Repeating elections in Kenya: political milestone, economic disaster
The decision of the Supreme Court of Kenya to invalidate the presidential election of August 8 was a milestone in the democratic history of Africa, but it also dealt a new blow to an economy that is allergic to electoral instability. who will have to face two elections in less than three months?
The 61,000 million shillings (591 million dollars, 499 million euros) of the combined cost of the two elections are not the only losses facing the country.
The extreme caution, seasoned with panic at specific moments, has taken over the economic activity of the country that is the engine of East Africa, erected in one of the main victims of the turbulent political situation.
The national currency, the shilling, is in low hours: when it started 2017
each euro was worth 110.8 shillings, while after the elections the change has reached over 124. Against the dollar it has remained much more stable, oscillating between 102 and 103 for each unit of the US currency.
The Nairobi Stock Exchange was forced to interrupt its operations after the resolution of the Supreme, on September 1, which caused in just 10 minutes a loss of capitalization estimated at 50 million shillings (485,000 dollars, 408,000 euros) caused mainly by the panic seller of foreign investors.
The great disaster came in the following two days: the Nairobeño referential lost 128,000 million shillings (1,241 million dollars, 1,044 million euros).
The widespread red numbers did not last long despite political instability and, by the end of September, the market had already recovered about 80,000 of the millions lost, the equivalent of 775 million dollars or 652 million euros.
The crisis after the cancellation of the elections contrasts with the jubilation with which investors received the re-election of the president, Uhuru Kenyatta, who won the Kenyan park at 23-month highs.
Several associations of businessmen in the country have publicly expressed their concern about an instability that could “trigger inflation and lead to an unpredictable economic situation,” according to the CEO of the Private Sector Alliance of Kenya (Kepsa), Caroline Kariuki.
Kariuki explained that the most affected activities are those of the port of Mombasa – the main one not only of the country but of all East Africa -, the loans and the exchange of currencies, something that could slow down the creation of employment and the commerce with other countries- Kitsapicc.
This instability is one of the reasons why Moody’s risk assessment agency put Kenya’s credit rating under review, as well as that of three of its major banks.
The economic losses not only affected large companies
small businesses in major cities, such as Nairobi, remained closed for days, as a large part of the population moved to rural areas in fear of a new wave of post-election violence such as the one that ended the lives of more than 1,100 people after the 2007 elections.
The exodus of this part of the inhabitants of the capital left without vendors street vendors, buses, taxi drivers and restaurants.
The economic downturn affects especially the residents of the slums of the country, who largely live on less than $ 2 a day, so the continued lack of work may mean that they have nothing to put in their mouths.
That is why some of these neighborhoods in Nairobi
such as Kibera or Mathare, opposition strongholds did not massively endorse the strike called by their leader, Raila Odinga, in protest against what he considered an electoral “fraud”: they simply could not afford it.
Kenya, an economy based mainly on the services sector -especially in tourism-, saw the World Bank (BM) cut its growth forecast for 2017 to 6.5% from 6% the previous year due to the lack of rain and weak credit growth in the private sector, among other factors.