Politics to take centre stage in shaping economic outlook ahead of August polls

The New Year began with widespread calls for peace. In his New Year’s address, President Uhuru Kenyatta asked all Kenyans to be peaceful and all leaders to preach peace.

The new UN secretary general Antonio Guterres pledged to make 2017 “a year of peace”. Without peace, there can be no progress or prosperity. Numerous op-ed pieces in our dailies have also said just as much.

This is also the year in which we will hold the sixth General Election since multi-party politics was re-introduced in 1991.

So this year’s peace is not only about silence, but justice. In this case, electoral justice. Instead, we are spending time arguing about electoral administration.

This year’s election promises to be particularly competitive, at national, county, constituency and ward levels. We often forget this in the perennial exchanges between President Kenyatta and Opposition leader Raila Odinga, as well as their lieutenants, cheerleaders and acolytes.

So much so that, in reading their recent New Year messages, and even allowing for differences in perspective common to political competition, any foreign visitor or returning citizen would be justified in thinking there are two different countries — parallel universes — called Kenya.

I am reminded of a quote in the British political satire Yes, Prime Minister on who reads the UK papers, thus: “The Mirror is read by the people who think they run the country; the Guardian by the people who think they ought to run the country; the Times by those who actually run the country; the Daily Mail by the wives of those who run the country; the Financial Times by the people who own the country; the Morning Star by the people who think the country ought to be run by another country; and the Telegraph by the people who think it is.”

Substitute Kenyan press titles, including gutter press, as appropriate. That’s where we are headed to in this “post-truth” world. I am surprised that our local creative economy hasn’t yet — to my knowledge — produced this sort of political satire as edutainment — civic education as entertainment — absent of our usual ethnic and other stereotyping as comedy. But I digress.

Let’s take a wider look at 2017. The Treasury’s recent Budget Policy Statement, as well as the World Bank’s latest Economic Update are both fairly bullish about Kenya’s economic prospects this year, predicated largely on a peaceful General Election and mega-projects.

The latter does also highlight external risks around a stuttering global economy in a post-Brexit and pre-Trump world. But the language in these documents is too polite.

In addition, The Treasury will soon publish its ‘Pre-Election Fiscal and Economic Report’ as required by the Constitution and public finance law.

Since the pre-2013 report was never publicised, one assumes its content will be restricted to the narrow fiscal effects of the election, rather than important developments in, and adjustments to, fiscal, monetary and overall economic policy.

So how would private sector scan the 2017 environment, and not just the election, for signals?

We could do worse than revert to that time-worn strategic planning/environmental scanning tool – political, economic, social and technological (PEST) analysis.

What does PEST tell me for 2017?
Politics naturally is the main event. During the pre-election period, political campaigning — and the cacophony therein — will dominate our first six months. Both sides of the political divide are resistant to campaign finance restrictions so funds will flow freely.

Even with the best will, it is almost impossible to fight corruption during this time, especially “off-budget” (or wholesale) corruption. Think 20,000 candidates for 1,882 electoral posts from President to MCA.

The post-election period – in the eighth month of the year – probably means that the rest of 2017 will be about “homecoming”. Regardless of whether or not there is a transition in administrations, normal “economic” activity will only likely resume in 2018.

Politics and the economy are inextricably linked. However, it is unlikely that global political events will significantly impact ours in the near term such as the incoming Trump administration, or the return of far-right politics in Europe.

Further, the UK seems completely unprepared to implement its Brexit decision. On the other hand, local decisions must be made on the Economic Partnership Agreement with the European Union that Tanzania and Burundi continue to resist.

However, any interest rate hikes by the US Federal Reserve and a surge in crude oil prices based on Opec and non-Opec production cutbacks are bad news for our shilling. This could be the perfect storm.

Begin with a weakening shilling in the face of rising import volumes — probably consumption-driven electoral spend rather than investment — and Chinese standard gauge railway (SGR) and Eurobond debt service and possibly lower pre and post-electoral tourism receipts and agricultural production.

Consider rising inflationary pressures in a fixed interest rate environment. Add on the likelihood of profligate national and county government deficit spending based on an early-approved budget and a last-minute infrastructure push.

Factor in continued corruption in an election year. Credit squeeze? Job losses? The economic signs for 2017 are not too promising.

And here’s a wild card thought. Is the ongoing “acquisition” of RVR related to the rush to get our newly-minted oil into export markets before the election? It’s too late to build the eastwards road to Lamu from Lokichar. The SGR is still a work-in-progress. Food for thought.

Politics and economics represent the “big stuff”. On a day-to-basis, however, it’s the social aspects that people relate to. The first issue to watch is what happens to a restive youth yearning for economic opportunity in a poisonous political environment.
The second is the impact of what — after the 2007/08 post-election violence— the World Bank referred to as “social fractionalisation” – divisions on account of ethno-linguistic or religious differences.

Simply, for the everyday Kenyan in 2017, “the world is not flat”. This is an important point. The trouble in the developed world is that progress and prosperity has become increasingly exclusive. In a developing country like Kenya, it was never inclusive in the first place.

Can technology be our saving grace in 2017? As I have said previously, it’s probably time to start thinking of “bottom-up” approaches that address people’s real needs rather than “top-down” big government brainwaves that end up as outcome-absent mega-projects.

Think about this in the context of the complex integrated poll management system that Independent Electoral and Boundaries Commission plans to procure, install, pilot, rollout and successfully use between now and August.

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