Why de-risking divisive polls makes economic sense

Monday March 30 2020
CHAPIC

Anti-riot police officers quell protests in Kisumu over the outcome of the presidential election, on August 12, 2017. PHOTO | FILE | NATION MEDIA GROUP

By NDIRITU MURIITHI
By GITHUKU MWANGI

In the furious ebb and flow of Kenyan politics, heated debate and daily effort to score points on the road to 2022 obscure any intellectual rigour.

Proponents of reform have suggested we need to de-risk Kenyan politics, particularly make our elections less divisive and destructive to the economy.

Their competitors have dismissed it as a ploy, a tactic to gain advantage as we head to the 2022 elections.

Well, we cast our lot with the proponents of reform. Here is why. In every election since 1983 (possibly earlier but our analysis starts in ’83), the economy stands still, growth decimated by uncertainty.

Leading to an election, the securities exchange tanks, business adopt a wait-and-see posture, consumer confidence dips, and all energy seems directed at the contest.

The 1992 and 2008 were particularly awful years, with negative or near zero growth.

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Agriculture accounts for close to a third of the GDP. Even then the impact of drought is lower than that of elections.

VULNERABLE SECTORS

One of the most severe droughts in the last 37 years was in 1999/2000, brought about by the La Nina phenomena.

The economy grew marginally. But it was still less impacted by the drought than by the elections of 1992, 1997 and 2007.

Political contests have been more destructive to this economy than climate change. Arguably, things improved after the 2010 Constitution.

The magnitude of the swings declined, but was not eliminated. The 1992 elections generated a recession — that is negative 0.3 per cent growth, having declined from 4.8 per cent growth in 1989.

The 2012 decline was dramatic, from 8.3 per cent in 2010 to 4.8 per cent, but we did not go into contraction.

Consider this. The decline in growth often happens over three years. That is a year before, during and after a general election.

This means that for every 10 years, the economy loses six years of growth opportunity. It is even more illuminating to look at individual sectors.

Let’s start with the primary sectors — agriculture, forestry and fishery.

Among primary sectors, fishing and aquaculture have suffered the most from the anxiety of elections.

UNCERTAINTY

Is it coincidence that fishing is based at the lake region and the Coast? Do the fish go away in election years or do elections disrupt fishing activity?

Forestry and logging suffer similar fate. Why? Logging licences awards are rather political, with government effecting logging bans from time to time.

In the secondary sectors, construction and manufacturing have been following similar patterns; their growth tanking during election years.

Notable factors driving these trends are that private sector credit is frozen since banks fear likely high levels of defaults.

Investors, likewise, hold back making decisions, and choose to retain cash in the bank given it is safer and accessible compared to selling stocks, machinery and buildings.

Growth in electricity supply swings to a slightly different cycle, reflecting the inherently political nature of the promise to provide electricity!

In the services sector, growth of accommodation and food services (tourism) suffers the worst swings, made pronounced, no doubt, by security concerns even in non-election years.

While foreign countries issue travel warnings, even Kenyans prefer to travel to their rural origins or abroad, where they feel they will be safer. Likewise, Kenyans would rather conserve cash, not spend.

PERCEIVED ENMITY

Since the 'Handshake' and launch of the Building Bridges Initiative, there has been lots of proposals and more noise about reforms.

The proposals fall roughly into nine or 10 categories, including national ethos, shared prosperity, opportunities for the young, inclusive politics, fighting corruption, strengthening devolution leaner/cheaper government, supporting SMEs, and universal health.

But it is the proposals on inclusive politics, in particular the structure of the national executive, that have elicited the most debate, comment and innuendo.

Some proponents are pushing a premise that stability will be gained when more executive seats are created to accommodate more interests on the power table.

Aspirants to the power table become leaders of their tribes through the proven model of stoking fear to mobilise their voter base (tribe), generally by warning of the dire consequences if others are in charge.

The politician that is most successful at mobilisation along these lines is enthroned as the ‘protector’, and the community can only be ‘safe’ if their ‘protector’ or ‘benefactor’ holds a powerful position in government.

It is our view that lessening the wild swings in economic growth requires reducing the feelings of us versus them.

GOOD GOVERNANCE

It involves creating certainty for everyone, even when their tribe is not in power. One way to accomplish that is to strengthen two key institutions — Judiciary and devolved governments.

Secondly, it requires fidelity to the rule of law. It is good governance that ensures equitable access to public resources.

It is ensuring that elections are managed freely and fairly so that even losers accept the outcomes without resorting to protests and violence.

The current ‘division’ lines pushed by political class aligned to 2022 presidential hopefuls are a recipe for disaster, given the apparent entitlements and threats (to rivals) therein.

Like the push for political liberalisation and change of the Constitution, it’s time for all Kenyans to actively participate in creating electoral stability.

POLITICAL CULTURE

Electoral stability is necessary for sustained, rapid growth for all Kenyans — not the victory of your preferred presidential candidate.

We find that having been the main losers, the producers (farmers) and business community ought to take the button to end the uncertainties created by the general election.

You are the financiers of politicians, leading employers as well as majority voters. The time is ripe to change our political culture, in order to guarantee all citizens and investors an enabling environment to thrive, regardless of the electoral outcomes.

Mr Ndiritu Muriithi is Laikipia governor; Mr Githuku Mwangi is his economic adviser