On the streets of Nairobi, even after presidential candidate Raila Odinga announced on August 16 that he would appear in court to challenge William Ruto’s win. Macroeconomics, however, tells a different story.
After the deadlocked election, local investors are now hesitant to lend to the new government as Treasury prices fell below their target in August. Investors were hoping for a 12.45% return, but the central bank was only able to deliver 11.8%. Kenya’s trade deficit has climbed to a record $6 billion in the past five months of this year.
Inflation hit 8.3% in July, and as Kenyans continue to suffer from rising food prices, currency The impact of mass unemployment, both local and foreign investors are holding on to their funds as they await the outcome of the petition.
“Foreign investors will closely monitor any deterioration in the security situation in the coming days, while seeking to better understand the potential impact of the proposed ‘bottom-up’ economic model,” Global Jay Truesdale, CEO of political agency Veracity Worldwide, a risk consultancy, told Quartz.
Kenya’s contentious election has investors wary
A week goes by contract before winner announced commercial activities in many towns and cities across the country. There was no road traffic in Nairobi on the day Independent Electoral and Boundary Commission (IEBC) chair Wafula Chebukati announced Ruto’s victory. Businesses have closed as people stay indoors amid tension and uncertainty, but a day later, Kenyans are battling to claim that “everything is over” despite Odinga’s running mate Martha Karua’s claim that “it’s over” Still work has resumed, suggesting a protracted dispute over the group’s credibility may be brewing. Supreme Court polls.
This is Odinga’s fifth run for president and Ruto’s first attempt to capture the top seat.
There are serious divisions within the IEBC as four commissioners say there is a lack of transparency in the tally of the results, and an IEBC election official who went missing under unknown circumstances on polling day was found dead this week. Foreign media reported live on social media, and after the results were announced, there was post-election violence.
The court battle means he needs weeks to be sworn in as president. This has destabilized the country’s economic and political situation and could delay government spending on projects and prolong periods of macroeconomic inactivity in the country.
Ruto’s campaign focuses on inclusive growth, support for farmers and youth employment, but in relative terms Truesdale Noting that little has been said about generating revenue or creating fiscal space to meet spending targets. “There is no doubt that Ruto will be encouraged by the international community to prioritize inter-ethnic relations, macroeconomic stability and transparency in governance.” Much of Kenya’s tax revenue is tied to fixed costs such as wages, pensions and debt service. Huge public debt and delays in the nomination of a new cabinet mean it will take longer to jumpstart the economy and stimulate growth. Currently, the macroeconomy is on autopilot thanks to a strong private sector.
“Corruption and sponsorship are the reasons why our economy is forever stagnant,” said economics columnist Jaindi Kisero.
Calling for fiscal consolidation to recover from the shock of the war in Ukraine, the global financial crisis and drought, the World Bank predicts Kenya’s economic growth will slow this year.
Following elections in 1997, 2007, 2013 and 2017, Odinga disputed the results, sparking protests that paralyzed business activity.
The general macroeconomic situation in the country is likely to remain stagnant until next month, but according to Sila Obegi, CEO of Nairobi-based business incubator Meta Capital, Odinga was unconvinced by the results. The microeconomic impact of rejection is minimal.
“Our focus right now is on building and repairing the economy,” he told Quartz.
