By Gahigi Moses
Political turmoil in Kenya continues to affect the country’s economy, with its all-share index dropping by 1.24 per cent and the blue-chip index dropping by 1.14 per cent earlier today. This follows the rise of tension after opposition leader Raila Odinga pulled out of the repeat of presidential elections that were scheduled for the 26th of this month.
For decades, Kenya has had a history of economic dips during election years. The country’s economic data shows a clear trend where every five years, coinciding with the general elections, inflation in the country shoots up while the economy slows down. The beginning of 2017 saw investors in the country putting in place measures that would bolster against the anticipated economic slump.
Kenya’s economy has since taken an additional hit due to the prolonged election period, and no resolve appears to be forthcoming. So far the country has witnessed sharp drops in industrial output and consumption of diesel and electricity.
According to the Kenya Private Sector Alliance (Kepsa) most investors have refrained from proceeding with business as usual, resulting in decreased spending and consumption of goods countrywide. The National Treasury has also lowered its growth projection for 2017 to 5.5 per cent from 5.9 per cent due to drought and political unrest.
Earlier this year, the Kenya Association of Manufacturers’ Barometer Survey, which was carried out by the Standard Investment Bank and the Kenya Association of Manufacturers (KAM), reported that 57 per cent of Kenyan manufacturers were pessimistic about the country’s economic situation until September, with more than half (55 per cent) of them choosing to delay major new investments until political certainty was restored.
So far it is expected that this wait-and-see attitude will continue to prevail.
It remains to be seen what further implications Odinga’s withdrawal holds for the country’s economic future.