NAIROBI, KENYA: Business leaders followed keenly on Tuesday as Kenyans trooped to the polls to elect next president.
But who between Jubilee Party’s President Uhuru Kenyatta and National Super Alliance’s Raila Odinga is a darling of the business community?
In the run up to the 2007 General Elections, when Orange Democrat Movement (ODM) headed by Raila Odinga led in the pollster rating ahead of Party of National Unity (PNU) headed by former President Mwai Kibaki, the then Nairobi Stocks Exchange (today Nairobi Securities Exchange) was shaken.
While a number of factors might have led to this development, critics of Odinga were quick to point a finger at him. Kibaki’s Government led by the then Finance Minister Amos Kimunya blamed the lackluster performance at the bourse to Odinga’s anti-business rhetoric.
The emerging negative perception damaged Odinga’s relations with the business community.
In the same year, ODM had opposed a plan by the Government to offload its 25 per cent stake in Safaricom to the public through an initial public offer (IPO).
ODM in a statement argued that the structuring of the offer locked out low end investors and must be reviewed before its implemented.
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Odinga’s party argued that “the requirement that shares need to be purchased only through banks and brokerage houses” created an uneven playing field thus locking out hundreds of thousands of small investors who would have wished to get a stake in one of Kenya’s blue-chip companies.
The then ODM’s Secretary General Anyang’ Nyong’o suggested the IPO should be delayed until the identity of a third shareholder in Safaricom was clarified, even as steps were taken to ensure the offer conformed with the 2005 privatisation law was followed.
It was such stances, which gave Mr Odinga an image of an anti-businessman whose prospect at occupying the highest seat in the land only drove the market South.
For a while, Odinga who some believe that his flirtation with Marxist policies during his stay in East Germany and former Soviet Union during the Cold War era, might have turned him into a socialist sympathiser. He was at pains to exonerate himself.
His recent pronouncements in the campaign trail have not made things easier for him. In one instance, Mr Odinga is reported to have promised to reduce rent when his coalition sweeps into power, a dubious policy for a country where housing is largely provided by private investors.
Odinga has since clarified that his plan was to re-enforce the Restriction of Rent Act in a bid to stop arbitrary hiking of rental fees for the poor and lower the cost of building houses to make it affordable to investors. But this has only added to the myth that Odinga is anti-wealth with one commentator even describing him as “the lord of poverty.”
President Uhuru Kenyatta has not been described in this fashion.
But even though, President Kenyatta as head of Government has made decisions that have left business leaders pulling out their hairs. For Odinga, his fortunes changed for the better owing to some decision he made as Prime Minister in the coalition Government endeared him to the private sector.
But for Uhuru, a decision to cap interest changes is likely to haunt him. Last year, when the Bill to cap rate charged on loans was brought before the President for assent, those opposed to it staked their hope on the business credentials of President Kenyatta.
Kenyatta, the son of the country’s first President Jomo Kenyatta, is a student of economics. He graduated from Amherst College in the US with a degree in economics, political science and government.
In fact, upon his graduation, Kenyatta returned to Kenya, and started a company Wilham Kenya Ltd through which he sourced and exported agricultural produce.
As the Finance Minister in the Coalition Government, Kenyatta must have witnessed the wonders of the invisible hand of the market (through the forces of demand and supply) as well as the disastrous effect of the visible hand of the Government through crippling regulations.
It was against this backdrop many expected he will not support the Bill to cap interest rate that was brought to him for signing into law.
Although lenders had been insensitive to the plight of borrowers by charging exorbitant interest, most economists did not expect the president would assent the bill to a law.
However, Kenyatta overruled even the ‘wise’ counsel of his National Treasury Cabinet Secretary Henry Rotich and the Central Bank Governor Patrick Njoroge to approve the controversial law. He signed into law the Banking Act 2016 much to the chagrin of most lenders, including Commercial Bank of Africa in which the Kenyatta family has a significant stake.
It is not clear what the impact of the law has been, although the International Monetary Fund has said it has already affected lending to the small and medium enterprises.
Credit extension to the private sector dipped to an all-time low of 2.4 per cent in what most analysts have been quick to blame on a sluggish economy.
Yet, it is not only on credit extension that the President has crossed paths with the private sector.
The President also raised the minimum wage despite protests by employers who complained that their cost of production had shot up in what they blamed on, among things, increased labour cost.
Indeed, the increase in wages came at a time when most firms in the country were laying off staff in droves as the business environment got tough. Some of the firms closed shop and shift their operations outside the country. The private sector, through its lobby, the Federation of Kenya Employers, expected the President to take this into consideration before he raised the wages for employees. However, President Kenyatta dimmed their hopes when he went ahead and increased minimum wage by 18 per cent. With high cost of labour, most firms might be forced to delay hiring.
When Odinga was in Government, he tried to create a good working relationship between the Government and the private sector by launching the Prime Ministers Round Table Sessions.
The dialogue was held between the executive, the legislature and judiciary through the prime minister’s round table and the president’s working forum.
They are reported to have achieved gains through policy reforms, including reduction of the number of licenses needed to start a business, the days it takes to register a business, and the 24 hour operations.
Since taking over, Mr Kenyatta has been credited with the rollout of Huduma Centres - a one stop shop which have eased service delivery to Kenyans including registration of businesses, filing of taxes, issuance of NSSF and NHIF cards and replacement of identity cards among others.
He has also been on the forefront in the digitisation of most government records and land - reducing fraud in service delivery. It is a ritual that Mr Kenyatta inherited, and which has helped deepen relations between the private sector and the national Government.
The two leaders, both of whom are business men, have insisted that the controversial decisions or pronouncements they made were for the public good, with Odinga emphasising that he was only pushing for transparency and fairness.
President Kenyatta said the decision to increase the minimum wage was meant to cushion workers against a rising cost of living.
On capping of interest rate, the Head of State observed that after wide consultations, he had to the conclusion that Kenyans were frustrated with the insensitivity of banks. “These frustrations are centred around the cost of credit and the applicable interest rates on their hard–earned deposits. I share these concerns,” said the President.
However, both leaders are accomplished businessmen who have built vast empires of business networks and operations estimated to be worth billions of shillings.