Peaceful vote lifts investor confidence in the economy

Kenyans on Wednesday went to the polls to determine the fate of a document that could drastically change the way the country is governed, lift investor confidence and intensify the pace of economic growth.

Final results of the vote are expected to be known today with many analysts predicting that a positive outcome will boost confidence and cheer local currency and the stock market, giving the economy a fresh impetus to full recovery.

It promises a drastic shift in the management of the country’s finances, land and politics laying a strong foundation for future growth.

Key planks of the proposed law include its aim to crush Kenya’s imperial presidency, devolve power, reform land tenure and affirm citizens’ basic rights.

Polling stations opened early and were marked by long queues showing high voter turnout.

No major incidents were reported during the exercise, which was under heavy police presence, especially in hotspots such as Nairobi slums and Rift Valley province.

The Interim Independent Electoral Commission (IIEC) started tallying the votes at the Bomas of Kenya late in the evening –– using its technology driven relay system that is based on mobile phones and laptops.

Today, the Kenya shilling and the stock market — two key indicators of the health of the economy — are expected to show renewed strength riding on the momentum that began on Monday as optimism rose over the expected positive outcome of the vote.

Business leaders have endorsed the proposed laws, saying they have the potential to put the country on a more stable foundation that is needed for long term growth.

“The proposed laws will create strong institutions that are needed for proper functioning of markets and anchor a legal framework that is key for growth,” Prof Njuguna Ndungu, the Central Bank Governor said on Monday.

In recent months, key sectors of the economy including agriculture, finance, commodities export, have shown signs of recovery.

The economy grew by 4.4 per cent in the first quarter of the year compared to 5.6 per cent in the same period a year earlier.

Treasury is projecting a growth rate of 4.5 per cent in 2010 and analysts have raised their forecast from four to five per cent.

“What happens after the referendum will greatly determine the economic outlook and investor confidence,” said Peter Wachira, an investment analyst PineBridge Investment — formerly AIG Investment. “A positive outcome will clear uncertainty over Kenya’s future and win the confidence of foreigners who want to invest in the country,” he said.

Equities and currency markets were closed yesterday but will be watched keenly this morning for reaction to the outcome of the vote.