Our economy has been inching along over the past months and businesses will effectively hit the pause button on August 7. A measure of maturity of a democracy is the extent to which a presidential election is carried out without material interruption of the economy – and by extension everyday life. I was in the US for two contentious elections: George W. Bush versus Al Gore in 2000; and Donald Trump versus Hilary Clinton.
Some would say these events were rigged with unexpected upsets challenging the integrity of the electoral process in arguably the most mature of democracies. As much as there was uncertainty, what was clear to me was the level of faith Americans had in their systems. Regardless of their political leanings, there was confidence that life will go on and, business stops for no man (or woman). In the case of Bush, Gore contested the results for five weeks. Meanwhile, we all went to work. After all, “rent’s gotta get paid.”
If there was a time Americans with strong cultural views – and seemingly unfettered access to guns – would have caused trouble, it was in 2008 when Barack Obama was elected. But again, the system prevailed -- no serious threats of violence, no mysterious deaths of officials, no talk of the military needing to step in.
The day after the Trump victory, I had meetings in New York. As I walked the streets of Manhattan, I was intrigued with how ordinary life seemed to be -- despite the polarising campaign. I was prepared for meetings to be cancelled, streets to be deserted, and shops to be shut. But it was business as usual. How many in Kenya plan to hold business meetings on August 9?
Prayer and Political Economy
The private sector has been told to pray, but I do not think prayer is what we need most. What we are experiencing is neither spiritual nor a Kenyan “peculiarity.” Poorly governed democracies witness this uncertainty every presidential campaign period. In a research on “Elections and Economic Policy in Developing Countries,” Lisa Chauvet and Paul Collier found business is affected by politics with pro-market policies diminishing closer to voting day.
This deteriorating environment causes a “price” that fragile democracies pay, and this can be as much as 2 per cent of GDP. The price is higher in countries where civil war breaks out and in this case recovery can take as long as 10 years.
Politicians will always be politicians. And when it comes to seeking office, reinforcing economic and social stability is not a number one priority. Countries like Zambia and Zimbabwe are often cited with this research, in both cases, the incumbents adopted populist positions to endear themselves to the public.
Zambia saw a 400 percent increase in money supply when Kenneth Kaunda sought another term in 1991; Robert Mugabe in 2008 printed money to pay wages and pacify voters. I suppose, Kenya’s example of such well-timed populist policies is the introduction of arbitrary price controls in the banking sector . If we can enhance accountability in government, the system will improve, and we will do away with this amorphous date businesses call “after the election”.
- The writer is an Eisenhower Fellow specialising in sustainability and a director at Kenya Bankers Association