BY BARNABAS ONYONKA
It has been five good years of eating by our legislators. They have been receiving the best salaries in the world (only second to their Nigerian colleagues), unlimited sitting allowances and a few softeners here and there in Parliamentary Committees. Time flies when you are having fun though. It is now barely two months to August 8, the day that determines who will be on the dining table for the next half-decade.
The party has to stop. You can’t afford the luxuries of the capital while your opponents, those whom you beat five years ago, are busy gaining political mileage back in the village. The good restaurants, fine golf courses and cozy homes in Nairobi can wait. Neither will foreign trips be of any value at this time. It is time to go back to the giver of the power to eat: the average Joe.
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As the political scene heats up, it will not be business as usual for either the business fraternity or economy as a whole.
Businessmen and politics
“Start from the bottom, hustle your way to the top and once you’ve hit the peak businesswise, brave the political waters.” The Stories of Mombasa governor Ali Hassan Joho, Nairobi gubernatorial aspirant Mike Sonko and many other self-made millionaires cum politicians play to a similar script. Let’s face it. Any good businessman in Kenya looks, every inch, a politician. And they know it, so they run. And when they do more often than not they win.
Even when they are not directly running for political office, businessmen still pull strings in the political scene. They fund candidates and political parties and in the event of a victory, politicians pay back in kind by making sure that they get a good number of government tenders. They will also partake in their loot, as their accounts will be the destination of monies paid from public coffers for services and goods not offered.
Paradoxically, even as the relationship between businessmen and politicians is closer and cozier than is expected, the effects of political heat to the economy are nowhere near cozy. Instead it brings uncertainty, ambiguity and fear.
Love-hate relationship
In Kenya, the economy and politics go together like traffic and weather. If the latter is doing badly the former does worse. Well, this may sound like a normal, plain and dull fact but it is not. Facts, figures and history have got some juice to go with.
The period immediately after independence is arguably one of the most politically stable times in Kenyan history. As a result, Kenya enjoyed an average GDP growth per year of 6.6% and 7.2% in the 60s and 70s respectively. Exit the 60s and 70s, enter the 80s. In 1982, Hezekiah Ochuka and company tried, unsuccessfully, to overthrow the government.
That was the beginning of two decades of doom for the Kenyan economy. Following the political malice and suspicion of the failed coup d’état, the country saw a mere 4.2% GDP growth in the 80s. It would have been worse than 4.2% in the 80s; luckily, the positive momentum gathered in the 70s was helpful in keeping the GDP figures presentable.
Positive momentum, however, was a thing of the 70s, what the 90s got from the 80s was a dampening effect: a mere 2.2% was the average GDP growth of the 90s. As one divide of the political folk celebrated the early 90s as a period of the “second liberation”, the economy was on its knees literally
The 1992 General Election threw the economy from the frying pan into fire. As the story goes, the Sh500 note was nick-named Jirongo. Youth for KANU swam in cash as the economy went down the drain. At the end of it all, the country was hit by a double whammy of 100% inflation and stagnation in GDP growth. To date, the years 1991, 92 & 93 remain the worst years our economy has seen. Fast forward to the mid-noughties, the economy was once again back on its feet. Political stability propagated decent growth figures. This sterling streak peaked in 2007 when GDP growth hit 7.5%. Once again, politics spoilt the party. The 2007/08 post-election violence put the economy back on its knees: 2008 saw a pathetic growth of 0.25%.
Having known the not-so-pleasant relationship history between politics and the economy, we are in a good position to anticipate what this political season may have in store for us.
Inflation
In the month of April the first half of May, Kenya experienced a period of high food prices. The prices of maize flour and sugar were the most notable during the period. It is worth noting that before the previous General Elections there was a similar rise in the prices of basic foodstuff. While many may argue that the forth-coming elections had nothing to do with the price tags on the shelves, it is prudent to allude to the fact that too much money in an economy leads to inflation. Once we have acknowledged that fact, then the possibility of the forthcoming elections having had a hand in Kenyan’s troubles at the counter becomes easy to swallow. This brings us to the all-important question of how elections lead to an influx of money in the economy.
On an average political year, government expenditure increases significantly. However, the expenditure during this period is usually opportunistic and not genuine. As a result, instead of stimulating economic growth, there is inflation because money was indirectly spent on trying to win votes instead of improving the economy as a whole.
Another way too much money ends up chasing few goods in the economy, is the philanthropic or exorbitant (depending on the way you decide to perceive it) nature of politicians during this period. So much so that it caught the eye of the electoral governing body, IEBC, who put a lid on the expenditure of political parties and politicians in campaigns besides barring them from taking part in fundraisings. That said though, we all know that such regulations only exist on the pages of documents and have no place in the real Kenya. The truth remains that politicians will spend as much as they wish in the hunt for votes.
Money looted for five years finally finding its way back into circulation! Surely, even the most stable of economies will lose its bearings.
Slowing down of the economy
Talk about the economy losing its bearings and you won’t be in the wrong for entertaining the idea of sluggish economic growth. In fact, it is a trend for economies to lose significant pace as elections draw near, of course Kenya is no exception. For our case as a country, the dampening effects of elections on the economy are felt by several key sectors in the country.
One such sector is tourism. As a result of the 2007/08 post-election violence, Kenya has been perceived as an unsafe country during the electioneering period. This means that tourists will shun visiting the country till they feel that the political dust has settled. There will be loss of income and losses in form of unrealized profit coupled up with loss of jobs (especially temporary jobs).
The curse of post-election violence does not stop at tourism, it also haunts investor confidence too. Local investors won’t expand to other parts of the country at this time; Multi-national companies planning to invest in the country may also decide to postpone their plans till the election is over. What this means is that, job opportunities will be put in jeopardy or even completely lost if the companies opt for neighboring countries. Consequently, the government will also lose out on tax revenues.
The public sector also takes a hit during this time. The fact that politicians hold most cabinet secretary positions in the country automatically implies that nothing worthwhile is going on in the ministerial dockets. Even those who were not politicians before appointment must be politically inclined at the moment. Right about this time, most probably, cabinet secretaries are busy campaigning for their boss. Or maybe we should just stop judging and remember that everyone loves their job. If their boss losses, they lose. Kenya being a country where the public sector is a major economic player, the economy feels the cold when government is not game actively.
If the economy would be able to love or hate, then it would love to hate and hate to love politics. Sadly though, politics cannot be wished away in a democracy such as Kenya. After all, Kenyans love their politics. All we can do is hold our breath and see what politics has for us, and our economy this time round.
