The International Monetary Fund has highlighted a 30% to 50% probability of political instability during Kenya's 2022 general elections, warning that election-related violence could disrupt economic growth. The institution's assessment of Kenya's 38-month economic program emphasizes risks tied to political tensions, particularly ahead of the presidential contest between Raila Odinga and William Ruto.
"Political violence could emerge around this year's (2022) presidential election as seen in previous polls," the IMF stated in its report. The organization urged Kenyan authorities to maintain fiscal reforms aimed at reducing debt vulnerabilities through controlled spending and increased tax revenues.
Historical Context of Electoral Uncertainty ¶
Kenya's economy experienced a sharp contraction in 2008 following post-election violence linked to the 2007 presidential dispute. That year, GDP growth fell to 1.5% from 6.9% in 2006, with widespread property destruction and loss of life. The IMF's World Uncertainty Index (WUI) has consistently shown elevated economic risks during election periods.
In 2019, Kenya ranked second-worst globally for business uncertainty ahead of the 2017 elections, with only South Africa performing worse. The WUI remained elevated until the 2021 'handshake' between President Uhuru Kenyatta and Raila Odinga, which temporarily restored investor confidence. However, the index showed extreme uncertainty in 2002, when Kenya's business climate was the most volatile globally.
Pandemic and Electoral Risks ¶
The IMF also noted ongoing challenges from the Covid-19 pandemic, including the Omicron variant's impact on recovery. Kenya's economy contracted 0.3% in 2020 but is projected to rebound in 2022 before slowing again as election tensions rise. Central Bank Governor Patrick Njoroge previously described political risks as "known unknowns," emphasizing that the pandemic remained the greatest uncertainty.
Economic forecasters anticipate heightened political risks that may deter investor confidence. The IMF's analysis underscores how electoral volatility continues to weigh on Kenya's economic stability, with historical precedents showing growth declines during periods of political unrest.
