From MARIA MACHARIA
NAIROBI, (CAJ News) – KENYA’S economy is projected to struggle in the wake of disputed elections whose results have been annulled, paving way for further tensions in the run up to fresh polls to be held next month.
The projections by Rand Merchant Bank’s (RMB) Global Markets Research comes as the August reading of private sector activity (PMI) slumped to an all-time low of 42.
According to experts, a figure above 50 indicates growth, while a reading below 50 indicates a contraction.
“The continued signs of contraction are hardly surprising given that market participants were concerned about the tense presidential election (held on the 8th of August) whose results have been annulled,” Africa analysts, Neville Mandimika and Celeste Fauconnier.
The analysts said “we are likely to see activity grind even lower” in the next month as the East African country gears up for yet another hotly-contested presidential election.
“As such, we expect fairly soft third and fourth quarter economic growth readings given the wait-and-see attitude that a lot of the private sector would have adopted.”
Fellow analyst, Ronak Gopaldas, said politically, the upcoming re-run raised several concerns.
Among issues, firstly, is whether the fresh election will be peaceful, given the political violence that has tainted previous elections.
An outcome opposition leader Raila Odinga disputed as rigged, which the Supreme Court has annulled, left over 20 people dead after police clashed with Odinga’s supporters.
Gopaldas said depending on the outcome, fresh elections could raise new petitions and the possibility of run-offs, stretching the electoral process into 2018.
Secondly, there is a looming stand-off between the incumbent leadership (Uhuru Kenyatta) and the opposition over the legitimacy of the IEBC to conduct a credible presidential poll.
Gopaldas said thirdly, investor and business uncertainty would increase until the matter was clearly resolved.
“Noting that an effective power vacuum has been introduced until 17 October, the economy is likely to continue on autopilot while we wait for the election results.”
– CAJ News
From MARIA MACHARIA