Kenya faces hard spending choices after a positive vote

Kenya’s new Constitution passed the popular vote by a clear majority, ushering in a new legal dispensation that should help the country depart from nearly 50 years of bad government and set the stage for long-term growth.

Provisional results published by the Interim Independent Electoral Commission (IIEC) showed that the new set of laws secured nearly 70 per cent of the 8.2 million votes cast.

That approval rate was more than the two thirds threshold that constitutional lawyers said was necessary for a clear mandate and general acceptance.

The passing of the new law clears the way for Kenyans to start the hard part of living with its provisions, some of which are particularly distinct in their departure from the current dispensation.

The new Constitution is particularly distinct in the way it distributes power among the various arms of government and in the establishment of an elaborate system of checks and balances to curb abuse of power by senior public officials that analysts said will come at a high cost to the taxpayer.

It also comes with rigorous provisions expected to significantly change Kenya’s social, economic and political landscape.

Key among the changes expected in the next 12 months is the big shift in the way the government budgets for and spends its money – the new law having removed much of Treasury’s say in the matter and instead vesting it in new institutions.

When the new law comes into force after President Kibaki’s assent, parliament will for instance, have a big say in the budgeting process as well as in the appointment of nearly all senior public officers.

The new constitution also lays a firm foundation for future growth in its tackling the thorny issues of land ownership, equitable distribution of economic resources, corruption, political patronage and tribalism.

Its tough stance on corruption, the single vice known to have done the most damage to Kenya’s chances of prosperity, has, for instance, renewed hope that the country will reduce theft and waste in government and use the money to advance the course of development.

It improves financial probity in government by providing for recovery from holders of public office any public funds used illegally or lost under their direction.

Business leaders say the new legal regime is critical to the desired departure from the flawed political dynamics that nearly consumed the country after the disputed 2007 presidential election, hurting the economy and tainting Kenya’s image.

It is hoped that the vote’s outcome will help lower Kenya’s political risk profile, clearing the way for it to effectively compete with its peers for investment.

“The economy should gain additional momentum as politics takes a back seat allowing the captains of industry to drive the agenda,” said Mr Paul Mwai, the chief executive of African Alliance Asset Managers.

A high risk profile — a combination of economic and political risks — harms the economy by raising the cost of external borrowing and Kenya’s attractiveness as an investment destination.