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Kenya: The African Hot Potato

by internationaldirector

Written By: Morgan Jones – Corporate Finance

Kenya is an important country in Africa. Its gross domestic product (GDP) comprises 40 percent of the East African Community (EAC) region: Kenya, Uganda, Tanzania, Rwanda, South Sudan and Burundi. The country also has the highest adult literacy rates in the region at 87 percent. Its democratic space is quite impressive compared to many countries in Africa, albeit it could be considered a hodgepodge of consistently changing coalitions of ethnic communities that rule the country. In East Africa alone, it is the only country that has experienced consistent changes in governing parties. The rest are either ruled by authoritarian military regimes or haven’t seen a governing party change in more than three decades. However, the political space still remains tethered to tribal prominence as opposed to ideological prominence.

The country is considered by foreign businessmen to be a gateway to countries in East and Central Africa and a launching pad for businesses in the region. This is evidenced by the latest Ernst & Young Africa Attractiveness report that shows that Kenya received the largest share of foreign direct investment (FDI) in East Africa, which amounted to 8.5 percent of Africa’s total FDI inflow. To China, it’s the only Sub-Saharan African country engaged under the Silk Road initiative, the basic tenet of President Xi Jinping’s foreign and trade policy. The other African countries include Sudan, Djibouti and Egypt.

Underscoring Kenya’s importance further is the role of the country’s president, Uhuru Kenyatta (son of the founding president), as a rising African and international power player. This is seen by the president’s open engagement with Israel and his vow to lobby African countries to vote in favour of Israel at the United Nations, a vow he made during Israel Prime Minister Benjamin Netanyahu’s three-day state visit to Kenya earlier this month. Empowered by Israel’s trust and dependence on Kenya’s capacity to help push its international agenda, Morocco, too, sought Kenya’s help on July 15. Morocco left the African Union in 1984 in protest over its position on Western Sahara and the admission of the Sahrawi Arab Democratic Republic to the Organisation of African Unity (OAU), the African Union’s predecessor. Now it wants in and Kenya’s help to spearhead its entry. Since his presidency began in 2013, despite the US president’s warning during the previous election that electing an International Criminal Court (ICC) suspect would have dire “consequences”, Mr Kenyatta has turned around what began as a political wound into a power base by rallying African countries around an anti-ICC position at the UN.

In a political coup for Kenyatta, during his visit to Kenya on July 24 of last year, President Obama criticized the Kenyan opposition, appearing to change his support in favour of Mr Kenyatta. To understand how much of a blow this was to the opposition, one has to look at Obama’s paternal heritage that traces back to the Luo community (his father was a Luo), and the opposition leader, Raila Odinga, has claimed to be a relative of Mr Obama’s. Raila Odinga has a near-cult level support from his community, and politicians from the community tend not to be re-elected based on the slightest hint of wavering adulation.

Mr Kenyatta seems to be capitalizing on his new political forte as an African power broker of sorts, to compensate for failings on the domestic front. Survey results released by the pollster Ipsos on June 7 showed that 60 percent of the population thought the country was headed in the wrong direction. Curiously the president still led in the polls as the most popular choice if elections were to be held today. The gloomy picture of the country held by the population is in stark contrast to the country’s economic growth that has been averaging an impressive 5.5 percent GDP annual growth for the last eight quarters. For the last five quarters, the trajectory has been upwards, with the last quarter hitting 5.9 percent. The International Monetary Fund, too, has an upbeat outlook for the country, predicting in its World Economic Outlook report that Kenya will grow at rates above 6 percent for the next five years.

An election is constitutionally expected to be held in August of next year. However, this is in doubt, considering the country’s attorney general’s statement on July 21 of this year that the elections may have to be postponed if the country’s electoral poll agency has to be disbanded and reconstituted, a key demand by the opposition. The reconstituting of the electoral agency is important as the current electoral commissioners engaged in corrupt practices that led to their counterparts, the directors of Smith & Ouzman, being jailed in the UK in 2014. However, the Kenyan electoral commissioners have still not been fired or arrested to date. The opposition had for several weeks been organizing protests countrywide, demanding a disbandment of the electoral agency. This has led to deaths of protestors, especially in the capital city and western parts of the country, a stronghold of the opposition. Police brutality, too, has played a role in the quick descent to violence at the protests. Uhuru Kenyatta’s reluctance to sack and charge the electoral commissioners for corruption does not help his image, either. The latest ranking of the corruption perception index by Transparency International is that Kenya is the third most corrupt country in Africa.

Raila Odinga is capitalizing on these domestic-front failures, continually painting the government as hopelessly corrupt and predicting that the elections will be rigged as he insists they were in 2013 (this was found by the country’s supreme court to be an unfounded allegation). Odinga, however, is beset with the feeling that this would be his last shot at the presidency, owing to his advanced age, 71 years. His urgency is evidenced in political speeches across the country, such as recently when he stated that his party won’t seek judicial redress if the elections are “stolen”, causing concern that there may be violence at the upcoming elections. A dangerous thing to say, especially considering that the country experienced countrywide political violence less than a decade ago, and with the stark reminders of that horrid time being the country’s No. 1 and No. 2 leaders, both of whom have been accused of perpetrating violence at the ICC.

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