Will the Upcoming Elections Slow Down Economic Growth this Year?

By Soko Directory Team / February 28, 2017




This has been a question on the minds of many investors both local and international considering it’s only a few months to the general elections. Electioneering period in Kenya has often been characterized by high level politicking. As a consequence, greater focus during this period has mostly been on politics and this may have an effect on economic progress in the country. Should Kenyans be concerned about a slowing economy as election campaigns intensify?

This comes as the government maintains it has put in place enough contingencies to shield the country from the negative effects of political campaigns and election politics. With just five months to the polls, the cyclic effects that elections have on Kenya’s economy have begun to show especially with the increase in cost of foodstuffs etc.

In an article on the Daily Nation, Paul Gachanja, Chairman of the Department of Economic Theory at Kenyatta University (KU) mentioned that unless the government figures out how to resuscitate the stagnant agriculture sector this year it can only get worse because fewer jobs will be created in the current environment.

Historic figures have it that the Kenyan economy slows down in an election year by about 1.2-1.4%. Typically folks become cautious and adopt a wait and see attitude but as long as the political rhetoric stays below the radar, then we should be ok.

kenyan-economy

Different analysis notes that sectors key to the economy including tourism, agriculture, manufacturing, transport, retail and finance are at a risk of experiencing slowdown in investments as investors wait for the high-octane charged elections to pass. There is, however, a level of optimism with many players saying the economy will sustain growth momentum owing to investments in infrastructure by the government. On the other hand leaders in different industries are, however, issuing cautionary statements noting that this year might be rough for their businesses, with the elections being a major concern.

Related:

Global Risk insights, a think tank that looks into political risks around the world, advises multinationals with operations in Kenya to be cautious and be ready to protect their investments this year. It further warns investors looking at Kenya to wait until after the elections.

It’s a generally accepted view that the economy slows down ahead of elections; there is a slowdown in investments and economic activity even as government spending goes up. Politicians are funded to enable them to sustain their election campaigns with expenditures which include; posters, banners, gifts, food and clothes especially reflector jackets for motorists, renting crowds and candidates to cut out rivals, commuting cost, fuel, temporary offices as well as part time and full time workers.

kenya-elections-2017

Does democracy increase economic growth?  Yes. The democratization is however accompanied by endogeneity problems. Elections might build better institutions and may improve governance, which in turn increases economic growth but while this is evidently true in the developed world, it is the reverse in the case of Kenya. The period preceding elections has been characterized by looting of public funds and resources, the Jubilee government has had a fair share in this, from the NYS scandal where 791 million went missing to the Euro Bond billions whose utilization was neither evident nor their whereabouts traceable. The counties haven’t been left behind with some counties, for instance buying wheelbarrows at sh110, 000 each. The counties can no longer sustain themselves, and crucial facilities under them such as for health running on recurrent strikes.

It is very ironic how there is so much wealth and funds to support and facilitate a democratic right but none to support and sustain growth.

But then the question is, are we safe economically during this year’s political campaigns and election polls? Whose responsibility is it to give a definite answer? Let’s wait and see.


Article by Amina Martha.



About Soko Directory Team

Soko Directory is a Financial and Markets digital portal that tracks brands, listed firms on the NSE, SMEs and trend setters in the markets eco-system. Find us on Facebook: facebook.com/SokoDirectory and on Twitter: twitter.com/SokoDirectory

View other posts by Soko Directory Team


More Articles From This Author







Other Related Articles








SOKO DIRECTORY & FINANCIAL GUIDE

ARCHIVES

2018
  • January 2018 (291)
  • February 2018 (220)
  • March 2018 (279)
  • April 2018 (226)
  • May 2018 (240)
  • June 2018 (137)
  • 2017
  • January 2017 (183)
  • February 2017 (195)
  • March 2017 (207)
  • April 2017 (104)
  • May 2017 (169)
  • June 2017 (206)
  • July 2017 (190)
  • August 2017 (196)
  • September 2017 (186)
  • October 2017 (236)
  • November 2017 (253)
  • December 2017 (266)
  • 2016
  • January 2016 (167)
  • February 2016 (165)
  • March 2016 (190)
  • April 2016 (143)
  • May 2016 (246)
  • June 2016 (183)
  • July 2016 (271)
  • August 2016 (250)
  • September 2016 (234)
  • October 2016 (191)
  • November 2016 (243)
  • December 2016 (154)
  • 2015
  • January 2015 (1)
  • February 2015 (4)
  • March 2015 (166)
  • April 2015 (109)
  • May 2015 (117)
  • June 2015 (121)
  • July 2015 (150)
  • August 2015 (157)
  • September 2015 (189)
  • October 2015 (171)
  • November 2015 (174)
  • December 2015 (208)
  • 2014
  • March 2014 (2)
  • 2013
  • March 2013 (10)
  • June 2013 (1)
  • 2012
  • March 2012 (7)
  • April 2012 (15)
  • May 2012 (1)
  • July 2012 (1)
  • August 2012 (4)
  • October 2012 (2)
  • November 2012 (2)
  • December 2012 (1)
  • 2011
    2010
    2009
    2008
    2007
    2006
    2005
    2004
    2003
    2002
    2001
    2000
    1999
    1998
    1997
    1996
    1995
    1994
    1993
    1992
    1991
    1990
    1989
    1988
    1987
    1986
    1985
    1984
    1983
    1982
    1981
    1980
    1979
    1978
    1977
    1976
    1975
    1974
    1973
    1972
    1971
    1970
    1969
    1968
    1967
    1966
    1965
    1964
    1963
    1962
    1961
    1960
    1959
    1958
    1957
    1956
    1955
    1954
    1953
    1952
    1951
    1950