Economists wary of political intrigues

January 13, 2012
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, NAIROBI, Kenya, Jan 13 – The political uncertainty as a result of the pending general election will continue to impact the economy negatively despite the High Court ruling on Friday.

Genghis Capital’s Head of Dealing Amos Odero argued that controversies surrounding the expiry of the 10th Parliament’s term put economic planning in jeopardy and a slump in the growth rate can be expected.

“We may have a slowdown this year compared with last year although it might not be that huge,” he explained.

The High Court ruled that Kenya’s next general elections will be held in 2013, unless the Grand Coalition government collapses this year.

Another analyst, who did not wish to be quoted as he is not authorised to speak to the media, concurred adding that the ruling heightens the uncertainty as it is not from the Supreme Court but rather the High Court and hence might be challenged.

“It also prolongs the election period or year hence increasing the political risk in the country,” the financial expert added.

At a time when the government has not effectively managed to contain the inflationary pressures, he fears that more time in political bickering might affect investment environment.

This is particularly so at a time when access to credit for the private sector has gone down significantly due to the soaring interest rates.

Further, there is a likelihood that due to the political risks investors are also likely to put on hold their investments due to these uncertainties of the election date.

It is however not all gloom and doom as he asserts that in the long run, these legal complexities do will yield appropriate and proper systems that will set the stage for implementation of the constitution to that will hopefully ensure a peaceful election.

“It also gives time to the government to reorganise itself in regards to mobilising necessary resources for election year considering this will be the most expensive election in the history of Kenya,” he added.

In the short term and despite the developments and the expected ruling by the International Criminal Court, on whether six high profile Kenyans should stand trial against crimes against humanity, the analysts expect the performance of the shilling and interest rates to hold going forward.

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