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Calm Kenya Vote Can Boost Growth, Reform May Still Stall
March 11, 2013 / 5:01 PM / 5 years ago

Calm Kenya Vote Can Boost Growth, Reform May Still Stall

LONDON, March 11 (Fitch) Kenya's prospects for growth and foreign investment should improve if presidential elections remain peaceful, although a political vacuum that delays reform could develop should the president and deputy president face a lengthy trial at the International Criminal Court, Fitch Ratings says. Political risk has weighed on the Kenyan economy in recent years given the scale of the post-election violence seen in early 2008 and fears that it could reoccur. This time around, election violence has been avoided since polling on 4 March, although it will be another week or so before the result is confirmed. This is despite technical glitches which delayed vote counting, and a large number of spoilt ballots which proved contentious given the narrow margin of victory. A tight finish, which saw President-elect Uhuru Kenyatta taking 50.03% of the vote - just above the 50% threshold needed to prevent a run-off - has been questioned by the opposition. Raila Odinga, who won 43.3% of the vote, has called for calm, while saying that he will challenge the results through the Supreme Court. Odinga believes the results lack credibility due to procedural problems with the voting process. The court has 14 days to rule. The threat of violence has not been eliminated, but Odinga's decision to take the dispute through the court system reduces the risk and helps to raise Kenya's image as a stable democracy. International observers have called the elections peaceful, free and fair, apart from isolated violence in Mombasa. With only 8,000 votes between Kenyatta and a run-off, a decision by the courts to include the 100,000 spoilt ballots as votes cast and recount results in the 30 disputed constituencies could see the country going to the polls again. Irrespective of who ultimately wins the presidency, neither candidate's coalition has a majority in parliament. This could make passing legislation time consuming and dependent on consensus among a disparate group of parties. If confirmed, the implication of the election of Kenyatta and William Ruto, both indicted for crimes against humanity at the ICC, as president and deputy respectively will become clearer in the coming months. Much depends on when the trial starts (it has already been pushed back from April to July and could be postponed further) how long it takes, and whether both men co-operate fully with the ICC. Both will be effectively out of action during the trial, leaving a political and leadership vacuum. The implications for the day-to-day functioning of government will depend on who is chosen as caretaker president and the effectiveness of the new cabinet. However, a protracted trial will likely see the reform agenda stagnate further; Kenya has already fallen 43 places to 121st in the World Bank's Doing Business Survey since the 2008 elections, with adverse implications for FDI, which lags well behind regional peers. Bilateral relations will be complicated with both leaders facing ICC charges, but western nations will probably take a pragmatic approach, particularly if both men co-operate, given Kenya's strategic importance to the fight against terrorism in Africa as well as the large number of multinationals already operating there. Kenya receives less that 1% of GDP in aid, so even if donor relations were to become strained, the direct implications for the budget would be limited. Fitch rates Kenya 'B+' with a Stable Outlook. As we have previously said, continued stability and reforms which have a favourable impact on the business and investment climate would bolster creditworthiness. Contact: Carmen Altenkirch Director Sovereigns +44 20 3530 1511 Fitch Ratings Ltd 30 North Colonnade London E14 5GN Mark Brown Senior Director Fitch Wire +44 20 3530 1588 Media Relations: Mark Morley, London, Tel: +44 203 530 1526, Email: The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article can be accessed at All opinions expressed are those of Fitch Ratings. Applicable Criteria andALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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