Kenya Faces Prolonged Uncertainty After Election Is Annulled

Sep 03, 2017

Kenya faces an extended period of political and economic uncertainty after the Supreme Court tossed out the results of last month’s presidential election in a stunning decision that’s unprecedented in Africa.

The judges ordered a new vote to be held within 60 days, opening an intense campaign at risk of being marred by violence. The news sparked celebrations in the capital, Nairobi, and in Kisumu, stronghold of opposition Kenya Mappresidential candidate Raila Odinga, who said the ruling marked “a historic day” for the people of Kenya. President Uhuru Kenyatta, winner of the annulled vote, said he disagreed with the decision but would respect it.

With its decision that the electoral commission failed to conduct a fair vote, the six-judge court demonstrated its enduring independence from the government of the day. It came at a time when demands for political change are spreading across Africa. Opposition parties won power in the past five years in Nigeria, the continent’s most populous nation, Ghana, Gambia and Senegal. The ruling also clouds the outlook for the country’s slowing economy.

“The historic Supreme Court ruling pours uncertainty on the Kenyan economy,” said Emma Gordon, an analyst at Bath, England-based Verisk Maplecroft. “Investors will be concerned about the financial implications and the high risk of violence. With the possibility of the new election going to a second round and the result being contested again, political uncertainty could easily last the rest of the year.”

Damning Rebuke

The ruling Chief Justice David Maraga read out Friday to a packed Nairobi courtroom was a damning rebuke to the electoral commission, which repeatedly denied opposition claims that hackers rigged the vote results on its computer systems. The decision helps entrench the rule of law in Kenya, one of the key pillars of the country’s long-term development plan, said Jibran Qureishi, East Africa economist at Stanbic Holdings Ltd.

“This is an extraordinary ruling,” Qureishi said in a research note. “It affirms our narrative regarding institutional strength and maturity.”

The outcome of the new vote is too close to call, with the same officials who ran the last one probably remaining in charge of the rerun, said Phillip O. Nying’uro, chairman of the department of political science at the University of Nairobi.

“It is going to be very tricky; we may end up with the same outcomes,” he said.

Criminal Prosecution

IEBC Chairman Wafula Chebukati said the commission is awaiting the court’s written judgment before making any decisions about what action it will take. Odinga called for six electoral commission officials to face criminal prosecution.

“Clear evidence shows that the commission was taken over by criminals who ran the general elections using the technology system and inserted a computer-generated leadership,” he told reporters on Friday.

Kenya, the world’s largest shipper of black tea and a regional hub for companies including Google Inc. and Coca Cola Co., faces an increased chance of violence, said John Ashbourne, Africa economist at Capital Economics Ltd. in London.

“The ruling leaves the authorities with little time to improve or reform the scandal-plagued election commission, which may throw doubt on the result,” he said. “Opposition supporters –- whose distrust in the voting system appears to have been validated –- may see another win for president Kenyatta as proof that the authorities are conspiring against them.”

Kenyatta rejected the opposition’s demands that electoral officials vacate office and asked the body to announce a date for fresh elections, his office said in an emailed statement Saturday. The current commission will supervise the new vote, Kenyatta said.

Security Forces

Clashes between security forces and Odinga supporters claimed 24 lives after the result was declared on Aug. 11, according to the Kenyan National Commission on Human Rights. The opposition put the death toll at more than 100 people, while police confirmed 10 deaths in Nairobi and didn’t release tolls from other areas. The deaths evoked memories of two months of ethnic conflict after a disputed 2007 vote that left more than 1,100 people dead.

Kenyan shares tumbled and the currency dropped after the court ruling, reflecting perceptions that prolonged elections mean more uncertainty, said Razia Khan, chief Africa economist at Standard Chartered Plc in London. The benchmark stock index closed down 3.7 percent, while the shilling weakened 0.1 percent against the dollar. Safaricom Ltd., the country’s largest company, dropped as much as 10 percent, the biggest decline in a year.

East Africa’s largest economy is in the throes of its worst drought in three decades that’s curbed output of corn, a staple, and driven up consumer prices. Gross domestic product expanded at the slowest pace since 2014 in the first quarter as farming output shrank. The government expects growth to slow to 5.5 percent this year, from 5.8 percent in 2016.

“A re-run of the election will contribute to more uncertainty and prolong any return to business-as-usual,” Khan said. “The continuation of sub-par economic performance, and its implications for fiscal revenue, is of course a negative for bonds.”

Odinga, a former prime minister, waged unsuccessful presidential campaigns in 1997, 2007 and 2013. The Supreme Court threw out his allegations of rigging in the 2013 vote that propelled Kenyatta to power, a ruling Odinga has previously described as a “travesty of justice.”

 

Credit: Bloomberg 

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