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January 22, 2019

Economic growth, elections and moving the country forward

Elections have been held in Kenya every five years since independence and therefore, last week’s event should be viewed as a normal event. As the awareness of the impact of elections in the country increases, so does the competition for elective positions. It’s not a surprise therefore that a week ago, Kenyans turned out in large numbers to exercise their constitutional right to vote. This was mostly peaceful, for which Kenyans as a whole should be proud of.

However, due to the intensity of the period up to the elections, political uncertainty was high on election week. Thankfully, the situation has quickly gone back to normal. Many businesses cautiously closed shop on election week leading to an economic go-slow that is now picking up in the current week. Markedly, this is expected during elections, but can be a major concern on economic growth if prolonged.

It is well noted that the uncertainty resulting from the political situations may reduce investment and the speed of economic growth. Private investment may decline in the run up to elections as investors weigh the risks of policy changes following the outcome. Further, foreign direct investment may also decline as foreign investors undertake a wait-and-see approach prior to injecting capital into an economy.

While uncertainty of electoral outcomes is expected in every country, it is vital that this does not translate to uncertainty to the overall political stability of the nation. To ensure this, governments strive to foster the rule of law, the creation of strong and stable institutions, efficient bureaucracy at the all levels, low corruption and a climate that is business friendly. These conditions are typical of a robust and mature country that not only inspires confidence in the citizens, but also assures the investors of continuity.

It is noted that Kenya is headed in the right direction despite the intensity of the campaigns. The Constitution has largely been upheld supporting the promise of peace and stability.

The fulfilment of various election promises is based on positive economic growth. The key focus is therefore on increasing economic growth, and the related job creation. If the energy and creativity seen during the election period is shifted to job and wealth creation, then we can reach over 10% growth rate targeted in Vision 2030. To attain this, we need to focus on value addition of agricultural produce, growing the industrial sector and making use of the infrastructure such as the SGR and electricity connections that were developed over the last five years.  



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