Executives peg growth of the economy on election results

Captains of industry are putting up a brave face as the country heads into elections, saying business operations will continue as normal despite the hotly contested presidential polls that have previously been the bane for economic growth.

The cross-section of top executives interviewed say a calm business environment is their major concern after prolonged campaigns, which ended peacefully on Saturday, already giving some confidence to businesses that the transition will not disrupt the economic recovery.

Leading presidential candidates former Prime Minister Raila Odinga and Deputy President William Ruto have both vowed to accept the outcome of the election.

However, sustaining economic recovery will hinge on the post-election environment with a repeat of the presidential election as witnessed in the last 2017 likely to cause jitters in the economy as such memories have already led to panic buying among some households.

Speaking to Business Hub, Kenya Airways (KQ) chairman Michael Joseph said it very much depends on the outcome of the election. “If there is a clear winner with no need for a rerun or a legal dispute, I believe the situation will be calm and business will return to normal next week.”

“If there is a period of uncertainty due to a legal challenge or the need for a second ballot then business will be more or less on hold until the outcome,” he added. “We foresee a Kibaki moment, soon after Kibaki took over the economy boomed and that’s what we expect. The confidence levels have risen and if there won’t be any petitions after the elections then all will be well,” noted Charles Munyori , CEO Auto Bazaar Association.

Central Bank of Kenya (CBK) survey recently revealed that confidence levels for banks stood at 79 per cent as of July 2022, compared to 26 per cent in 2017, while 72 per cent of non-bank actors perceived the economy would do better, against 35 per cent since the last survey in 2017.

Business confidence

With a business confidence index standing at 61 points overall, the CEOs see a surge in the hiring of full-time employees in the next six months, which will translate to increased business operations. Kenya’s elections have previously been marred with violence.  Many traders and investors have been holding back their investment to assess how the elections will pan out, more so, in areas that have traditionally been associated with violence during polls.

Interior Principal Secretary Karanja Kibicho said last week that adequate security personnel have been deployed across various parts of the country to maintain law and order before, during, and after the elections. Kenya’s elections have often been dogged with violence and unrest, costing businesses billions in lost revenues, damages and theft, notably in 2007 and 2017.

The annulment and repeat of the last 2017 presidential elections, for instance, shocked investors, limiting the country’s export to neighbouring countries, and left many local businesses closed for several months.

Coupled with the Covid-related economic fallout amid Russia-Ukraine tension, the CEOs say that any skirmish in this year’s elections will additionally hit hard households amid runaway inflation currently at 8.3 per cent. As election panic mounts, shoppers and retailers across various retail outlets are reporting stock-out due to pent-up demands despite the government beefing up security to minimize supply constraints during polls.

Stockpiling foodstuff

In anticipation of disruption, residents in major cities are stockpiling foodstuffs, including cooking oil and the one-month subsidised maize flour that retails at Sh100 per two-kilo packet. The unexpected stocking is however expected to strain the majority of Kenyan households that are still dredging from the economic hardships left by Covid-19.

“Manufacturers are stocking up raw materials for the next few months, to ensure scheduled production is not interrupted. They are also producing fast-moving goods and perishables to meet current demand only,” says Kenya Association of Manufacturers (KAM) acting CEO Tobias Alando.