Kenya has been ranked among the most uncertain business environments in the world in the run-up to the August 9 polls, according to data by the International Monetary Fund (IMF).
Only Colombia, Brazil and Colombia fared worse than Kenya between April and June, showing how spooked investors are as the country nears the General Election.
The economic and political uncertainty has risen sharply by 84 per cent to 0.628 points from 0.34 to the second quarter of 2021, according to the IMF's World Uncertainty Index (WUI).
The IMF team came up with the WUI as a means to measure economic and political uncertainty among 143 countries that represent 99 per cent of the world’s Gross Domestic Product (GDP) - the total value of all goods and services.
The index uses a single source for all countries, allowing the IMF team to compare the level of uncertainty across countries.
“The index is constructed by text-mining the country reports from the Economist Intelligence Unit (EIU), a business intelligence company that provides country reports on a quarterly basis. These reports cover each country's economy, policies, and politics,” says the IMF.
Uncertainty in different countries is informed by different events, for example, the terrorist attacks of September 11, 2001, in the US created a lot of nervousness in the world.
In Kenya, the electioneering period is one of the main sources of uncertainty, with investors, at worst, fearing an outbreak of war such as in the aftermath of the 2007 elections.
Kenya also had the second most uncertain environment in the run-up to the 2017 general elections.
And in the fourth quarter of 2002, Kenya had the most uncertain business environment in the world as Kenyans went to the polls to vote for a change of regime after 24 years of rule by the late President Daniel Arap Moi.
Opinion polls have shown that former Prime Minister Raila Odinga and Deputy President William Ruto - the leading contenders for the Presidency - are in a dead heat, with none of them able to marshal more than 50 per cent of the votes cast if elections were held.
As a result, most investors have taken a wait-and-see approach, preferring to wait until the race is clear to make big plans.
Colombians also went to the polls during the review period which saw the election of former guerrilla fighter Gustavo Petro as president, making him the South American country’s first leftist Head of State.
The Covid-19 pandemic also was also a source of uncertainty in Kenya, with the index rising to 0.452 in the second quarter when the country recorded its first Covid-19 case.
Central Bank of Kenya (CBK) Governor Patrick Njoroge, however, in an interview last year, said unlike the risks posed by the rising political temperatures occasioned by a possible referendum and the 2022 elections, there was still an element of surprise with the pandemic.
He said Kenya, having gone through many political risks, had somewhat learnt how to deal with them. He termed the risks - including the US elections - as “known unknown”.
“Coronavirus is actually the one that is the unknown. The others are in the realm of known unknowns,” Njoroge said.
However, surveys have since shown that investors are less worried about the pandemic. Instead, most of them have cited the Russia-Ukraine conflict and the impending elections as a reason for their jitteriness.
Nonetheless, the economy grew by 6.8 per cent in the first three months of the year, the highest in 22 years, new data from the Kenya National Bureau of Statistics (KNBS) has shown.
The expansion of the GDP compared to the same period last year has been attributed to increased economic activities after the country rolled back the containment measures aimed at curbing the spread of the Covid-19 pandemic.
The GDP is expected to grow at a slower pace this year compared to last year, largely owing to the elections, the war in Ukraine and drought.