Court rul­ing im­pacts econ­omy

The Star (Kenya) - - News | Business - ALY KHAN SATCHU

F ri­day was a day of un­prece­dented and high drama. The Supreme Court of Kenya’s 4-2 de­ci­sion to an­nul the elec­tion was an un­prece­dented move in Africa and the first time on the con­ti­nent that a court ruled against the elec­toral vic­tory of an in­cum­bent. The Chief Jus­tice David Maraga de­clared Keny­atta’s vic­tory “in­valid, null and void”. This is only the fourth oc­ca­sion world-wide when this has hap­pened (Ukraine, Mal­dives and Aus­tria). The judges or­dered a new vote to be held within 60 days. Given the damn­ing na­ture of the ver­dict with re­spect to the IEBC (The court ruled that it had “failed, ne­glected or re­fused to con­duct the pres­i­den­tial elec­tion in a man­ner con­sis­tent with the dic­tates of the con­sti­tu­tion”), its un­clear to me how the 60 day dead­line is met. I would rec­om­mend that we look at the Mar­ble so­lu­tion a la Gam­bia. The court’s de­ci­sion was un­prece­dented be­cause in such cases, courts have weighed the level of malfea­sance and in­frac­tion in the bal­ance and typ­i­cally where the mar­gin of vic­tory is so wide, courts have taken the view that the level of in­frac­tion has not risen to a thresh­old which would have al­tered the re­sult. Here the Supreme Court ruled on a lit­eral and nar­row con­sti­tu­tional ba­sis. The Pres­i­dent’s lawyers were out­played and slow to ap­pre­ci­ate that the ground had shifted. In­ter­est­ingly, the im­me­di­ate me­dia re­sponse to the de­ci­sion spoke of a ‘’com­ing of age’’ of Kenya’s in­sti­tu­tions and Re­nais­sance Cap­i­tal’s Char­lie Robert­son tweeted;

‘’Elec­tions are costly in Kenya and dis­rup­tive to the econ­omy; but there are hard-to-quan­tify ben­e­fits from in­de­pen­dent ju­di­ciary/rule of law.’’

‘’Mar­kets hate un­cer­tainty’’ is a re­frain that re­ver­ber­ates through the mar­kets and on Fri­day, we saw a big out­size bear­ish re­ac­tion. The Stock Ex­change’s cir­cuit break­ers kicked in and the Stock Ex­change was halted for 30 min­utes when shares fell by 10%. Sub­se­quently, Trad­ing re­sumed and the Nairobi All Share Index closed -3.69% [+22.18% in 2017] and the NSE20 Index -3.47% [+22.00% in 2017]. I am afraid we are go­ing to see fur­ther sell­ing pres­sure this week. The Shilling which was at a 4 month High be­fore the Rul­ing closed -0.4% and our av­er­age yield over trea­suries blew out 25 ba­sis points (bps) on the EMBI Global Di­ver­si­fied index to 411 bps. Kenya’s $2 bil­lion sov­er­eign bond ma­tur­ing in 2024 fell 1.33 cents, ac­cord­ing to Tradeweb data, its low­est since mid-Au­gust.

“The his­toric Supreme Court rul­ing pours un­cer­tainty on the Kenyan econ­omy,” said Emma Gor­don, an an­a­lyst at Verisk Maple­croft told Bloomberg “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.”

“To­day we’re throw­ing songs not stones.” op­po­si­tion sup­port­ers told the FT’s John Aglionby. We need to all make sure we keep it that way. Q1 GDP ex­panded at the slow­est pace since 2014 and clearly an­other 60 days of elec­tion­eer­ing is hardly go­ing to be a growth ig­ni­tion.

The two prin­ci­pals need to de­con­flict their lan­guage be­cause oth­er­wise there will be more blood in the Water.

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

“We shall re­visit this thing. We clearly have a prob­lem,” The Pres­i­dent said, re­fer­ring to the ju­di­ciary.

Newspapers in English

Newspapers from Kenya

© PressReader. All rights reserved.