University Report: Economic Impacts of Kenyan 2017 General Election

This report examines the economic impacts of the 2017 Kenyan general election, focusing on the effects of political campaigns, investor confidence, and unemployment. The study analyzes the historical economic performance during election periods and the impact of post-election violence on businesses and job creation. It discusses the role of tribal disputes, the impact of the nullified election, and the loss of investor confidence. The report highlights the effect of political rhetoric and the impact of changing rainfall patterns on food prices. The analysis includes graphs illustrating the Kenyan economic growth from 2004-2017 and the unemployment rate during the election period. The report concludes by discussing the role of tribalism and the impact of election-related violence on the economy.

Running Head: The Kenyan 2017 General Election
The Impacts of Elections on the Economic Growth: A Case Study of Kenyan 2017 Election
By (Name)
(Tutor)
(University)
(Date)

The Kenyan 2017 General Election 2
The Impacts of Elections on the Economic Growth: A Case Study of Kenyan 2017 Election
Introduction
The Kenyan economy is one of the world economies that have held the latest general
election. The election took place barely three months ago. This paper shall cover the impacts the
elections have inflicted on the Kenyan economy. Kuo (2016) argued that elections have never
been good for any economy; and thus it is not of expectation that Kenyan economy could have
experienced some different impacts. Kuo pointed out that the 8th August 2017 election was the
greatest economic hurdle that faced the Kenyan economy as it was accompanied by great
uncertainties. The economy holds general elections after every five years where any elected
member can vie for the seat again on the next general election. Kenya has a decentralized system
of governance where power is left on the hands of the county regional leaders; this makes the
number of positions to be filled so many during a general election. The maximum terms an
elected person can serve is a two term period of 10 years.
After an election the leaders serve the nation for four year without any pressure; however
in the 5th year, campaigns start on preparation for the next general election. Both the existing and
new parties start going to their counties to request the people from their region to vote for them
in the coming election. Development is the major basis that determines whether a previous
elected member is going to be chosen again in the upcoming election. In the area where the
leader has seen an increased level of development, the people of this regional has no bound
reelecting such a leader on the upcoming election. On the other hand, regions will lower
development always tend to blame the leader for misusing the funds allocated for developing the
area and thus opt to elect a new leader to bring some change. The leaders always make various
promises to the citizens to make them look more desirable (Kohlmann, 2016). The campaigns for
the last general election started in 2016 and the election date was 8th August 2017. This election
has resulted in negative economic growth on this economy especially the fact that Kenyan
economy have tribal disputes during an election. The situation was worsened in the fact that the
election was nullified by the Kenyan Supreme court on September 1st 2017.
The History of the Kenyan Economic Performance during an Election
According to Douglas and Helmi (2013), Kenya employs a Winner-Take-All election
system. This system has been found to be weak in avoiding ethnic tensions compared to other
systems. The Kenyan economy has unveiled an increased economic performance during the year

The Kenyan 2017 General Election 3
when the campaign for an election is taking place. This is due to the increased spending by
politicians on developments in order to make them look attractive on the eyes of the people with
an aim to secure more votes during the election. During this period, people benefit much from
this increased spending, even the unemployment rate falls on seasonally adjusted basis because
many people are get temporary jobs of facilitating such development. The greatest spending goes
to infrastructure as people always consider good roads, availability of clean water and
electrification which includes street lighting as the biggest visible development. This is not
always a case for the Kenyan economy; an economy like Bangladesh and many others has gone a
similar phase of development during the campaign period (Mukti, 2017).
Fig: Kenyan economic growth history
Source: Tradingeconomics.com (2017)
The graph above is a representation of the economic growth for the Kenyan economy from 2004
to 2017. During this period, Kenya has undergone three general election and a decline in
economic growth is noted in all these elections. The 1st was on 2007 and a sharp decline is
observed. The next was on 2013 and again another decline is observed. The last was in 2017 and
another decline can also be observed.
Loss of Investor’s Confidence during a Kenyan General Election
It is with great concern that it has been noted on the presence of low investors’
confidence during a general election in Kenya. For the past two general elections, the one held
on 2007 and 2013, the opposition leaders did not get satisfied with the results provided by the

The Kenyan 2017 General Election 4
Independent Electoral and Boundaries Commission (IEBC) and resulted in protests that resulted
in inter-tribal mass slaughter and destruction of many businesses. The major election issues
always happen on the presidential position. There is no restriction on the tribe from which the
presidential candidate may come from. However, there are two conflicting tribes, the Kikuyu
where the previous president belong and the Luo where the opposition candidate belong. Raila
Odinga the opposition leader has been the major opposition leader for the last 3 general election
held in Kenya (2007, 2013 and the last election of 2017). During all these three elections, he has
slightly lost all of them to the other opposition leader; however, he has never been satisfied with
any election outcome and have always claimed that the election was rigged. In 2007, he lost to
the previous Kenyan president Emilio Mwai Kibaki.
He protested against this defeat and caused a tribal war in his stronghold areas (Thibon,
Ndeda, Fouéré and Mwangi, 2014) . In a place like Kisumu, Homabay and Kibera his stronghold
where most of the Luo community dominate, all the other tribes were chased away by force and
those who resisted were killed. Their properties were stolen and others were burnt down to ashes.
All the businesses and factories belonging to other tribes but located in these are were all broken
down and intense damage caused on the same. According to Kuo (2016), the Kenyan Investment
mood was destroyed as the economy headed to the 2017 general election as they were practicing
the approach of wait-and-see.
Unemployment Impact of General Election in Kenya
In Kenya, the constitution allows for free movement from one area to another; thus, a
person can live in any part of the country. There are tribal mixes in all areas in the Kenyan
counties. Tribal discrimination has never been an issue in Kenya until the 2007 general election.
After this election, many people whose properties were damaged ended up in tents requesting for
government’s help and they were considered Internally Displaced Persons (IDPs) (Lafargue,
2009). These people stayed out of their jobs and businesses and thus became unemployed; they
were expected to remain like this since they couldn’t go back to the areas from where they were
displace from as there was nothing left back that they could have used to restart back their life as
all was down to ashes. They therefore found it better to remain in the IDP camps relying on any
internal and external help that was given to this group. What these people failed to understand is
that these businesses irrespective of the tribe the owners came from were the major source of
employment in these areas. Other than the IDPs, there are also many people who were left

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behind unemployed because they destroyed the businesses from where they had been employed
earlier.
Fig: Kenyan unemployment rate
Source: Tradingeconomics.com (2017)
After the post-election violence eased out, unemployment continued rising in this
economy. The major explanation for this is that the restoration of the businesses to their initial
position was not easy as huge amounts of capital was required to facilitate the same. The
situation was worsened by the fact that many Kenyan businesses have no insurance covers. Thus
the restoration had to come from a new capital investment by the owners; but the owners again
did not have this capital outlay as the capital they had was first to be used to build a new life for
their families. Furthermore, it would have taken a strong investor to restart a business in these
affected areas as many investors considered this a risky investment basing their argument on the
fact that it would take time to re-establish and for the businesses to pick up again, and that the
same thing may happen again after another five years. The creation of jobs therefore was at a
lower rate as investment was discouraged. There are more than 39000 families that were left
homeless after the post-election violence of 2007. All these families camped on tents provided
by NGOs on areas where they were considered safe away from the affected areas. Statistics
noted that the number of displaced persons were more than half a million (Kuo, 2016)

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The 2017 General Election
The political campaigns have created much hatred on the previous government.
According to Musau (2017), Raila was the strongest opposition leader expected to give a big
challenge to the sitting president. Before the election, Kenya has been faced with a problem of
insecurity from Somalian terrorists which the opposition leader Raila Odinga has been claiming
as failure on the government’s part to provide adequate security to its citizens. On the other hand,
the economy has been hunger stricken in 2017 owing to the climatic changes in rainfall patterns
in 2016, this has resulted in the prices for food rising to unaffordable levels. The opposition
leader accused the government of raising the food prices so as to raise more funds to facilitate
their campaigns. He has also on several occasions noted that the previous government
(Kenyatta’s government) has been so corrupt and has misused many of the public funds. He
made the citizens believe that the major reason why most of the Kenyan youths are employed is
because the government is corrupt and fails to utilize its funds efficiently. All this arguments are
economically not correct since it can clearly be determined that these were false accusations. For
instance, the changing rainfall patterns resulted in a declined food production since many
Kenyan farmers depend on rainfall for their farming activities. This decreased output production
given that food is a necessity with inelastic demand created a shortage of supply over the
economy’s demand. Whenever there is an excess demand over supply, the price level is bound to
rise.
Another instance is on the increased unemployment; a place like Kisumu and Kibera has
the highest level of unemployment rate; this can be tied to their irresponsible behaviors during
general elections where they destroy businesses from where they get employment; in addition to
reduced investment level. Now the problem is that it could only take economists to determine the
true nature of these accusations. Given that many Kenyans are not economists, it was very easy
for Raila Odinga to make most citizens believe that the accusations were true and that they
needed a change of governance. During the campaigns Raila Odinga always told the citizens that
President Kenyatta had a plan to rig the elections; he argued that the 2010 election between him
and Kenyatta was rigged and they were still going to repeat the same during 8th august general
election. He made his people believe that there was no way president Kenyatta could have won
without stealing of the votes.

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During the campaigns, the presidential candidates were free to go to every constituency
in Kenya making a request for the citizens to vote for them during the general election. However,
the major candidate; the previous president Kenyatta and opposition candidate Raila Odinga
were not equally welcomed in all the constituencies. Raila was not allowed by the citizens of
Kenyatta stronghold areas to carry of peaceful campaigns in their areas. Kenyatta was also not
welcomed in Raila’s stronghold areas. The campaigns ended a few days to the August eighth
general election where all the leaders had adequately convinced the citizens to vote for them.
During the Election Day (8th August 2017), many citizens came out to choose their leaders; the
exercise was completed successfully and citizens went back to their homes to wait for the
outcomes. For one to qualify as a Kenyan president, he must have 50% of the votes and 25%
from 24 of the 47 Kenyan counties. According to Onyango and Otieno (2017), failure to meet
this requirements in the 1st election automatically calls for a run-off vote.
According to BBC News (2017), after the votes count process was complete, Kenyatta
was declared the winner by 54% and his opposition leader Raila Odinga followed by 44%. Mr.
Odinga was not satisfied with the election outcome and claimed that his party had more votes
than those held by Kenyatta. He claimed that some sources revealed that the electronic IEBC
servers were hacked and that the votes claimed to be held by Kenyatta were manipulated. Thus,
he claimed that the 8th August 2017 election were not carried out according to the constitution
requirement of free and fair election. He then protested the results on the Kenyan Supreme Court
where it was decided that the elections failed to meet the set standards and therefore was
nullified. The Supreme Court then announced that a fresh presidential poll was to be repeated
within the next 60 days. Later it was announced that the poll was to take place on October 17th
2017. However, the oppositional leader Raila Odinga protested against the poll taking place on
this date arguing that there has to be a change in the IEBC officials claiming that the existing
officials were biased and that there were much changes that needed to be changed for the repeat
election to be held. His protest was heard and the election date was shifted to October 26th 2017.
However, Raila was not also satisfied with this repeat poll date arguing that his demands were
not yet met. He therefore later announced his withdrawal from taking part in the presidential
election. But according to the constitution, he couldn’t be allowed to stay out of the election at a
time so close to the election; his name was included in the ballot papers.

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Few days to the Election Day, Raila made a speech calling upon his supporters not to
take place in the repeat election. The government called upon every citizen to take part in the
repeat poll by promising to provide enough security to every person who wished to participate in
the repeat poll. On 26th October 2017, the repeat election took place. However, the participation
was significantly smaller compared to 8th August 2017 (Bbc.com, 2017). This is because the
voters who decided to participate were only those who supported other candidates other than
Raila. On Raila strongholds especially Kisumu, Homabay and other places, there were boycotts
against the election (Wakaya, 2017). The citizens from this areas couldn’t allow the participation
in these areas and prevented the delivery of election materials. There was zero participation in
these areas. Raila had announced to these citizens to stay away from the elections that he would
announce a date for the elections later. He was demanding for the fresh poll to be done in 90
more days.
The Impacts of Nullification of Kenyan Election of its Economic Performance
The uncertainty of reoccurrence of post-election violence lowered the investors’
confidence. Most investors halted their investments until the elections were to be held, new
president announced, and there was peace in the economy. Most people have been laid off from
their jobs since businesses turned to be less profitable. The low demand for goods and services
has seen the Kenyan economy falling into a recession. The current economic performance is very
poor. There was an announcement by the CEO of Kenyan stock exchange that they had made
billions of losses since the 8th August election.
Decreased Domestic Spending
Due to the increased uncertainty of the post-election violence of 2007, production is
always halted during the consecutive general elections (Somerville, 2012). The country’s income
contracts resulting in a decreased consumer spending. This is not good for the economy as it
discourages investment even in the unaffected sectors. The production of output declines causing
the price level to rise. This raises the household’s cost of living as now they are forced to buy
goods and services at a higher price than they could be willing to pay. Domestic spending fell
when we approached the general election and a further decline after the nullification
The Increase in Government Spending
The Kenyan government has a mandated role of protecting its people from any great
disaster. Therefore, the government raised its spending on providing relief to the IDPs. Other

The Kenyan 2017 General Election 9
than the provision of this relief, the government can be noted to have spent more on military
spending in an attempt to restore peace in the affected areas. This economy is an open economy
that rely more on foreign earning to achieve an economic growth. After, the 2007 post-election
violence, the flow of foreign earning into Kenya declined significantly. The tourism sector is a
major source of this foreign earning; many tourist from different parts of the world considered
Kenya an unsafe destination for tourist activities and thus went back to their countries whereas a
new flow was cut. So the government is getting a lower revenue level but its spending is high.
Fig: Kenyan history of government spending
Source: Tradingeconomics.com (2017)
The Kenya government tend to spend more before an election, less during an election, and
increased spending after an election.
The Possible Actions that the Government may take to stimulate the Kenyan Economy
The government have to take action to get the economy back to its original position. This
will be policies that aim at promoting an increase in the investment level. The government may
lower taxes in or increase its spending so as to stimulate the expansion of households’ income.
Lowering taxes will raise the level of household’s disposable income and thus enabling them to
push up their spending (Amadeo, 2017). This spending will cause the demand of goods and
services to expand. The pressure to raise price owing to increased demand will raise supply a
representation of expanded output growth. Government spending increase also has the same
impact as tax, more employment is created, income expands, and spending goes up, production

The Kenyan 2017 General Election 10
expands (Horton and El-Ganainy, 2017). However, there are many critics on the use of fiscal
stimulus for a country like Kenya with deficit in Budget balance.
There is an argument that fiscal stimulus will not stimulate investment level as expected
but otherwise it will discourage private investment. The primary argument against fiscal stimulus
e.g. government spending is that it is mainly facilitated through borrowing both domestically and
from external sources. The higher the debt level the higher the interest charged and thus interest
rate rise discourages borrowing which is the primary factor behind the level of investment in an
economy. Monetary policy that may be employed is increasing money supply or an interest rate
cut. Increased money supply has the same impact as fiscal stimulus. However, lower interest rate
influences investment directly as investors borrow and invest more at the low rate.

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