In Kenya, democracy once again tests the resilience of business

Business confidence was surveyed in May, and remained at record lows for the third month running. 92 percent of managers of 400 private sector firms remained steadfast in their convictions that their business would not expand in an upcoming calendar year of activity. While these beliefs logically stem from global inflation and elevated costs of production, they further compound a trend that is well-known to Kenyans; election years are tough on business and economic growth. Financial services provider ICEA Lion projected that the Kenyan GDP would grow by 5 percent in 2022, following 8 percent growth in the previous year, further remarking that GDP growth in the election years of 2002, 2008, 2013, and 2017 had similarly slowed as firms delayed investments and regulatory bodies postponed important decisions as the Kenyan economy at large prepares for yet another tense election period.

As the direction of the country’s emerging economy has taken center stage in the first “post-pandemic” presidential election in the country, economic anxiety seemingly reacts to the Kenyan election period itself, rather than the diametrically opposed stances of either candidate, therefore becoming relevant to unpack with the intention of underscoring the importance of stable and inclusive democratic processes to a regionally-vital emerging economy like Kenya.

This is not to say that the Kenyan economy itself is in peril; the World Bank’s prediction of 5 percent growth in 2022 is among the highest in Sub-Saharan Africa and indicates that the country will undergo one of the strongest, and quickest economic recoveries in the “post-pandemic” period. Moreover, 230 private sector CEOs were reportedly optimistic about the post-election recovery of business activity in an April survey conducted by the Monetary Policy Committee. Yet these same feelings are failing to translate into meaningful engagement with domestic politics, after years of rampant corruption and the introduction of controversial legislation in the decade and a half since the 2007 Constitutional Crisis. That year, Ruto and Odinga were united in a political coalition between Kalenjin and Luo ethnicities, opposing the majority-Kikuyu government over which incumbent-President Kibaki and Kenyatta were allies. International observers reported vote tampering and ethnic violence broke out which reportedly left 1,300 people dead and another 600,000 internally-displaced; the events prompted the International Criminal Court to charge, but later desist from pursuing, both Ruto and Kenyatta as orchestrators of ethnic violence.

The Independent Electoral and Boundaries Commission disconcertingly reported as early as February of this year that it had only reached approximately one third of its goal of registering six million new voters for this election, blaming voter apathy and disillusionment for their difficulties. The importance of these findings rather lies in the idea that election cycles themselves take precedence over the respective ideologies of the main candidates in sparking, perpetuating, and aggravating economic anxieties which slow the growth and development of the country, cycle after cycle. The Danish Institute for International Studies believes this fear can be attributed to three main factors: a persistent history of violence following each election, the scarcity of resources both linked to climate and global economic conditions, and the intricate link between ethnicity and political affiliation which exacerbates tensions as allegiances are formed and reformed. In 2022, the Kenyan presidential election will not feature a candidate representing the Kikuyu majority for the first time since multi-party elections recur in the country; the other main groups; Luo and Kalenjin are respectively represented by Odinga and Ruto.

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Misinformation and social networks continue to play key roles in fomenting social polarization, especially surrounding elections or controversial political developments in Kenya. The Guardian’s Odanga Madung commented in early April that “in 2021 Kenyan judges and activists underwent wave after wave of attacks on Twitter as Kenyatta and Odinga sought to get their elite pact, titled ​​Building Bridges Initiative (BBI), past the courts.” BBI was a hotly-contested proposition of dozens of constitutional amendments determined by a bipartisan commission seeking to promote political and social cohesion following the significant unrest that took place as Kenyatta was reelected for a second term in 2017, amid accusations of electoral fraud by his opponent Odinga. Curiously, this political imperative was shared by both President Kenyatta and Odinga, facing significant opposition by Deputy President Ruto. It was struck down in late March by the Supreme Court of Kenya in a landmark ruling which crushed Kenyatta’s aspirations, upon which he had gambled his legacy.

We would be remiss in not acknowledging Odinga and Ruto’s clashing policies; the distribution of wealth has taken center stage in debate between both campaigns, regardless of the degree to which the undertaking of an election once again promotes domestic and foreign investor hypervigilance and caution. The current Deputy President has repeatedly decried the practice of “trickle-down” economic policy, instead advocating for a refreshed, “bottom-up” approach which focuses investment and facilitated access to credit for millions of lower-income Kenyans including the unemployed, those in agricultural industries, and self-employed “hustlers” whose moniker has been adopted by Ruto to rally supporters around this core campaign policy. Odinga has so far staunchly opposed these propositions, going so far as to refer to them and their defenders as “misleading” a large and electorally-vital younger demographic. His plan focuses on restructuring the plentiful pile of short-term debt burdening the economy, and investing in key manufacturing and agricultural sectors in creating a more “business-friendly” environment. The International Crisis Group went as far as to label Ruto’s policies as “populist” in a briefing published just under two weeks ago.

Ultimately this pattern speaks more largely to the idea that a stable liberal democratic process and opportunities for sustained growth and investment in an emerging, dynamic economy correlate directly. In the case of Kenya, severe pandemic-era shocks to business have since given way to optimism about the dynamism of the economy and the interest of investors in Kenyan markets. The OECD assessed youth unemployment to be as high as 13.6 percent in 2020; the size of this demographic relative to the population of the country indicates that this “post-COVID-19” recovery effort has met Kenya at a critical moment in its economic trajectory. With a wider East African region in a turbulent political moment, a delicate scenario arises to which volatile political and social conditions pose an interconnected challenge. The growing relevance of social communication technologies in deepening existing cultural and economic tensions further oblige candidates courts, and civil society to reaffirm their commitments to peace and stability in service of calming tensions rippling both in politics and markets. Logically, Odinga’s campaign would be conventionally favored by domestic and foreign investors, yet his tenuous four point lead in a May poll has done little to assuage their belief that the Kenyan economy (and by extension, civil society) will again be put to the test on August 9.