Kenya in 2017
- Investment Support
Africa Riskwatch - Issue 9 - January 2017
Kenya in 2017: Businesses should ensure preparedness amid growing political tensions and rising doubts over election timeline
Not only internal, but also external factors might disrupt business in 2017
With just over five months to go until 8 August, many signs are pointing to a clear victory for President Uhuru Kenyatta and his Jubilee Party of Kenya (JPK) – while the main opposition coalition, National Super Alliance (NASA), has yet to agree on a presidential candidate.
However, despite such a favourable environment, Kenyatta’s public appearances in recent weeks have not given the impression of a calm president full of confidence in his election chances. One likely reason are growing concerns over Kenya’s preparedness to hold elections on time, and the consequences a delay could have on the election outcome and the stability of the country.
Overall, Kenyatta has been an interesting character to watch this year as he and his party have simultaneously governed and campaigned for re-election, trying to appeal to the man on the street on the one hand, and to balance business interests on the other. On 15 March, he gave the annual State of the Nation address to parliament which NASA criticised as a campaign speech rather than a government progress report.
Listening to Kenyatta, some probably believe him to be the ‘man-of-the-people’ persona, as he emphasised JPK’s social projects and proposed a salary cut for elected politicians. However, JPK has also worked to make Kenya easier for investors. Tax and customs – the bane of many companies – are somewhat more straightforward, while new anti-bribery and anti-money laundering laws represent an attempt to prove Kenyatta’s government is closing the loopholes that have made investing and working in Kenya so complicated, especially for foreign interests.
Is Kenyatta a defender of the masses or a supporter of the business elite?
NASA leaders assert that JPK neglects the wananchi. And with rising inflation, high youth unemployment, small businesses suffering from a JPK-induced credit squeeze, and the government’s woeful record on corruption, it is difficult to argue against this position. But NASA for its part also still owes the voters a suggestion on how they intend to make economic development work for everyone including businesses. Uncertainty around Kenyatta’s real focus remains.
Information and preparedness will be crucial for businesses in the year ahead
Ahead of the election, preparedness, including through monitoring key trends and understanding their implications, will be critical for businesses operating in Kenya. Companies interested in the security environment, for example, should watch for further questioning of the legitimacy of the election by the opposition, which increases the chances that opposition supporters will not accept the election outcome. There is a long list of other factors worth monitoring, including, among others, unrest around the party primaries, a potential NASA split, voter mobilisation rates, displacement campaigns and threats from al-Shabaab along the Somali border.
Regardless of who ultimately wins any of the multiple seats up for grabs, some policy disruption is inevitable given that some county and national government policies already move in entirely opposite directions. Contracts with the government are likely to be reviewed, especially if there is a change in the party that wins the election across any level of government. While it may be exhausting, it is now more important than ever to keep an eye on the multiple alliance-shifting and -building ahead of the polls.
Geopolitical shifts and the impact on Kenya
It is easy to get completely distracted by the ongoing domestic political battles while failing to account for the global geopolitical shifts that will also disrupt business in Kenya. US President Trump’s focus on security and trade has already seen suggestions to reduce spending on aid budgets for countries like Kenya, whose ailing health sector depends heavily on donor funding. Meanwhile, over the weekend the UK’s Foreign Minister Boris Johnson visited Kenya and Somalia, heralding some likely changes in the relations with the post-Brexit UK. New trade agreements with or cuts in development assistance by either of these countries have the potential to transform or undermine the development of sectors essential to the Kenyan economy.
But the bright side of all this is the refreshing resilience of many businesses in Kenya, which tend to find ways to survive and even thrive regardless of who is in power across the world. Those with strategic plans in place will not only be able to weather the electoral and geopolitical storms, but also create a competitive advantage from this disruption. Coupled with a growing realisation by voters and business alike that they have the power to select and hold accountable people who will make tangible improvements to the economy, there is much to look forward to in the coming year.
- Patricia Rodrigues, East Africa Analyst