NAIROBI, Kenya, Sep 7 – Kenya’s economy is expected to lose a further 0.3 per cent of Gross Domestic Product (GDP) owing to the Supreme Court decision that nullified the August 2017 presidential results.
The drop increases the percentage to 1.03 per cent adding the one percent drop that was expected owing to the General Election.
Kenya National Chamber of Commerce Chairman Kiprono Kittony says the country has witnessed a fall in exports, low money circulation, weaker purchasing power among traders and low employment rate.
“I do not have the specific numbers, but the damage could be greater if we continue to contest on the date of the Presidential election that was set by the IEBC, we should not aggravate the problem,” he said.
He says despite the downturn tourism and transport sectors have shown resilience.
It will take the country about six months to recover the loss of business during this election period.
“We need to finish elections so as businesses can return to normal for the sake of economic growth,” he stated.
In the long term, however, the decision will be a plus for the economy as it indicates the country has improved its constitutionalism and rule of law which reduces political risks, especially for international investors.
The decision, which caught many by surprise, saw investors’ wealth at the Nairobi Securities Exchange (NSE) decline having lost Sh130 billion on Friday and Monday this week.
“Nobody really expected such a decision, and investors do not like unpredictability,” Genghis Capital Research Analyst Gerald Muriuki told Capital FM Business.
However, market capitalization at the Nairobi bourse went up on Tuesday by Sh23 billion to close at Sh2.37 trillion reversing the losses experienced over the last two trading days.
On Wednesday, equity turnover soared 138 per cent to Sh1.6billion on increased foreign investor activity.
Foreign investor participation rose to 65.8 per cent compared to 54.3 per cent in the previous session.
They remained net sellers for the fourteenth straight session recording net outflows of Sh886 million highest single session outflows in two years.