ABC Capital Research Analyst Joshua Otiende says premature campaigns may make it hard for the economy to recover after the polls.
Otiende told Capital FM Business the financial sector will be most affected as foreign investors opt to relax from the market in a heightened political field.
“The tone that we will set this year, as we move into the election year is what will determine whether we will recover fast or slow after the 2017 elections. For example, when we had the disputed elections in 2008, it took us a while to adjust because there was no goodwill and trust in how the elections were done, so if we go through this transition smoothly then we shall recover very fast,” he explains.
He says even though the economy is expected to be better in 2016 than 2015, the political environment will make it harder and if not checked on, might stifle growth of the year.
He however says political risk has drastically gone down compared to 2008 where the country experienced the post election violence.
Political temperatures are gradually rising as politicians prepare for the 2017 General Elections.
“The political noise will not only affect the fiscal environment locally, but the key factor that affect our economy are import and export bill and we have seen our import bill decreasing due to the fallen oil prices and our export bill increasing. We have seen an improved production from agriculture especially tea improving while the numbers posted in December will see tourism improving in 2016,” he said.
For companies in 2016, Otiende expects to see a lot of hedging against foreign currencies in a bid to protect them from the shocks they experienced in 2015 that saw the highest number of listed companies issue profit warnings, with 15 firms notifying investors of expected significant drop in earnings, by at least 25 percent with most of them attributing it to foreign currency losses.
Areas that companies will also have a keen eye on will be on the interest rates regime, as well as government projects as 2016/ 2017 have been mentioned to be deadlines for most government projects that include the Standard Gauge Railway, that is expected to be completed in 2017,” he stated.