One of the primary reasons why Africa remains high risk in terms of the flow of capital on a long term basis to fund the development of capital projects very crucial to industrializing this continent, is the lack of integrity in the political system and the lack of institutions to govern processes and laws. Africa is seen as a continent where personalities are bigger than institutions like President Obama said at the Ghanian Parliament in his speech, on the 13th of July, 2009. From Angola to Republic of South Africa, to Nigeria & Egypt.
Kenya has being ruled since their independence in 1964 by two political dynasties, the Kenyatta’s and the Odinga’s. This political rivalry has being held for nearly 53 years. On the 1st of September 2017, the Kenyan Supreme Court under Chief Justice Maraga annulled the results of the August 8 elections in a 4-2 vote citing voter irregularities and widespread fraud in the system. The Nairobi Stock Exchange All share index took a hit as the largest company quoted on the bourse Safaricom (parents of the popular mobile money mpesa) dropped by 4.9% trading intraday.
Geoffrey Odundo the CEO of the Bourse was quote as saying “When there is a movement in the market beyond a certain limit, we have to stop trading to allow the market to process the information”. Recall that in 2015 elections, after the first Presidential elections were postponed due to security issues in the North Eastern part of Nigeria, the All share index dipped 0.4% same day. The decision by the NASA party led by the 72 year old Raila Odinga (The main political opposition) doesn’t inspire as much confidence in the financial markets, despite the closure of the Nairobi Stock Exchange for two days to allow the IEBC conduct the rerun slated for the 26th October 2017
The European Union has reduced its international observer presence for tomorrow’s poll as National Super Alliance accused them of overlooking the widespread irregularity in the August 8 poll that was annulled. International investors are worried that with the intimidation of the judiciary and opposition members of the parliament, a civil war like the one that was experienced after the 2007 elections in which Mr. Odinga lost, that led to the death of 1,200 people would not repeat itself. Foreign Direct Investments thrive in a predictable atmosphere where Investors can be sure of certain parameters, however, the events of the past few months is looking so much like a Deja Vu situation that is not inspiring a lot of confidence as it regards keeping or bringing in capital into East Africa’s largest economy with a GDP of $70.53bn.