Kenyan Electoral Results and Implications

The Kenya presidential elections were held last week. The Independent Electoral and Boundaries Commission (IEBC) declared William Ruto, the current deputy president, as the winner, but not after taking several days to deliberate. The 65% turnout was much lower than the 78% during the 2017 election. The result was close, with Mr. Ruto winning 50.5% and garnering over 230,000 more votes. So far there has been no widespread post-vote violence, which has plagued past elections, and all leaders are calling for calm. As Kenya is one of the largest and most successful democracies in Africa, we believe this sends an important message to other countries on the continent; election violence should not be encouraged or tolerated. However, the results are not a done deal yet. The challenger, Mr. Odinga, who has now run for and lost the presidential vote five times, said he does not accept the results and will contest them in court. And four members of the IEBC have said they cannot endorse the results as they were ‘opaque’. From a policy standpoint, there is unlikely to be material change. In February 2021, Kenya inked a $2.4bn loan facility agreement with the IMF. The main conditions of the agreement are a reduction in the fiscal deficit through higher tax revenue and reduced spending, and stabilization and a gradual decrease in government debt levels. Due to the pandemic, fiscal deficits have been elevated at 9% and 7.5% in 2020 and 2021, respectively. Public debt levels jumped considerably during the Kenyatta administration, from 39.8% in 2013 to 68.4% in 2021. Although the absolute level is not nearly as high as the Indebted Five (Argentina, Brazil, Egypt, Pakistan, and Sri Lanka) where levels are 80-95%, it’s the pace of change that is a concern. The IMF agreement therefore acts as a policy anchor that does not allow Mr. Ruto much room to maneuver. Because of the pending election, some important decisions had been delayed, such as on the fuel subsidy. We should now see some movement on these. Assuming the results are upheld, we are optimistic on the direction Kenya is headed.