Markets gain Sh42bn after court upholds William Ruto's victory

Supreme Courts judges at the Court premises in Nairobi on Monday, September 5, 2022, when giving verdict on the Presidential election Petition. PHOTO | DENNIS ONSONGO | NMG

Investors gained Sh42.1 billion in paper wealth in the highest daily gain at the Nairobi Securities Exchange (NSE) in three weeks as markets welcomed the Supreme Court ruling upholding the win by Deputy President William Ruto as the fifth president of the Republic of Kenya.

Market capitalisation jumped to Sh2.192 trillion from Friday’s close of Sh2.15 trillion while Kenya’s Eurobond yields trended lower from 15.1 per cent on Friday to 13.84 per cent on the 10-year 2024 bond.

This was despite a US Labour day holiday that meant thin volumes, pointing to confidence in the markets that may allow companies to loosen their purse strings and put back money into the economy as economic uncertainties clear.

In 2017, Kenya’s stock market crashed following the Supreme Court’s decision to annul the 2017 presidential election results and investors were worried that a similar verdict would hurt investments.

The Supreme Court on Monday upheld the election of President-elect Ruto dismissing seven petitions challenging his victory in the August 9 General Election.

Seven judges of the apex court threw out the cases in a unanimous decision stating that Dr Ruto and his running mate Rigathi Gachagua were validly elected.

“As a consequence, we declare the election of 1st respondent (Dr Ruto) as President-elect to be valid under Article 140(3) of the Constitution,” Chief Justice Martha Koome said.

The judges of the top court said they were not persuaded that the technology deployed by Independent Electoral and Boundaries Commission (IEBC) failed the standard of Article 86(a) of the constitution on integrity, verifiability, security and transparency, as alleged.

The court said a report by the Registrar of the court on scrutiny and recount of ballot boxes from 15 polling stations confirmed that the Forms 34A on the public portal and those issued to party agents and those delivered to the National Tallying Centre at Bomas of Kenya tallied.

The judges further said there were no illegalities and irregularities pointed out by the petitioners, among them Azimio La Umoja Raila Odinga, and those tabled were not of such magnitude as to affect the final result of the presidential election result.

The top court dismissed all the nine issues the judges were called upon to consider arising from the election petitions saying there was no evidence tabled by the petitioners to upset the results of the August 9 polls.

Businesses welcomed the ruling, which is expected to lift the economic stasis that has slowed activity in the country since the August 8 General election over the uncertainty of the court outcome.

East Africa’s biggest economy, which has a history of disputed polls weighing heavily on the economy, has demonstrated political maturity and fidelity to the rule of law that is set to boost investor confidence.

Focus economic analysts estimated the country might dodge historical polls hangover to record a five per cent growth, the highest in an election year since the return of the multi-party political system more than 30 years ago.

Expansion in Kenya’s economic activity has a history of slowing down in election years since the return of multi-party democracy.

Analysis of growth trends since 1992 shows the momentum in economic activities softened 2.83 per cent on average in election years and recovered by an average of 2.08 percent in the year after the election fever.

The election of Ruto has, however, exposed a deeply divided country, an economy that has stalled on election anxiety and deep financial challenges.

Former Prime Minister Raila Odinga captured half of the legislators under the Azimio banner with 23 senate seats against Ruto’s 24 and 162 MPs against Kenya Kwanza’s 159.

President Ruto has however convinced several legislators to defect from Azimio including independent MPs in a bid to ensure the split does not derail his legislative agenda.

Ruto also takes over the mantle aiming to kick start an economy deeply troubled by high inflation and lack of jobs.

The Kenya Kwanza administration faces the uphill task of delivering poll promises on jobs, cost of living, economic reforms, infrastructure and housing.

Dr Ruto has promised interest-free loans, multimillion-shilling stimulus programmes, housing, infrastructure, agricultural reform, completion of stalled projects as well as clearing pending bills.

The President-elect pledged to retain President Kenyatta’s subsidy programme in his manifesto but set up a legal framework to ring-fence the Fuel Stabilisation Fund used to pay oil marketers to keep prices low.

Throughout the campaigns, the Kenya Kwanza flag bearer promised to address the growing unemployment among the youth, if elected.

In his manifesto, President Ruto pushed for a bottom-up approach to job creation which entails funding smallholder agriculture and small business to the tune of Sh500 billion over his first term in office.

“Bottom-up economics is about investing the limited capital available where it will create the most jobs at the bottom of the pyramid. What does it mean practically? It means a commitment to invest Sh500 billion over the next five years in smallholder agriculture and the informal sector,” President Ruto said.

This will however be met by budgetary constraints on debt payments that take up over 63 per cent of revenues and a bloated wage bill that consumes 50 per cent of taxes.

He also takes over a government constrained with debt and wage bill problems that are under an International Monetary Fund programme that has called for increased taxation and elimination of subsidies.

Kick-starting the economy and creating jobs will be no mean task in an economy where the bulk of businesses are seeking to be lean after being hit by the effects of Covid-19.

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Note: The results are not exact but very close to the actual.