effect on surrounding counties that rely on Nairobi as a vital artery for commercial activities and other and logistics.

Of the Sh3.8 trillion GCP, financial and insurance services contribute the most at Sh885.6 billion, followed by real estate at Sh628.4 billion, and transport and storage at Sh581.2 billion.

Some financial institutions opted not to open their branches on Monday due to the risks associated with the planned demonstrations. “Dear customer, due to the ongoing protests, several of our branches are currently closed,” read a message from DTB Bank to clients.

Nairobi Hawkers’ Association Secretary-General Francis Gachanja told The Standard that businesses in the central business district were severely disrupted.

Informal arrangements

Beyond the anticipated losses from the day’s closure, Gachanja said members had incurred additional costs to protect their goods in light of looting and vandalism experienced during the June 25 Gen Z commemorative protests.

“We’ve hired people to protect our merchandise along the alleys. They are paid Sh1,500 a day — and this isn’t a one-off. We’ve contracted them for at least three days as they’re required to stay overnight to safeguard the goods,” he said.

Despite these informal security arrangements, Gachanja said some guards were still assaulted. As a result, some traders reinforced the doors and windows of their premises or moved goods to safer locations. “We relocated them to upper floors where access is harder for vandals,” he added.

According to the 2024 GCP figures, Nairobi contributes the largest share — 27.5 per cent — to Kenya’s gross domestic product (GDP), which currently stands at Sh16.2 trillion.

While GDP measures national economic output, GCP captures the same value at county level.

“Nairobi City leads with a GCP per capita of Sh802,344 — nearly three times the national average. This dominance stems from its status as the capital and major economic hub,” the KNBS report notes.

By contrast, the national average GCP per capita is Sh293,229.

Development economist Peter Biwott told The Standard that business closures have a ripple effect — from informal traders to government coffers.

“It has a huge implication, and when calculated comprehensively, the country stands to lose billions of shillings. People cannot transact in banks, traders cannot sell, and boda boda riders cannot ferry clients,” he said.

Biwott added that most urban businesses operate on a “hand-to-mouth” basis — vendors rely on daily earnings to meet essentials such as food, utilities, and school fees.

Ripple effect

He noted that many traders, lacking savings, may be forced to take high-interest loans from digital lenders or banks, further straining their finances.

Additionally, the losses extend to the public sector. Law enforcement personnel deployed to manage the protests represent an unplanned resource expenditure.

Monday’s protests came just two weeks after the June 25 demonstrations commemorating the Gen Z movement that emerged in opposition to the contentious Finance Bill, 2024.

Then, Kenya Association of Manufacturers (KAM) CEO Tobias Alando warned that the frequency of protests had added unpredictability to Kenya’s business environment.

“We remain committed to building national prosperity through sustainable industrialisation — including job creation, investment, and revenue generation. But this can only occur in a secure and predictable business climate that safeguards people, property, and capital,” said Alando.

In terms of income, Nairobi also leads on GCP per capita, with a population of 4.7 million and a working population of 2.2 million.

Prof Samuel Nyandemo, senior economics lecturer at the University of Nairobi, noted that the government will also incur losses due to reduced revenue collection by the Kenya Revenue Authority (KRA).

“This may compel the government to seek alternative revenue sources — either through increased taxation or further borrowing,” he said.

Prof Nyandemo warned that continued demonstrations could stretch into 2027 if grievances raised by the Gen Z movement remain unaddressed. He added that ongoing unrest undermines investor confidence and risks shrinking the economy.

“It compels investors to relocate. An unstable economy cannot flourish,” he said.