Election Cycles Should Not Slow Economy

Kenya has just re-elected President Uhuru Kenyatta for a second term in office. As the results were streaming in, millions of Kenyans were holed up in their houses, apprehensive to venture back to normalcy, until the Independent Electoral and Boundaries Commission (IEBC) announced the official presidential results. Cities and major towns were devoid of activities as people kept off the streets. The trepidation was plausible since memories of the 2007 – 2008 post-election violence are still fresh in Kenyan minds.

During the post poll violence, 1,333 people were killed and more than 650,000 people were displaced. Business premises were destroyed and some investors relocated permanently. The tourism industry was worst hit after Western embassies issued travel advisories causing the tourist numbers to fall drastically. Two days after the poll, officials from Kisumu Business Coalition asked the government to provide adequate security for Kisumu residents. “We want to see the return of normalcy. We urged the transport industry to resume work and serve the workers.

We also request security for our staff who will be coming to work,” Israel Agina, the coalition’s chairman said. Since the 2007 post elections violence, investors are cautions to invest in the country during the elections period, making the economy to almost come to a halt for a few days. Highly charged political campaigns, and the uncertainty of the elections aftermath affect investors’ confidence as they adopt a ‘wait and see’ attitude.

It is for this reason the Kenya bears heavy economic cost in every elections year, aside from the cost of running an election. For instance, this year’s elections cost the tax payer more than Ksh 50 billion. The Kenya’s Economic Survey 2017 by Kenya National bureau of Statistics (KNBS) indicated this year’s elections will play a key role in Kenya’s economic growth in 2017. According to KNBS Kenya’s economy grew by 5.8 percent in 2016. In April this year, the World Bank lowered Kenya’s economic growth outlook from 6 percent to 5.5 percent.

Diariétou Gaye, World Bank’s Country Director linked the slow growth to famine, rising oil prices and the slow uptake of credit by the private sector. According to economic analysis by, Dorothy Otieno and Vincent Ng’ethe, of Daily Nation Newsplex, Kenya’s economy shrank by 0.8 percent in the 1992 elections. The country experienced tribal clashes in the rift valley and there was an exodus of populations whose main occupation was business and farming. The Rift Valley is also the country’s bread basket. In the 1997 elections, the economy grew by 0.5 percent. Again the country was rocked by ethnic clashes in the Coast and Rift Valley areas.

The devastating El Niño rains also negatively affected the agriculture sector. In the December 2002 elections, former President Mwai Kibaki won and brought to end the 24 year rule of former President Daniel Moi. In that year, the economy grew by 0.5 percent. However, the aftermath of the 2007-2008 post-election violence was the worst to hit the country. It led to an economic growth decline of 0.25 percent.

East Africa’s economic hub
Kenya is the economic hub of East Africa, and when Kenya sneezes, the neighboring countries catch a cold. The land locked countries Uganda, South Sudan, Democratic Republic of Congo (DRC), Rwanda and Burundi depend on the political stability of Kenya to import their goods through the Mombasa Port.
According to International Monetary Fund (IMF) working paper on How Does Political Instability Affect Economic Growth? Written by Ari Aisen and Francisco Jose Veiga, political instability more often
reduces a country’s economic growth, both statistically and economically.

“Political instability affects the economy by leading to “a more frequent switch of policies, creating volatility and thus negatively affecting macroeconomic performance.” The authors Aisen and Veiga propose that, “governments in politically fragmented countries with high degrees of political instability need to address its root causes and try to mitigate its effects on the design and implementation of economic policies.”

South Africa’s political shakeup
As Kenya was conducting elections on August 8th, South Africa’s President Jacob Zuma narrowly survived his sixth vote of no-confidence motion for corruption and poor governance. 177 MPs voted for the motion, 198 MPs voted against, and 9 MPs abstained from voting. Reuters news agency reported that
South Africa’s assets gained on August 7th, with the rand rising by 1.7 percent after the Speaker of South Africa’s parliament allowed a secret ballot for President Zuma’s no-confidence vote.

However, the rand weakened by 1.5 percent to a one month low, after President Zuma survived the vote of no-confidence motion. Zuma’s tenure has been riddled by corruption allegations and poor governance. His leadership pitfalls have reflected on South Africa’s market. He was linked to the 246 million Rand Nkandla scandal. The country’s Constitutional Court ordered him to repay public funds used to refurbish his residence. Last year Zuma survived another vote of no-confidence motion for corruption allegations. In the last three years, President Zuma has appointed four different Ministers of Finance.

In March this year, President Zuma faced a backlash after he reshuffled his cabinet and fired Finance minister Pravin Gordhan. Deputy President Cyril Ramaphosa told Zuma off for the unpopular move. “The minister of finance was serving the country with absolute distinction. For him to be removed is to me unacceptable,” he said. President Zuma has received blame from government officials and the opposition for presiding over a poorly performing economy with a weakening currency, more so after the country’s economy fell into recession in June this year. This is a testament that economic growth correlates with political stability.

Florence Gichoya is an Associate Fellow with the Nkrumah Center for African Affairs and Global Peace (AAGP), at the Africa Policy Institute. Email: flogichoya@gmail.com

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