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Bad politics poisoning investment climate

By | February 15th 2011 at 00:00:00 GMT +0300

On Tuesday, all eyes will be focused on Parliament and how it goes about the business of cleaning up the controversy surrounding President Kibaki's nominees to the state offices of Chief Justice, Attorney General, Director of Public Prosecutions and Director of Budget.

But while this exercise could be a sign of our expanding democratic space, the noise generated by the ongoing debates and controversy around the issue of appointments is harmful.

Already feeling the effects of this acrimonious debate is the Nairobi Stock Exchange (NSE), a key barometer of the economy.

Both local and foreign investors at the bourse are concerned that the country’s perennial political cycle that happens before the general election is rearing its head.

The ongoing elevated noise levels have turned everyone at the NSE defensive.

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A recent market activity chart indicates a slide in activity during the past few days.

For instance, the NSE 20 share index has declined from 4526. 78 points in January 27, to 4326.57 points as at Thursday, February 10.

Apart from a sluggish NSE, the local currency has taken a major beating because of the heightened domestic political noise surrounding the nominations saga and other pending state appointments.

Crucial cog

In the event that Parliament decides to take this matter to the floor and vote on the nominees, it is important that our politicians need to agree on the best way to discuss the matter without washing our dirty linen in public.

They must know that the country comes first more than any individual regardless of their position or influence in the political arena.

Experts are also warning that the economy could suffer a confidence crisis if the Controller of Budget, a crucial cog in the country’s financial engine, does not gain the much wider legitimacy.

We hold the view that appointments to state offices should reflect wishes of the people of Kenya and not narrow parochial interests of either Orange Democratic Party (ODM) or Party of National Unity (PNU).

In the prevailing political atmosphere, the two coalition partners in the present administration should show leadership. This is by adhering to the transitional clauses in the new Constitution and the National Accord, which require consultations between the Office of the President and that of the Prime Minister.

Both these two individuals need to exercise coalition etiquette, in the full knowledge that for corporate Kenya to work, its chairman and chief executive officer must read from the same script.

The implication on the economy of delays in appointing offices to these state offices is grave and Parliament must be aware of this before it considers the matter further.

There ate indications that activity at the NSE has declined by close to 30 per cent since the noise surrounding these nominees begun.

While political heat has affected this market before, investors are hopeful that current controversies surrounding these nominations will be resolved sooner and amicably.

Key stakeholders at the NSE have expressed concerns over the deteriorating political climate, saying lack of a quick resolution to the nominations controversy will affect investor confidence, not just at the bourse but also across the entire nation.

The earlier the two principals sought out the issue the better for the market and economy as a whole.

We are hoping that the various parliamentary committees involved in the matter will survive obvious partisan politics and party loyalties.

Rubber stamp

It is also not healthy for these committees to engage in debates and reports that will only trap or humiliate one side of the political divide. Public interest must be the driving force not parochial interests. The days when the Executive used Parliament to merely rubber stamp its nominees are long gone.

The new Constitution, in specific sections and chapters, states that occupants to each of these offices shall be nominated by the President with the approval of the National Assembly.

Going forward and to avoid the bad tempered political exchanges that threaten soil the country’s investment environment, it is important for the two principals to handle affairs of the Nation within the spirit and letter of the new Constitution.

president kiabki raila odinga NSE Nairobi Stock Exchange investors
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