Heightened political uncertainty in the country poses a much greater risk to businesses than the effect of international geopolitics, analysts at the UK based Control Risks have warned.
The outlook comes amid growing prospects of post-election violence after the August 8 general election fueled by growing contempt between supporters of the ruling Jubilee government and their opposition counterparts.
The opposition said on Wednesday mass protests were possible if August elections were rigged, comments likely to scare Kenyans fearful of a repeat of the widespread violence that erupted after a disputed poll in 2007.
This, coupled with macro-economic instability will continue to be the main driver of business risks across the country and the wider East African region, said Daniel Heal, Control Risks East Africa senior partner.
Businesses must pursue different strategies to protect value and seize opportunity in the run up to and after the polls.
“For businesses to succeed in this diverse region, it is important to take a threat -led approach and understand the unique and evolving risks that could impact the business in that specific market,” he said on Wednesday at a media briefing in Nairobi.
Geopolitics senior partner Charles Hecker said the disruptions in international geopolitics, largely the UK vote to leave the European Union and the election of Donald Trump as US president, have created uncertainties for investors and governments alike.
Recently, the Central Bank downgraded Kenya's economic growth forecast to 5.7 per cent in 2017 from 5.9 per cent last year, citing uncertainties in the global economy amid a ravaging drought.
Agriculture, which is the mainstay of the economy, is expected to give less output following a prolonged period of dry weather which has hit the food-producing regions.
CBK governor Patrick Njoroge said last month it remains unclear how the economy will react after Britain starts the process to leave the European Union and the uncertainties over the direction of US policy under the new government of Donald Trump.
There are increased uncertainties with regard to the prevailing drought conditions and risks in the global markets, the governor said.
Heal said governance improvements and the embedding of democratic practices and norms will limit the scope of potential for deterioration adding that challenges will still persist.
“On the other hand, businesses must respond through defensive focus on core markets and targeting new opportunities,” he said.