Kenyans are due to return to the polls on October 26 in what is proving to be the most contentious and unpredictable election since the 2007-8 crisis. Back then, a disputed result sparked nationwide instability that lasted months.
The October vote is a re-run of the presidential contest held on August 8 (which President Uhuru Kenyatta won) but later annulled by the Supreme Court, citing “irregularities.”
Opposition candidate Raila Odinga will not participate in the repeat poll unless his demands for reforms to the electoral commission (including the dismissal of officials allegedly involved in irregularities) are met. Reform measures to date, he says, have been inadequate.
Kenyatta, on the other hand, is determined for the vote to go ahead and his party has in recent weeks passed legislation making it harder for the courts to cancel the results – actions that are flaming tensions.
The risk is that Kenya enters a prolonged spell of political volatility in which government attention is diverted from policy reforms, and anxiety over the future dissuades businesses from expanding.
Given MNC executives’ high hopes for the market – Kenya is seen by many as offering opportunities that can offset disappointing performance in other large Sub-Saharan African markets – the prolonged political impasse raises serious business concerns.
Back in 2007, the economy ground to a halt. Domestic demand dried up as investment slumped and spiraling ethnic violence disrupted transport routes, upsetting distribution and supply chains.
This time, around 100 people have died in protests – usually clashes with police. Further sporadic violence is probable in the lead up to voting day.
Yet a national security crisis on the scale seen 2007-8 is unlikely:
- Odinga on October 17 called off mass demonstrations, fearing further clashes between his supporters and police would result in more deaths.
- Two of the main ethnic groups opposing each other in 2007-8 are now allied in Kenyatta and former opponent-turned-deputy William Ruto’s Jubilee Party.
- The security services are better equipped and prepared than they were in 2007-8 to clamp-down on, and contain, unrest when it emerges.
The highly fluid situation nevertheless poses challenges for MNCs planning for 2018.
Particularly concerning is whether sustained volatility (and thus customer anxiety) will dampen demand from local consumers and businesses, and how different political outcomes will shape the business environment through 2018.
Regular market monitoring in such a setting is crucial to ensure MNCs are not blind-sided by events and are – in conjunction with local partners – able to action contingency plans when necessary.
FSG clients can contact your client relationship director if you need more insights or require assistance with strategic planning in Kenya.
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