Kenya has experienced an overall economic slump since presidential candidate Raila Odinga filed a court petition disputing the Independent Electoral and Boundaries Commission (IEBC) Aug. 15 announcement of William Ruto as the president-elect.
But hours after Kenya’s supreme court upheld William Ruto’s presidential win, the financial markets are showing signs of recovery. The Nairobi Securities Exchange (NSE) gained $357 million—the highest in three weeks. Market capitalization rose to $18.2 billion while equity turnover jumped by 70% to $3.7 million.
Kenya’s election stalemate
Following the election stalemate, local investors were hesitant to lend to the new government. The August treasury bond price fell below target while the country’s trade deficit climbed to a record $6 billion in the past five months of 2022.
But on Sept. 5, citing lack of concrete evidence, the court threw out all nine petitions challenging presidential votes tally and verification, including claims of hacking of IEBC’s voting system and manipulation of results, paving way for Ruto’s swearing in ceremony on Sept. 13.
The country remains calm after the supreme court decision. Even Kisumu—Odinga’s hometown which the US embassy had warned its staff against traveling to—has remained peaceful.
No time for Ruto to celebrate
But there will be no honeymoon phase for Ruto as he inherits a troubled economy. Citizens continue to suffer through economic turmoil that has seen the loss of livelihoods.
The wage bill eats up 50% of all taxes collected and only goes into the hands of 2% of the country’s population. Inflation hit 8.3% in July, and Kenyans continue to suffer through rising food prices, a plunging currency, and mass unemployment. More than three-quarters of Kenya’s 53 million people are aged under 35, yet the youth unemployment rate is 39%.
Investors are keen to witness the fulfillment of Ruto’s promise to fight corruption and repay the huge public debt which has seen treasury raise taxes and introduce new levies—an IMF recommendation.
The technology sector is also looking to see how Ruto will fulfill campaign promises of making Kenya a tech powerhouse, and converting east Africa’s biggest economy from agriculture-based to tech-based.
“To have jobs you need companies, and to attract multinational companies demands a stable environment free from corruption. This must be his number one job. Eliminate the corruption and companies will flock to our shores, bringing jobs and FDI with them,” Jay Shapiro, founder of Nairobi-based gaming startup Usiku Games tells Quartz.
Corrupt officials steal $20 million daily
Ruto’s government is inheriting public debt of $80 billion which keeps snowballing due to corruption. A huge part of borrowed public funds ends up in the pockets of politicians and government officials with outgoing president Uhuru Kenyatta once estimating that corruption is responsible for the loss of $20 million from government coffers every day.
Ruto now has the tough task of uniting a politically divided nation but rebuilding the economy through his bottom-up model is what many citizens and investors are eager to see.
“Bottom-up economics is about investing the limited capital available where it will create the most jobs at the bottom of the pyramid. It means a commitment to invest $415 million over the next five years in smallholder agriculture and the informal sector,” Ruto says.