Kenya’s upcoming election adds to the uncertainty coming from the international landscape. Typically, elections are not a painless affair in the East African country. Violence is not necessarily part of the outcome, but the departure of President Uhuru Kenyatta, at the end of his second term and no longer eligible for re-election, makes the unfolding scenario highly unpredictable.
The crisis in Ukraine — with its impact on food and energy inflation as well as the expected drop in demand for Kenyan exports due to the general slowdown in the global economy — is bound to penalise Nairobi as well. The question at hand is the magnitude of this impact and the resilience of the country's economy. Growth forecasts have already been revised downwards from an initial 6% expected expansion for 2022 to 5.5%. Last year, the country reported a more satisfying 7.5%.
One of Africa's most dynamic economies
Kenya has long shown great vitality and energy, proving to be an innovative and dynamic country like few others in Africa. The country's exuberance, however, includes a number of excesses, most notably corruption levels that are remarkable even at these latitudes, and turbulent elections.
As the third largest sub-Saharan economy as per the World Bank's estimates (with a $109 billion GDP in 2021, third only to Nigeria and South Africa), Kenya ranks ahead of Italy as a favourable environment for business activities (Ease of Doing Business 2020). It is no coincidence that Nairobi has systematically been the 'chosen' location and crossroad for businesses and international organisations in the region.
Kenya’s capital city is the hub of an established ecosystem of technological innovation – the so-called 'Silicon Savannah'. The pioneering, rapid, and astonishing penetration recorded by the mobile payment system (the extensively studied success of M-Pesa) is a case in point, but the city is rich in experiences across a wide range of sectors, from the green transition to logistics. High levels of education and training, in comparison with other African economies, prove a strong asset.
The country is the real beating heart of the East African Community, which represents a market of 180 million citizens — the Democratic Republic of Congo (DRC) recently joined the group formed by Tanzania, Uganda, Rwanda, Burundi and South Sudan — and the best integrated out of the eight Regional Economic Communities recognised by the African Union. According to measures developed by a UN agency, the African Union and the African Development Bank, Kenya is second only to South Africa in the degree of its economic integration (i.e., trade, manufacturing, financial, etc.) with neighbouring states.
Over the past twenty years, Nairobi has failed to attract the kind of praise garnered by other African economies by virtue of their exceptionally bright growth rates. Rather, it was slower in getting itself in gear. After a relatively underwhelming phase, however, the Kenyan economy has picked up a creditable pace, averaging 4.7% between 2010 and 2021. The steady trend of the past fifteen years was only interrupted — albeit so far briefly — by abrupt slowdowns at times of international crises (first the global financial crisis, then the Covid-19 pandemic). Since around 2010, and more clearly since 2014 following the end of the commodities super-cycle, Nairobi went from lagging behind to settling steadily above sub-Saharan Africa's average growth rates. Like other economies not directly linked to the export of single or a few energy or mineral resources, it proved less susceptible to fluctuations, more resilient, and ultimately performed better. After quickly absorbing the pandemic contraction (going from -0.3% in 2020 to 5.5% in 2021), growth was expected to further strengthen in 2022 – that is, until the war in Ukraine broke out.
The economic revival of recent years was driven by several factors: the expansion of infrastructure investments (e.g., port and railway investments), the development of great agricultural and agribusiness potential (including, famously, the export of cut flowers destined for the European market), a relative growth in manufacturing, tourism in both coastal areas and national parks, and a diversification and acceleration of services linked to technological innovation.
The key to political stability
Crucially, Kenya's economic dynamism was also somewhat fuelled by the country's political evolution. Essentially stable since independence, Kenya has never suffered a coup d'état nor a civil war. Since the early 1990s, and thus for thirty years now, the country has regularly held competitive elections. It was precisely the 2002 victory of the oppositions that started a season of ambitious economic and institutional reforms designed to kick-start the economic recovery. The Kenya Vision 2030 development blueprintalso plays a significant role: launched in 2007 and implemented through five-year plans (the latest was adopted in 2017), it aimed at periodically defining its focus and stimulating its implementation.
In this context, however, there have been moments and episodes of instability, typically around times when Kenyans are called to cast their votes. The lowest point came with the election in late 2007-early 2008, when the electoral campaign, the vote, and the vote-counting process sparked widespread violence that left over a thousand dead and six hundred thousand displaced. Albeit not equally tragic, the 2017 presidential election also led to a phase of uncertainty as the opposition’s petition was upheld by the Supreme Court, leading to the annulment — the first such occurrence in Africa — and re-run of the vote.
At the heart of political tensions is a powerful presidency that communities, ethnic groups, and regions perceive as 'un-waivable' since it can give privileged access to public resources. So far, therefore, the Kenyan electorate has largely voted along ethnic lines. Although the Constitution recognises as many as 111 ethnic groups, it is the so-called 'Big Five', i.e. the Kikuyu (about 22% of the population), Kamba (10%), Luo (11%), Luhya (14%), and Kalenjin (13%), who define the game. Since there is no majority group, the road to the ballot is an opportunity to sew, unravel, and renegotiate potentially victorious ethnic alliances. As such, said frequent reshuffling of cards often results in the paucity of parties that remain stable over time.
Towards the elections: at risk of a shake-up?
In the years following Kenyatta's 2017 re-election, an entirely unforeseen development shook Kenyan politics. A year after the election, the President 'made peace' with his long-standing opponent and opposition leader, Raila Odinga. In a move known as 'the handshake' he, to an extent, informally involved him in government and began laying the groundwork to eventually endorse him as a possible successor. All this was to the detriment of the current Vice President, William Ruto, who had been waiting a decade for his turn to get the job only to see the risk of the presidency being snatched away from him on the finishing line. In a climate of utmost uncertainty, therefore, the election now sees Ruto (a kalenjin) and Odinga (a luo) running against each other, with Kenyatta (a kikuyu, the group historically identified with the establishment) who, on his way out, has shifted all his power and leverage from the former to the latter. Apart from the role – far from marginal – that other communities and 'independent' voters will play, however, it remains unclear how much the current President will actually be able to deliver to the Kikuyu electorate, part of which seems more inclined to support Ruto.
Based on past experiences, and on the assumption that many people want to avoid sinking a boat that is still sailing at good speed, one can realistically expect Kenya and its economy to have the capacity to absorb possible election-related shocks. Provided they are neither too violent nor too long.