BMI View: The ability of al-Shabaab to launch a complex and large-scale attack against a shopping centre in Nairobi indicates that military defeats in Somali have led the group to focus on civilian targets abroad. The attack will deal a painful - but likely short-term - blow to Kenya's tourism sector, but we do not predict that it will seriously damage the East African country's economy.
At noon on Saturday 21 Septembe r between 10 and 15 terrorists used grenades and assault rifles to attack the Westgate shopping centre in the upmarket Nairobi suburb of Westlands. The assailants did not take hostages or attempt to negotiate with the authorities, aim ing instead to kill as many people as possible . Police responded later that afternoon and sporadic gun battles continued over the following 48 hours.
Government forces launched an assault on the building on the night of the 22 nd - in cooperation with American and Israeli advisors - and, while details were difficult to verify at the time of writing on September 23, most of the complex appears to be under government control. Reports suggest that approximately 70 people were killed and almost 200 wounded. Both of these numbers are likely to increase over the coming days.
Responsibility for the terrorist attack, the bloodiest in Kenya since 1998, was claimed by al-Shabaab, a Somali militant Islamist group affiliated with al-Qaeda. The group announced that it was responding to the presence of Kenyan troops in Somalia, where Nairobi is supporting a fledgling new federal government . An a udio statement told Kenyans to ' leave our country , or live with constant attacks' .
The attack proves that recent Kenyan victories in Somali have not deprived al-Shabaab of the ability to launch complex operations abroad, and it likely signifies a consolidation of power by Ahmed Abdi Godane's more internationalist wing of the group . The Westgate attack will deal a further blow to Kenya's embattled tourism sector, which was already struggling following political tensions and a fire at Nairobi's airport in August 2013 . Further attacks could dent faith in Nairobi's position as a regional economic hub, though BMI stresses that a single event is unlikely to seriously damage the Kenyan economy .
|Failed States Make Poor Neighbours|
|Somalia - Zones Of Control|
Who Are al-Shabaab?
Near anarchic conditions have reigned in Somalia since 1991, when President Mohamed Siad Barre was deposed, causing the country's government institutions to collapse. The current Somali government is a fragile coalition that only controls a small portion of the country's territory, and is heavily reliant on 18,000 peacekeepers from the African Union Mission in Somalia (AMISOM).
|Kenya Getting Stuck In|
|AMISON - Troop Contributions|
Many rural areas are controlled by al-Shabaab, a militia which aims to establish an Islamic state in Somalia. The group, whose name means 'the youth', was formed out of a wider Islamist movement that controlled Mogadishu, Somalia's nominal capital, in 2006. They controlled the key port of Kismayo until 2012, when they were expelled by Kenyan forces, which intervened in Somalia following several kidnappings along the two countries' border. Kenyan troops remain active in Somalia as part of AMISOM.
The loss of Kismayo deprived al-Shabaab of millions of US dollars worth of smuggling revenue and triggered an internal debate over the group's future. In June an internal power struggle resulted in the death of several key leaders, with Ahmed Abdi Godane eventually taking control. Godane, a veteran of the war in Afghanistan, is thought to have a more internationalist outlook than other leaders, who are primarily Somali nationalists.
While al-Shabaab has launched attacks outside of Somalia before - notably in Kampala in 2010 - BMI believes that the Westgate attack signifies that Godane's view of a regional struggle is likely to take hold over the group. Indeed, given its failure to control territory in Somalia itself, terrorist attacks against civilian targets in AMISOM-contributing states are likely to become the group's key modus operandi. Some analysts have characterised the attack as an 'act of desperation' by a group with no other options left.
Westgate Is Not The New Normal
BMI notes, however, that the Westgate attack was a complex operation that will have taken time and resources to plan and execute. The majority of al-Shabaab's attacks outside of Somali are small-scale bombings. While we cannot exclude the possibility of another mass-casualty attack, al-Shabaab does not have the manpower, resources, or organisational capacity to launch large-scale operations on a continuous basis. The success of a single large-scale terrorist attack does not indicate that the group will be able to 'scale-up' all of its operations to a similar level. The January 2013 In-Aminas gas plant attack in Algeria by a separate Islamist militant group provides a useful example.
Another Blow To Battered Tourism Sector
BMI predicts that the attack will further damage Kenya's struggling tourism sector, which is already reeling after political tensions in Q1 and a damaging airport fire in August. We note that tourism arrival figures had fallen in month-on-month terms for most of the first half of the year. Negative news surrounding the attack, which targeted a location popular with tourists and which killed several foreign citizens, is likely to deter visitors. Even so, we note that the 1998 US embassy bombings in Nairobi (which killed more than 200 and wounded 4,000) caused tourism arrivals to stagnate, but did cause the industry to shrink. The attack on a civilian leisure location may increase the emotional salience of the attack for some potential visitors, but we believe that the impact on the s ector will be relatively short term. The focus of the tourism sector on relatively remote rural areas will cushion the blow somewhat.
How Lasting An Impact?
More broadly, BMI does not believe that the attack poses a serious threat to the Kenyan economy. The country has suffered terrorist attacks in the past, and has a relatively established and professional security service which will step in to prevent panic. The retail sector in Nairobi will suffer, but headline growth is likely to remain stable. The Kenyan shilling had weakened to KES87.6/US$ at the time of writing, but remained above lows seen earlier in September. There are, however, two key risks to this forecast.
The first risk is tensions between Kenyans and ethnic Somalis living in Kenya. Previous al-Shabaab bombings have led to reprisal attacks, and an escalation of ethnic tensions could be deeply destabilising, especially in Nairobi. Quick action by the Kenyan government to increase polic ing in Muslim areas, however, may avoid large-scale violence.
The second risk is that Nairobi's position as a regional economic hub will suffer if attacks in the city become more common. Kenya's capital serves as one of Africa's key economic and financial centres, and is the regional base for many international firms. This position is due in no small part to the perception that Kenya provides a relatively secure base from which to operate in East Africa, which has few other stable economie s. Perceptions that the city no longer offers a secure environment could be economically damaging, but BMI stresses that this is only likely in the event that relatively large-scale attacks continued at a high rate. While tragic, an individual event is unlikely to cause firms with billions invested in Kenya to reconsider their location.