TOPIC: Political Cycles and Their Impact On
The Economy: The Kenyan Experience
PRESENTER: EDWARD KISIANG`ANI (PhD)
DATE: 15th -17th FEBRUARY 2017
VENUE: KENYA SCHOOL OF MONETARY STUDIES, NAIROBI
WHAT IS POLITICS?
 Process by which People of a polity make collective
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decisions.
Term is also applied to civil governments but is also used
in other interactions eg academic, family, c0rporate and
religious fields.
Kenya’s politics comprises many fields but elective politics
rules supreme
Aristotle defines politics as affairs of the state.
We can thus say politics could mean all the activities
which occur under a defined administrative, judicial
disposition.
WHAT IS POLITICS conti….
 In political Science, politics is defined as study of power
and authority and also the exercise of power and
authority
 Authority exists whenever several or many people
explicitly permit somebody to make decisions for them(
Lindblom,1977)
 Power means ability of individual or group to achieve
outcomes that reflect his/its objectives.
WHAT IS POLITICS conti….
 In an untidy process called politics, some people who want
authority struggle to get it while others try to control those
who have authority.
 Those who succeed to control the group with authority wield
power ( Weber, 1947).
 This group is really dangerous. You have had it in Kenya from
Geoffrey Kariithi, Charles Njonjo, Simeon Nyachae, Sally Kosgei
and probably now Joseph Kinyua now.
WHAT IS POLITICS conti….
 Where there is homogeneity as opposed to heterogeneity
of interests conflicts are less.
 Kenya’s political terrain has complex heterogeneous
interests- regional, ethnic, individual, cultural, spiritual,
class etc. Navigate through these diverse interests
remains the biggest challenge for any political formation.
 Yet people with power and authority guided by narrow
interests continue to control the decision making process
in the use and distribution of resources.
WHAT IS ECONOMICS.
 Study of the optimal use of scarce resources (scarce
because the resources have alternative uses.
 It is the science which studies human behavior as a
relationship between ends and scarce resources.(Robbin
1932)
 Challenge is always in Resource distribution- this is always
a political process done by those with authority
influenced by those with p0wer.
WHAT IS ECONOMICS conti…
 Often policy markers advise those with power and authority
on the best way they could use our resources- this is the work
of economists like you.
 Yet people with power and authority are not known to follow
the advise of the professional economists.
 People with power and authority are more interested in
addressing immediate political interests than observing
rational economic models.
Some Theoretical considerations
 Cyclical theory
 In history the theory sees society as a product of alternating Dark
and Golden Ages. Plato taught the concept of the Great Year, and
other Greeks spoke of aeons (eons). ... In the East cyclical theories of
history developed in China (as a theory of dynastic cycle) and in the
Islamic world in the work of Ibn Khaldun
 In economics, the theory purports to identify repeating
cycles in the economy, the stock market, politics, social
trends, or other things. It is used to make predictions, often
catastrophic, about the near future.
 This shows society hardly makes progress because it
tends to repeat past episodes of fortune and misfortune
Some Theoretical considerations cont..
 Linear Theory:
 History is about progress. The world is constantly improving
and heading in an ultimate direction.
 There are no real repetitions in history, although they may
appear to exist every once in a while.
 This theory is heavily based on the idea of cause and effect:
"this happened, and then that happened; that happened
because this happened first.
 So has Kenya’s political and economic history been Cyclic or
Linear?
POLITICAL CYCLES
 A definite historical period in which a certain political elite,
ethnic group –unite in purpose or action- to wield power and
authority and by extension control the use and distribution of
resources.
 The cycle could cover one or several election periods 5,10 , 15
or even 40 years depending on whether you are talking about
Kenya or Zimbabwe.
 In some countries where the head of state and government
remains the same despite the elections, there may not be
serious policy changes but there could be internal
realignments in which some old actors are excluded from the
political equation while new ones are administered.
POLITICAL CYCLES conti….
 In Kenya, you can generally say that between 1963 and
1978, Kenya experienced the first political cycle defined
by the leadership of Jomo Kenyatta. This period embraced
several elections in which Kenyatta’s post of president
was hardly contested.(1964, 1969, 1974 etc)
 Daniel Moi’s tenure was similar for 24 years with changes
at the bottom but status quo at the top (1978, 1983,
1988, 1992,1997)
 Kibaki’s cycle
of about 10 years lasted between
2002(actual change in government) and 2013
 Now we have the Uhuruto cycle from 2013- todate
POLITICAL CYCLEs cont….
 According to world bank reports reviewed by News play,
the economy is more likely to slow down multiparty
elections than to grow and take time to heal in single
elections the office of the president is not up for groups.
 Slowdown is because of fear of violence.
Political cycles cont….
POLITICAL CYCLEs cont….
 1st three election years of multi-party era the economy
slowed to a virtual standstill shrinking to 0.8% in 1992
and inclining forward to by 0.5% in 1997 and 2002.
 In 2007 and 2013 plunge in economic growth did not
materialize because of governance and electoral reforms.
 2007 economy grew by 7%- only to change in 2008growth rate of 0.25%.
Chat on the economic performance
Economic performance cont…
Economic performance cont…
POLITICAL CYCLES ONE: The
Kenyatta Era.
 Characterized by a dominant Kikuyu elite-dominating civil
service and cabinet.
 They delivered most resources to Central Kenya.
 By the time Kenyatta dies in 1978 - Central Kenya had more
tarmacked roads, more hospitals, schools than any other part
of the country. Is this accidental?
 During the elections under the Kenyatta regime more money
was spend by those with power and authority to ensure
nobody opposes Jomo and to sponsor Kenyatta’s sycophants
from other communities to win elections.
POLITICAL CYCLES ONE: The
Kenyatta Era cont…
 KENYATTA’S KEY PROVINCIAL COMMISSIONERS
 Paul Boit — PC Central, Western and Nairobi (1964-80) Kalenjin –
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Nandi, son of chief
Isaiah Cheluget — PC Nyanza (1969-80). Kalenjin – Kipsigis
Charles Koinange — PC Central and Eastern (1967-80). KIKUYU from
Kiambu, son of senior chief, Mbiyu Koinange’s brother and
Kenyatta’s brother-in-law
Eliud Mahihu — PC Eastern and Coast (1965-82). KIKUYU from Nyeri,
colonial administrator and ex-Home Guard
Isaiah Mathenge — PC Coast, Rift Valley and Eastern (1965-82).
KIKUYU from Nyeri, ex-Home Guard and detention camp warder
John Godhard Mburu — PC Coast, North-Eastern, Nairobi and
Western (1964-79). KIKUYU from Murang’a
Simeon Naychae — PC Rift Valley and Central (1965-79). Gusii, son
of chief
POLITICAL CYCLES ONE: The
Kenyatta Era cont…..
 SENIOR KIKUYU PARASTATAL HEADS IN THE 1970S
 Ephantus Gakuo — Director-general of East African Railways (later Kenya Railways),
1987-1970s. MURANG’A
 Bethwell Gecaga — Chairman, Industrial Development Bank (1976-9). MURANG’A
 Julius Gecau — Managing director, East Africa (later Kenya) Power and Lighting
Company (1970-84). KIAMBU
 James Karani Gitau — General manager, Kenya National Trading Corporation (196979). KIAMBU
 Stanley Githunguri — Executive chairman, National Bank of Kenya (1976-9).
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KIAMBU
Charles Karanja — General manager, Kenya Tea Development Authority (1970-81).
KIAMBU
John Matere Keriri — General manager then managing director, Development
Finance Company of Kenya (1972-82). KIRINYAGA
Peter Kinyanjui — Chairman, East African Harbours Corporation (later Kenya Ports
Authority) 1970-80. KIAMBU
John Michuki — Executive chairman, Kenya Commercial Bank (1970-9). MURANG’A
Philip Ndegwa — Chairman, Agricultural Finance Corporation (to 1974). KIRINYAGA
Matu Wamae — Executive director, Industrial and Commercial Development
Corporation (1969-79). NYERI
POLITICAL CYCLE ONE:The Kenyatta
Era.conti…
 This means more money was put in voter intimidation,
transportation and buying. Every election moved the Republic
away from serious economic investment to consumption.
 Those who had made money combined their wealth with state
resources to win back power and authority
POLITICAL CYCLE TWO: The Moi
Era.
 Those who wielded political power and authority came
from the Rift Valley.
 New actors emerged new tycoons such as Mark Too.
Nicholas Biwott, Philemon, Chelegat, Ezakiel Bargentuny
took to the podium with power at authority to determine
the use and distribution of resources.
 The Kenyatta/ Kikuyu script was replicated in a Kalenjin
fashion.
 We slowly started seeing real efforts to establish new well
equipped schools in the Rift Valley.
POLITICAL CYCLE TWO: The Moi Era.
Cont…..
 Even a university and international Airport were
built and in Eldoret airport came up.
 Civil Service was dominated by Rift Valley people.
 Tarmacking of roads and supply of electricity in the
Kalenjin areas was enhanced. Was this a
coincidence? NO.
 So most resources were spent on voter bribery,
intimidation, buying and manipulation. So fake
projects were set up to persuade voters if they vote
Kanau there would be development( eg the Ol
Kalou poer fraud).
POLITICAL CYCLE TWO: The Moi Era.
Cont…..
 The controversial electrification programme in Kipipiri
constituency of Nyandarua District , which was abandoned in
1995, was back on schedule, 20 days to the 2002 General
Election .
 The programme was hastily abandoned in 1995 when Kanu
lost the seat to the outgoing MP, Mwangi Githiomi of DP,
during a by-election necessitated by the death of former MP,
Laban Muchemi( The Standard 7 December 2002)
 The economic implication of this withdrawal is obvious
POLITICAL CYCLE TWO: The Moi Era.
Cont…..
 Increased money supply as was the case in 1992 Multi-party
election was done against a crippled production system.
Inflation rates hit the double digit mode.
 The economic downturn was worsened by increase political
intolerance by the state and the general uneasiness by the
International donor community.
 Moi’s situation was aggravated by the declining fortunes of
the Cold War- something Jomo Kenyatta never experienced
POLITICAL CYCLE THREE: THE KIBAKI
ERA
 Return of most of the features in Cycle One.
 Re-diversion of resources to Central Kenya.
 Domination of Kenya’s political and economic life by the
Central Kenya elites.
 No wonder, this led to bloody political confrontation in 2007
that cut economic growth from about 7% in 2007 to 2% in in
2008!
 In the countdown to 2013 election, the drop in economic
performance was relatively low from 5.4% to 5.3%. This was
because of the ICC threat. Nobody wanted to cause trouble
again for fear of being implicated by the Hague –based court
POLITICAL CYCLE FOUR; The
Uhuruto Era
 The harmonization of political cycle one and two. In
which there has been increased forces in the
development of central Kenya and rift valley.
 Most of the people who control power and authority
under Uhuruto came from the two regions.
UhuruRuto Manifesto
 In an attempt to win 2013 election, Uhuruto appealed to people’s
emotions over the ICC matter and quickly floated a very attractive election
Manifesto that promised the following:
 Five international stadiums in Nairobi, Kisumu, Mombasa, Nakuru and
Meru.
 Promote talent amongst the young
 Free Wi-fi to every major town .
 Zero tolerance on corruption.
 Inclusive governance of all tribes,
 Laptops to every school going child.
 Creation of 1 million jobs yearly, for the youths
 Connection of electricity to all Kenyans across the grid.
There was renewed hope that we then have got our politics right. We now
know that optimism was not entirely accurate
The Uhuruto Era conti….
 Founded on Kikuyu-Kalenjin interests
 Most public appointments favoured the two
communities
 The details captured in the Capacity Assessment and
Rationalisation of the Public Service report exclusively
show that 77 per cent of all public service positions are
held by six communities.(Kikuyu Luhya ,Kalenjin, Luo,
Kamba, Kisii etc)
 This means that the rest of the tribes are left with 23
per cent positions to fight for
The Uhuruto Era conti….
 In the counties, the Kikuyu have the highest number of
employees at 27,947 which translates to 22 per cent,
 While the Kalenjin are second with 18,623 employees.
 Is this an accident?
 The report also states that there are counties where
minorities or external groups constitute a higher
proportion of the public service employees. One such
county is Marsabit county
Borrowing and expenditure
 Since President Uhuru Kenyatta and his Deputy
William Ruto took office in 2013, the corruption has
widened and deepened.
 Corruption invariably crops up in most conversations
about the national condition and its effects have
started to grind away at some of the country’s most
vital institutions.
 A recent survey by auditors PricewaterhouseCoopers
(PwC, 2016) found Kenya to be the world’s third-most
corrupt country in terms of the prevalence of economic
Borrowing and expenditure cont….
 Kenyatta’s is the most corrupt regime in Kenya’s history was
confirmed by a $2.7 billion Eurobond commercial loan the
country borrowed for recurrent and development expenditure in
2014.
 Kenya’s most credible independent experts can’t conclusively
tell if this money ever arrived in the country in its entirety and, if
it did, it wasn’t immediately “eaten,” as Kenyans say..
 The regime’s reaction to the resultant public questioning and
opprobria in the face of these scandals has not been quenched
 friends and relations are repeatedly mentioned in some of the
most egregious scandals and a wall of impunity appears to
protect them.
Election and Economy
 Kenya’s biggest economic hurdle right now is its
upcoming election. According to a recent new report
from the parliament’s budget office released in (May
2016), the general election in August 2017 will be the
“greatest challenge” to the national economy.
 Elections are always a time of uncertainty for Kenya.
 The election mood currently being experienced as
the country is gearing itself for the 2017 elections have
dampened the investment mood of the country as
most investors are practicing the wait-and-see
approach,”
Election and Economy cont…
 Reports by economists and analysts advising the budget office,
says that investors have beenare waiting to start new projects or
put more money into existing ones after the General Election. In
2017, the pace of growth should thus remain flat, at about 5.6%,
last year’s rate of expansion. (Officials had previously given an
optimistic projection of 6.0%.)
 Elections have been bad for the Kenyan economy in the past.
The economy has slowed or remained stagnant through three of
the five multi-party elections held in Kenya.
But does Electoral spending lead
to poor Macro economy and micro
economy?
Catering services
 Catering is the business of providing food and drinks. Political campaigns
consist of people gathering in one place to be address by their candidate. This
means that people must eat and drink.
Graphic Design and Printing
 This is a recruitive deal at this time of the year. Candidates are printing
posters, t-shirts, and other campaigning materials
Car hire/transport services
 If you have a bus or other big vehicle that can convey a decent number of
people, then consider approaching an election candidate.
Courier services
 This is a service you can do at a small-scale level. Politicians will need to
distributor letters, parcels, and campaign materials to different parts of their
constituency
Election spending cont….
 Entertainment
 Election campaigns and partying are synonymous. Campaign
trails are characterized by loud music, dance and drama and
booze
 Citizen journalism/blogging
 This needs some levels of professionalism and passion. Let us
start with photography. People want to keep memories
 Consultancy services
 It is a wise decision for a candidate to hire a consultant or a
consultancy firm to do things he cannot do.
Election spending cont….
 Volunteering
 This is not exactly a business but it can keep you occupied and
earn you some allowances.
 Offer professional services
 For example some people are good talkers, orators, writers,
researchers, planners and posses organizational skills which can
add value to a particular candidate.
 Events management
 The most important part of the campaigns for a candidate is
rally where he communicates to people who are going to vote.
Important notes and Observations
 While the electioneering season can be a godsend for
some enterprises, it’s not all good news for the economy
as a whole.
 Increased inflation, heightened political risk, lower value
from the labour market with energies diverted to
politicking, and relaxed enforcement of laws as the voteseeking incumbents seek political expediency are just
some of the negative effects on business
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Important notes and Observations
cont…
 “Overall, elections are bad for the economy because they tend
to support ‘cash cows’ and ‘cash traps’ – enterprises that yield
profits in the short term but have no long-term future or
benefit for the wider economy,”
 Economists argue that ‘cash cows’ and ‘cash traps’, which tend
to succeed during elections, flourish at the expense of ‘star’
and ‘question mark’ enterprises that either earn good profits
or offer the potential, with suitable investment, to provide
sustainable long-term growth and therefore aid the economy.
Challenges for the in Uhuruto
Government
 National Security:
 Corruption:
 Diplomacy & International Relations Diaspora
 Economy
 Taxes
 Transportation and 24 Hour Economy
 Tourism
 Tribalism, Nepotism and Cronyism – Appointments
An important questions about
Uhuruto
 Has the Uhuruto to presidency dealt with the bad
features of cycle one two and three?
 If they have then kenya is experiencing linear growth that
means we are on a path to progress.
 But if they haven’t then we are in the cyclical mode in
which we keep on repeating our past era by engineering
negative ethnicity, corruption and discriminatory
development
 So is 2017 election about our cyclical nightmare or is it
about our linear progression, thanks you
THANK YOU