6 September 2017

Kenya: Supreme Court Decision to Attract Foreign Investors to Kenya

Photo: Damien Glez/This is Africa
Supreme Court ruling annuls Kenya’s presidential election result.

Nairobi — Kenya is set to benefit from the adherence to the Supreme Court ruling that nullified the Presidential results.

According to economic experts, the decision will enhance political predictability for investors boosting Kenya's attractiveness as an investment destination.

Cytonn Investments Chief Executive Edwin Dande says the decision has raised the country profile with regard to constitutionalism, the rule of law and has reduced the country's political risk.

"One of the best outcomes about this election petition is that it shall increase the size of ugalis on our tables. Raila having now gone to all courts - high court, court of appeal and Supreme Court and accepted their rulings, I think the probability of or room for ever going to the streets again is radically reduced. In short risk perception goes down, asset prices go up, which means more ugalis on our tables. We are all winners," he said.

President Kenyatta expressed dissatisfaction with the ruling but said he respects the decision of the court that ordered the Independent Electoral and Boundaries Commission to conduct a fresh presidential election within 60 days.

Stanbic's Bank Purchasing Managers Index for August is of the view that despite the immediate losses that were experienced after the supreme court decision, the response by the political class will likely attract foreign investors.

"The decision by the court is indeed a reflection of Kenya's strengthening institutions and will certainly appease the foreign investor community," the survey said.

The decision, which caught many by surprise, saw investors' wealth at the Nairobi Securities Exchange (NSE) decline having lost Sh130 billion on Friday and Monday this week.

"Nobody really expected such a decision, and investors do not like unpredictability," Genghis Capital Research Analyst Gerald Muriuki told Capital FM Business.

However, Market Capitalization at the Nairobi bourse went up on Tuesday by Sh23 billion to close at Sh2.37 trillion reversing the losses experienced over the last two trading days.

But global rating agency Moody's says the Supreme Court move will negatively affect the country's credit ratings and will prolong policy sluggishness and uncertainty.

According to the agency the ruling has brought about the political uncertainty that has already damaged business confidence and undermined economic growth.

The election fever was felt in August with Stanbic's purchasing index revealing private sector activity slid hitting fresh lows with new orders falling for the first time in the survey's history.

Orders also fell for the first time in over three years, while employment also fell in August.

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