Election risks will weigh on Kenyan economy

Significance

With all eyes on the political and security implications of the Supreme Court’s landmark annulment of the August 8 polls, elevated political risk is also impacting the economy, which could now see subdued conditions extend well into 2018. Given President Uhuru Kenyatta’s apparently comfortable victory and widespread approval by international observers, investors were stunned by the Supreme Court ruling, and are now likely to be cautious about fully re-entering local capital markets until the political clouds lift.

Impacts

• Public investments under Odinga would likely focus on lower-profile but critical sectors such as agriculture and health.
• The government’s 1.5-billion-dollar precautionary IMF facility will buttress the currency if offshore investors accelerate their retreat.
• Kenya’s rankings on international governance indices could improve, increasing its appeal as a regional investment gateway.