Po­lit­i­cal cam­paigns bad for busi­ness

If for­eign in­vestors are spooked be­cause of the pre­vail­ing “our turn to eat” style of pol­i­tics, the level of FDIs could de­cel­er­ate. This could have far reach­ing con­se­quences for the econ­omy

The Star (Kenya) - - Front Page - KIPRONO KITTONY

With the gen­eral elec­tion less than a year away, cam­paigns around the coun­try have picked up in earnest and po­lit­i­cal tem­per­a­tures are quickly es­ca­lat­ing by the day. Although some may ar­gue that cam­paigns are a crit­i­cal com­po­nent in a thriv­ing and healthy democ­racy, which is true, the fun­da­men­tal im­por­tance of mod­esty and pru­dence dur­ing these ac­tiv­i­ties must not be over­looked. Sadly, our cam­paigns are rarely about mod­esty, let alone pru­dence. Rather, they are about tak­ing swipes against per­ceived ri­vals and cheap dis­plays of flam­boy­ance. This only serves to po­larise the coun­try and heighten po­lit­i­cal risks.

This medi­ocre brand of pol­i­tics is not only a stark an­tithe­sis to the true spirit of democ­racy, but also a se­ri­ous im­ped­i­ment to busi­ness sta­bil­ity and eco­nomic growth. Con­se­quently, in­vestor sen­ti­ment is likely to dampen as we draw closer to the elec­tions. This is a huge con­cern for the busi­ness com­mu­nity.

As the chair­man of the fore­most pri­vate sec­tor lobby, the Kenya Na­tional Cham­ber of Com­merce and In­dus­try (KNCCI), I have had the priv­i­lege of talk­ing to well-placed busi­ness­men about the ris­ing po­lit­i­cal tem­per­a­tures in the coun­try. All of them have ex­pressed strong reser­va­tions about this is­sue, say­ing that pol­i­tics will make busi­ness harder next year.For­eign in­vestors, who typ­i­cally lever­age on the Cham­ber as a crit­i­cal knowl­edge part­ner, are also in­creas­ingly am­biva­lent about whether or not they will ramp up in­vest­ment ac­tiv­ity ahead of the elec­tions.

In­vestors’ un­easi­ness over elec­tions is not only in­formed by the in­flam­ma­tory state­ments that politi­cians rou­tinely make, but also by past ex­pe­ri­ence. The ex­pe­ri­ence in Kenya has al­ways been that the econ­omy slows down be­fore and af­ter a gen­eral elec­tion, lim­it­ing busi­ness op­por­tu­ni­ties.

Ac­cord­ing to a study by Na­tion News­plex, Kenya’s econ­omy slowed to a vir­tual stand­still in the 1992 elec­tions, shrink­ing by 0.8 per cent. The econ­omy grew marginally by 0.5 per cent in 1997 and 2002. The vi­o­lent af­ter­math of the 2007 elec­tion also ad­versely im­pacted growth. They was also a sig­nif­i­cant lull in 2013 elec­tions over fears that 200708 would re­peat it­self all over again.

Over­all, the Kenyan econ­omy slowed or failed to grow in three of the five mul­ti­party elec­tions and in two of the five sin­gle party elec­tions that have been held in the past, the study fur­ther shows.Clearly, the pre­vail­ing style of pol­i­tics in the coun­try is bad for busi­ness. For things to change in the up­com­ing elec­tions, Kenyans them­selves need to change. If things don’t change, and Kenyans don’t aban­don their vit­ri­olic style of pol­i­tics, we could wit­ness a flight of cap­i­tal away from Kenya next year. Although I am not in­clined to doom and gloom prophecy, it doesn’t take a crys­tal ball to read the signs of the times. The writ­ing is lit­er­ally on the wall. For in­stance, Kenya’s credit rat­ing could face a down­grade in the com­ing year.

This es­sen­tially means that it could be­come more ex­pen­sive to bor­row money next year, lim­it­ing the growth prospects of busi­nesses and com­pelling them to turn to lay­offs in or­der to pre­serve the bot­tom line.

Damp­ened in­vestor sen­ti­ment due to po­lit­i­cal risk could also re­verse the tremen­dous gains Kenya has made in at­tract­ing For­eign Di­rect In­vest­ment. FDIs in Kenya hit Sh190 bil­lion in 2015, up from Sh115 bil­lion a year ear­lier, ac­cord­ing to the African Devel­op­ment Bank.

If for­eign in­vestors are spooked be­cause of the pre­vail­ing “our turn to eat” style of pol­i­tics, the level of FDIs could de­cel­er­ate. This could have far reach­ing con­se­quences not only for the econ­omy, but also for the coun­try’s im­age. This will es­sen­tially erase the tremen­dous work Kenya has done in ton­ing up its im­age on the global stage, par­tic­u­larly the work done in eco­nomic diplo­macy. In con­clu­sion, politi­cians and Kenyans in gen­eral need to learn from past ex­pe­ri­ences that high po­lit­i­cal tem­per­a­tures harm the econ­omy and put bread­win­ners out of their jobs. A more mea­sured and is­sued-based ap­proach to pol­i­tics will help Kenyans im­mea­sur­ably. Peren­nial is­sues of in­equal­ity and devel­op­ment will fi­nally be solved and the econ­omy will main­tain a healthy tra­jec­tory.

POLITI­CIANS AND KENYANS IN GEN­ERAL NEED TO LEARN FROM PAST EX­PE­RI­ENCES THAT HIGH PO­LIT­I­CAL TEM­PER­A­TURES HARM THE ECON­OMY

COM­MENT KIPRONO KITONNY Chair­man of the Kenya Na­tional Cham­ber of Com­merce and In­dus­try

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