Kenya’s economy is relying on a speedy and peaceful conclusion of yesterday’s election to claw back the huge losses it has suffered since the beginning of the year as concerns over its outcome caused jitters and slowed down business to a near halt.
Kenyans voted for leaders across six elective positions, the highlight being the tight presidential race that pit President Uhuru Kenyatta against opposition leader Raila Odinga.
Investors and business owners have adopted a wait-and-see attitude in the weeks leading to the election, potentially costing the economy billions of shillings in lost opportunities due to production cuts.
Yesterday, polling stations opened to orderly and peaceful voting in many parts of the country, largely absent of the technical hitches that characterised the 2013 elections leading to disputed outcomes.
Millions of Kenyans said they had played their part and that the ball was now squarely in the Wafula Chebukati-led Independent and Boundaries Commission’s (IEBC) court to deliver credible results. Analysts said a speedy return to normalcy depends on the credibility of results that the IEBC will announce and its acceptance by all parties.
“The most important moment of the election is declaration of results and their acceptability by the winners and losers – not how orderly the polling stations are, how long the queues are, how the technology performs or what the international observers say,” said Hasnain Malik, an analyst with UK-based Exotix Capital.
Disputed presidential poll outcome sparked the 2007 post-election violence that led to the killing of more than 1,200 people and displacement of more than 600,000 from their homes, mainly in the Rift Valley.
Various sectors of the Kenyan economy, including suppliers of goods and services, have been hit by pre-election jitters and are waiting for a quick conclusion of the process to return to normalcy.
Some of the country’s big corporations said they had cut down on new orders out of fear of being left with dead stock should there be a breakdown in law and order after the polls.
Small-scale traders dealing in fast moving consumer goods such as clothes, mobile phones and food have also felt the heat in recent weeks as customer numbers dropped with the exodus of people to their rural homes to vote or escape possible unrest in the cities and towns.
Those left behind had held onto their cash awaiting a conclusive settlement of the political contest.
Nairobi-based shoe trader Patrick Kimani told Xinhua news agency that he started feeling the negative effects of the elections nearly two weeks ago when the number of customers fell sharply.
A number of businesses have also given their workers extended days off as they wait to assess the security situation before they can resume normal operations.
Markets were also slow on Monday in the last trading session ahead of the polls, with turnover at the Nairobi Securities Exchange (NSE) dropping by 64 per cent to Sh303 million and the shilling weakening to 104 units to the dollar compared to 103.90 on Friday.
The cost of unrest after elections was clear in the 2007/2008 period, when Kenya’s GDP growth plummeted from a healthy 7.1 per cent in 2007 to a paltry 1.5 per cent in 2008.
There have been signs of economic slowdown even before the campaign period that coincided with a prolonged drought and slow expansion of credit to the private sector.
Kenya National Bureau of Statistics (KNBS) data shows that the country’s GDP growth slowed down to 4.7 per cent in the first quarter of the year compared to 5.9 per cent in a similar period in 2016 — making it the slowest quarterly growth in four years.
Businesses polled by Stanbic Bank #tickerCFC and British firm IHS Markit in last month’s purchasing managers index reported weak demand and deteriorating conditions linked to the election.
Should the election pass peacefully, businesses are expected to claw back some of the lost ground in a span of six months.
“Contingent on a relatively peaceful election in August, the private sector could begin to very gradually show some signs of improvement,” said Stanbic regional economist Jibran Qureishi.
Kenya’s landlocked neighbours, who depend on it to import and export goods, are also watching the election carefully, wary of possible disruptions along key transport corridors.
In 2008, Ugandan traders counted heavy losses after their goods were held up at the port of Mombasa for months due to unrest along the northern corridor.
Kenya would also stand to lose heavily should these countries be forced to move their cargo business away from Mombasa, which has been locked in tight competition with Tanzanian ports as the preferred gateway to the sea for Uganda, Rwanda, South Sudan and Burundi.