The annulment of Presidential election results earlier this month has had devastating economy of the Kenyan economy. One of the few robust economies in the continent that has weathered a hostile environment to post strong growth rates, now seems headed for slow growth this year and probably the next.
This is because the Supreme Court’s activism gave greater weight to alleged infidelity to constitutional rights of an individual damning the economic consequences.
Minutes after the ruling, the Nairobi Stock Exchange, lost US$82 million in capitalization as foreign investors headed for the exit. By the second day of trading, the loss hit US$130 million.
The world feared an outbreak of violence and investors quickly rushed for the exit door, offloading Kenyan stocks and other debt instruments in droves. The Kenya shilling felt the pressure, losing 35 cents to the US dollar.
The Nairobi Stock Exchange’s market capitalization shaved off US$89 million in a single day! While the shilling was shaved off US$3.5 million in its value. In fact, US$50 million was trade in less than one hour.
Brinkmanship by the opposition leader, an idiot in matters economics, has led to several negative economic outcomes, adding to the existing economic woes in the country. The major loss was Kenya’s right to host CHAN games early next year owing to security concerns.
At home, consumption is declining as the middle class opts to save more just in case. Investors have held investment plans while the business community has been placed on a virtual hold as the idiot holds the country at ransom.
Adding to the economic haemorraghe are travel advisories at a time when the tourism peak season is just about to begin.
This has many economists say that the economy will not approach the targeted annual growth rate of 5.9 per cent this year. They say it will be lucky to hit 4.5 per cent.
Granted. The economy was facing headwinds due to bad weather that adversely affected growth in the agricultural sector due to prolonged drought. However, the ruling added speed to the deceleration.
The bourse, a barometer of a country’s economic health suffered a massive off load with all blue-chip scripts suffering a battering. It had to halt trading for an hour when the battering hit the red line.
In a single five-hour trading day, a total of $164 million was traded. This is, in normal times, the exchange’s turnover in a week. An average of $5.5 million was moved every hour on Friday.
In the forex market, the shilling which had been gaining since Uhuru was declared President, was also battered. It shred off 35 cents against the US dollar after the ruling.
It opened at 102/75 buying 102.95 selling Friday morning but slumped to 103.10 buying 103.20 selling. Kenyan debt stock overseas also bled. On that day alone Kenya’s forex reserves were shaved off kshs 356 million. The country’s daily turnover is slightly more than US$10 million.
Kenya’s $2 billion sovereign bond maturing in 2024 fell 1.33 cents, reports said, it’s lowest since mid-August. The 2019 issue fell 0.75 cents to 102.75 cents.
Things only calmed down when the President, drunk as most puritans said he was, addressed the nation, saying he accepts the ruling although he differs with it. His call for peace calmed the markets. And his tour of Burma market removed the uncertainty completely.
In Jubilee strongholds which were under close watch, the people were shocked but went on their business as usual- no disturbance of any kind. That entrenched the calm in the market.
However, rants and yells by the opposition has unnerved the business community thus extending the uncertainty into the fourth quarter given that the election will be held on October26th. This has extended the economy’s woes particularly given the Political brinkmanship of the opposition leader, Raila Odinga.
The Nairobi stock exchange is capitalized at US$23 billion, slightly under a third of the country’s national wealth of US$72 billion. It is therefore a barometer of Kenya’s economic health and a good pointer to the mess, a poorly thought out ruling- whatever its merit- can inflict on the economy.
Without going to the merits of the ruling, the judges, including the Chief Justice, for all his alleged wisdom, did not consider the implication on the economy, their ruling would have. In just a few hours after the ruling, Kenya lost billions in the value of its stocks and foreign exchange!
The ruling will also slow down economic growth in the fourth quarter, due to ongoing campaigns for an election to be held within sixty days. It will also cost the tax payer another KUS$10 million in preparation for the election.
This is a triple economic injustice on Kenyans whose will was sabotaged by the Supreme Court. First they lost in terms of the country’s wealth, which loss shall never be recovered, they also will lost in terms of tax money that will be squandered on the election. And finally, they lost their sovereign will. And if the dissenting ruling by two of the seven- judge bench is anything to go by, the ruling was based on fake evidence.
The Court has thus become a player in the malicious destruction of the Kenyan economy. Not that, such stupidity is anything new, the courts have become a major partner to any loser in major government contracts. Giving his ruling a week ago, the Chief Justice, David Maraga, trashed economic concerns arguing that countries are ruled and developed by their fidelity to constitutionalism and rule of law, “even when the ruling is idiotic,” to quote his predecessor, Willy Mutunga.