Kenya political risk declines as markets shrug off ICC rulings

Kenya’s economic and political stability survived a crucial test on Monday as the International Criminal Court allowed the prosecution of two presidential hopefuls over allegations of crimes against humanity, with markets holding firm and political tension eased.
The ruling will, however, put pressure on President Kibaki to rethink the fate of his Finance minister, Uhuru Kenyatta, and the 66-year-old Head of Civil Service, Francis Muthaura. Others to face trial at The Hague-based court include presidential hopeful William Ruto and Kass FM journalist Joshua arap Sang.
On Monday, business leaders and analysts found solace in the ICC ruling saying it helped clear uncertainty and pessimism that lingered over the economy .

“The most important thing is that the uncertainty and apprehension is over. At least we now know where we are,” said Robert Shaw, an independent economic analyst.

While economic confidence is expected to remain stable, with few shocks expected in the short term, the next phase of the trial will test the strength of the Kenyan markets.

“It is the next page in a process and we have moved on which is important. We have work lying ahead such as implementing the Constitution and prepare for elections,” he said.

While President Kibaki on Monday came out in a unity call, key indicators such as the currency market remained unchanged — an indicator that they could have absorbed the shocks already.
“The crux of the matter is the reaction to the decision not the decision, which was expected. We are witnessing an inflection point lower in Kenya political risk. This is a tipping point. Kenyan markets have all the bad news baked into the price and none of the positive,” Aly-Khan Satchu, an analyst, told Reuters.

Data by Reuters said commercial banks posted the shilling at 86.50/70 against the dollar during early trade, barely changed from the 86.60/80 it was before the ruling was announced.
Proceedings at the Nairobi Securities Exchange (NSE) were also stable despite the indicative NSE 20 Share Index going down slightly by 0.42 per cent to stand at 3171.63 points.

Vimal Shah, CEO at Bidco Oil, said the calmness that followed the ICC decision signified that the country’s population had matured, hence lower political risk.

“Clearly it was business as usual for Kenyans who seem to have learned their lesson from the past and we expect the economy to carry on normally,” he said.

Investors across the world keep an eye on political risk factors for their decisions on which economies to place their bets.

Mr Kenyatta, alongside Muthaura and Mohammed Hussein Ali, the post-master general and the police commissioner at the height of the poll violence, were accused of crimes against humanity, including murder, forcible transfer of population, rape and persecution.

Mr Ruto, a former Higher Education minister, was accused alongside former Industrialisation minister Henry Kosgey and Sang, of crimes against humanity, including murder, forcible transfer of populations and persecution.
The six were suspected of stoking the violence that followed a disputed election in December 2007, in which at least 1,200 people died and hundreds of thousands were forced from their homes and property destroyed.

In its ruling on Monday, the ICC pre-trial chamber II voted to commit Messrs Kenyatta, Ruto, Muthaura and Sang to trial and dropped cases against Mr Ali and Mr Kosgey.

“As a result of the decisions issued today, Mr Ruto, Mr Sang, Mr Muthaura and Mr Kenyatta are committed to trial. They will be tried before a different Chamber for the charges confirmed. To this end, one or more Trial Chambers will be established by the Presidency of the ICC,” Ms Ekaterina Trendafilova, the presiding judge of the chamber said on Monday.

Monday’s anticipated ruling by ICC chamber had elicited massive political uncertainty with security being beefed-up across parts of the country to guard against any violence by those aggrieved by the decision of the judges.

No violence was however reported in any part of the country following the ruling, handing relief to business owners still cautious about the unrest that rocked the country in early 2008.
“Kenyans learnt their lesson following the violence in 2007 and would not do anything of the sort. Life must go on,” Mr Shah said.