Sunday’s political truce between President William Ruto and opposition leader Raila Odinga is a huge boost for the business environment and the battered economy, business leaders and traders in various sectors said on Monday, April 3.
It has pulled Kenya back from the brink of economic collapse by cooling the excruciating political heat that followed the August Presidential polls fired up by the recent anti-government demonstrations and put the country on the path of reconciliation and economic reconstruction, they said.
It has also created room and space for a resumption of economic activity that had come to a near standstill, and will bear a peace dividend for the battered economy they added.
Odinga and President Ruto signalled on Sunday that their rapprochement would mean an end to the recent disruptive demonstrations, polarisation and political instability that followed the disputed elections and put the economy on the path to recovery.
“First, is a return to normal operation, which is itself a simple but effective thing,” said Deepak Dave of Riverside Advisory. “More vitally, it shows that as difficult decisions are made this year, the whole political class might work together, for example on the national debt, employment and so on.”
Kenya’s delicate tourism sector will be one of the early beneficiaries of the truce, players in the sector said. “Political stability is a key thing. Once this has been achieved, the working environment thrives and business experience optimum growth,” said Naivasha Tourism Association Treasurer Sammy Mugo.
“The truce of Ruto and Raila has calmed the storms experienced in last three weeks with the ‘maandamanos’ that wreaked havoc in key towns and cities around the country.”
He said players in the hospitality industry will be able to sell various products within their premises with the backdrop of knowing there is local and national government support.
“The truce will enable visitors who are planning to travel around various destinations in our country to travel especially right now as we are now heading towards the Easter holiday,” said Mugo.
“I believe this truce will mean well to all the industries like transport, agriculture and security. Let this truce be a beginning of a healing process that will see our country back to its usual spirit of peace, love and harmony.”
Manufacturers said the truce between Ruto and Odinga will boost efforts to stabilise the economy and give businesses breathing space from the political heat that hurts business and investments.
“It is a step in the right direction. We need stability in the political environment for businesses to prosper,” said Kenya Association of Manufacturers (KAM) chairman Rajan Shah.
He said the demonstrations were affecting manufacturers because of supply chain disruption. “Demand was also getting affected during this uncertain period,” he said. “We hope a long-term solution can be found which will ensure peace and security prevail which are the foundations on which any business thrives.”
The mass rallies around the country to protest the high cost of living and last August’s disputed presidential polls had been seen to hurt Kenya’s already battered economy.
If the demonstrations lasted for an extended period, business confidence was set to be affected, raising the risk of job losses and other blows to the fragile economic recovery, they had said.
The transport sector, manufacturing, retail and services sector have so far been hardest hit by the disruption.
However, the demonstrations’ impact had increasingly affected other industries too.
Businesses feared any further disruptions following the Covid-19 pandemic, political jitters caused by last year’s divisive General Election and the current drought could wreck any hopes of recovery for East Africa’s largest economy.
The Kenyan economy ordinarily takes a dip every five years as businesses hold back investment decisions awaiting the outcome of elections.
The recent unrest could have undercut one of Kenya’s key foreign revenue generators - tourism, players said earlier. Kenya is banking on the recovery of the tourism sector this year after the sector posted good results last year.
The sector’s earnings jumped 83 per cent in 2022 to Sh268 billion on the end of Covid curbs officials said recently.
Analysts also forecast political uncertainty could jolt investors at the Nairobi Stock Exchange (NSE). Any political jitters linked sell-off of shares would pull down the NSE to new lows.
“NSE is frankly already in poor performance territory. It is not much of a gauge for economic confidence, but we can expect some sell offs by jittery foreign investors,” said Dave of Riverside Advisory.