Justus Ondari
25 November 2009
Nairobi — The ongoing constitutional reform process could make or break the country's economic prospects, analysts have warned.
CfC Stanbic Financial Services analysts said the way Kenyans handle the harmonised Draft Constitution will determine how the economy performs next year.
If well handled, the economy could grow by 4 per cent next year, up from the projected 2.5 per cent this year.
"The economy is showing signs of recovery but the greatest risk factor it is facing is the reform process, especially the referendum on the Draft Constitution," the company's head of research, Mr Judd Murigi said.
"If there are extreme reactions, investors will be scared away."
As the 30-day public debate on the draft continues in the run-up to the referendum slated for next year, there is a precedent on the effects of a protracted referendum process.
This is because the differences experienced during the disputed 2007 presidential election, the 2008 post-poll chaos and the uneasy relationship that has characterised the grand coalition partners, PNU and ODM, can be traced to the fall-out from the bitter Orange and Banana campaigns during the 2005 Draft Constitution referendum.
The chaos and subsequent economic slow down, coupled with the global financial crisis later on, was to see the country's economic growth rate decline from a high of 7.1 per cent recorded in 2007 to last year's 1.7 per cent.
Mr Murigi also urged Kenyans to ensure that the Constitution they enact does not strain the budget, a clear dig at the Draft Constitution's proposed three levels of government -- national, regional and county.
"We must be able to afford it without creating budget deficits in the economy in the long-term.
"We have to live within our means," he said on Wednesday during their quarterly press briefing on the economic and market trends at a Nairobi hotel.
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