The private sector is betting that Kenya will survive 2012

As I occasionally care to point out, Kenya is making meaningful progress towards institutionalization of government. According to Joel D. Barkan, the Kenyan parliament is the strongest in Africa. Its judiciary has just undergone radical reforms which saw outsiders from civil society appointed to the country’s newly created Supreme Court. The country’s provincial administration (with pith helmets and all), in the past the key tool of executive repression and control, is in its twilight and will be replaced by a devolved system of counties. The counties will elect their own assemblies, governors and will be funded directly from the consolidated fund.

But many fear that all these reforms could go up in flames in next year’s general election. President Kibaki is term limited and will be stepping down. The frontrunner is Raila Odinga. But new electoral rules – requiring a majority of 50% +1 – complicates matters a bit. Ethnic arithmetic point to an inevitable second round which will be closely fought between pro and anti-Raila factions. Raila is perhaps the most divisive figure in Kenyan politics. Most people tend to either love him or hate him, with a passion.

The prospect of another closely fought election has got many observers worried. 2007-08 is still fresh on many people’s minds.

That is why it is encouraging that the private sector is sending signals that they have confidence in the political system. Multibillion Shilling projects in construction, manufacturing and retail such as this and this are signs that businesspeople do not see that much political risk moving into next year.

These investments are also a vote of confidence in the nation’s property rights regime. The outcome of next year’s general election being unclear, it is significant that businesspeople have faith that their investments will be protected regardless of the outcome.

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