Personal Finance

How politics and law are interlinked

CROWD

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Summary

  • This is a special year for Kenya due to the upcoming August elections.
  • The polls will bring change as new leaders will be coming in. These changes may be for better or for worse but we certainly hope that they will be for better.
  • A change in the external political regime is likely to result in a change in the legal environment as well.

This is a special year for Kenya due to the upcoming August elections. The polls will bring change as new leaders will be coming in. These changes may be for better or for worse but we certainly hope that they will be for better.

A change in the external political regime is likely to result in a change in the legal environment as well.

Law and politics are strongly linked as the leaders play a large role in determining the legal environment in a country. For example, members of parliament make laws. The elections will lead to a change in the parliamentary membership therefore affecting the legislative environment. The shift in political regime will also affect counties as there will be new governors and senators coming in counties. Some governors have served their full ten-year term and are therefore not eligible for re-election. County laws and policies are, therefore, going to shift after the elections.

It is also the beginning of the year and many businesses are writing their plans and strategies for the new year. This is an opportune time to consider the changes in the political and legal environment when writing your plans.

Here are some of the elections attributable issues to consider:

What are the opportunities created for your businesses? What are some of the challenges created for your business? Once you consider these then it would be prudent to plan for them.

I give law firms as an example. The polls create an opportunity for lawyers to practice electoral law through election and constitutional petitions. A lot of lawyers are taking advantage of this season to equip and position themselves for increased litigation after elections.

In some cases, elections may carry a threat of heightened political tensions. While this may not happen, it is classified as a threat due to the likelihood of tensions.

How then will your business respond to this threat? Some businesses may experience a lower demand for their products as result of the elections.

One way to assess the threats is by considering past elections and how they affected the business macro-environment. Some businesses were caught flat footed and some were even forced to shut down. Some of those that closed have never recovered. All these risks can be managed with good planning and putting in place mitigating measures.

I would advise you to consider the services of an expert if need be in assessing the impact of political risk on your business and how to mitigate that risk.

The legal environment will change after elections. I therefore advice businesses to be aware of these changes and prepare for them well.

In contract drafting you could consider the use of a force majeure clause to manage any unforeseen political tensions that would negatively impact parties’ ability to manage their responsibilities. If you are getting into some types of contracts at this time, for example construction, it is important to discuss the parties’ responsibilities in the event of heightened political risk.

International contracts especially investor-state contracts usually carry the change of law clause. This means that even if there is a change in political regime, the state continues to be bound to its obligations.

After elections not only will there be some changes in the law, but there will also be policy changes especially at county level. Policy determines the types of law that follow. Therefore, it is good to be acquainted with that.

Many businesses are adopting a wait-and-see approach to the elections.