Rarely has so much rested on a single handshake. When in March, the re-elected President Uhuru Kenyatta shook hands with his defeated opponent Raila Odinga, it was as if they had hit Kenya’s reset button.
Their act of reconciliation ended months of drama around the 2017 presidential poll, which had to be held twice after the Supreme Court annulled the first vote on the grounds that it had been marred by “irregularities and illegalities”.
The clasp of hands brought to a close a period of uncertainty that had culminated with the mock inauguration of Mr Odinga, an act of defiance that enraged the government and led to the temporary shutdown of television channels that had broadcast the event.
For Kenya optimists, the fact that the election stand-off was settled without a repeat — on anything like the same scale — of the violence that undermined the 2007 contest is proof of the country’s maturity. For pessimists, it is evidence that the lives of ordinary Kenyans are held hostage every five years when the elites scrap over power and the rich pickings that accrue to those in office.
Either way, the handshake has breathed new life into both the economy and Mr Kenyatta’s second term. It brings to a pause the feud between the politically dominant Kikuyu — Kenya’s largest ethnic group, which includes Mr Kenyatta — and the Luo, the country’s third-largest community. It shifts attention to the 2022 contest in which the big question is whether William Ruto, Mr Kenyatta’s deputy, will be the candidate for the ruling Jubilee party.
In the meantime, economic sentiment, as reflected in business confidence surveys, has improved dramatically. The economy, which grew 4.9 per cent in 2017, is expected to expand 5.8 per cent in 2018, though that partly reflects better rains. Agriculture, which employs three in four Kenyans at least part-time, still makes up a third of the economy.
Cheerleaders for Kenya say the bounceback from what was a shallow dip during the election turmoil shows the underlying strength of the economy. Many attribute that to Kenya’s essentially free-market ideology, which differentiates it from the likes of Ethiopia, Tanzania and Rwanda, east African neighbours in which the state plays a more dominant role.
“The wonderful thing about Kenya is that it is capitalist and market-driven,” says Michael Turner, managing director for east Africa of Actis, a UK private equity group. “The vibrancy of the private sector goes all the way from large companies right down to what we call the jua kali, the informal sector,” he says.
“That is why Kenya has proved so resilient to the ups and downs of the political cycles.”
That is not the view of everyone. Patrick Gathara, a cartoonist, political commentator and self-styled “keyboard warrior”, says Kenya has believed its own hype for too long. “We don’t recognise the changes around us,” he says of developments in the region. “Kenyans still have this concept that we are the linchpin economy.”
In reality, says Mr Gathara, Ethiopia — for all the brittleness of its authoritarian model— has been growing faster. According to the World Bank, its economy overtook Kenya’s last year as the biggest in east Africa, though in per capita terms it is still much poorer. Growth rates in Rwanda and Tanzania, at least according to official numbers, have also been outpacing those of Kenya.
If Kenya’s market-led system has not delivered the clear outperformance often assumed, it also remains extremely unequal.
A 2016 report from New World Wealth, an independent South Africa-based research group, found that 8,500 of Kenya’s roughly 48m people controlled more than two-thirds of the country’s wealth.
The government, for all the freshness of electoral victory, appears aware of the need to bring development closer to the people. This is one of the objectives of devolution, which was enacted in the 2010 constitution.
Mr Kenyatta has launched a Big Four policy agenda whose focus — on universal healthcare, affordable housing, food security and manufacturing — is on bringing security and jobs to the masses.
“If you look at the first term, the president worked significantly to ensure that we had the right infrastructure,” says Joe Mucheru, minister for information and communications, referring to big projects in road, rail and power that have changed Kenya’s landscape — and added substantially to its debt.
“When the government came in, infrastructure was a problem,” says Mr Mucheru. “Power was a problem, water was a problem, roads were a problem, railway and so on. In his second term, the main focus is on people.”
Mr Kenyatta, the son of Kenya’s first president Jomo Kenyatta, has also made it a priority to tackle the widescale corruption that threatens to break the bonds of trust between the government and Kenyan taxpayers.
Many investors in the country complain of the difficulty of getting things done without paying bribes, both large and small. In May, more than 20 people, including senior officials, were arrested over an alleged $100m scam centred on the National Youth Service, a government agency.
Martin Kimani, head of Kenya’s counter-terrorism centre and a confidant of Mr Kenyatta, rejects criticism that the president has allowed corruption to flourish. “He’s trying to fight this beast, but he’s very aware of how difficult it is,” he says. “He can’t be judge, jury and executioner,” he adds, referring to the separation of powers and the administration’s frustration with a judiciary that has often appeared reluctant to convict.
But Mr Kimani, like others, detects a new urgency and predicts that some heavyweights will go to jail soon. “This is the latest push and it’s a strong push.”
If the seriousness of the corruption crackdown is yet to be tested, so is the government’s ability to pay for all its people-focused pledges, including universal healthcare.
The government piled on significant debt in the first term, borrowing both on the eurobond markets and from China, lifting public debt towards 60 per cent of GDP.
Critics say that corruption played a part here too, for example inflating the cost of the $3.3bn Chinese-built railway from Mombasa to Nairobi.
While the debt looks manageable in GDP terms, debt service ratios are worryingly high, particularly since the government continues to run a budget deficit of 7 per cent. Some debts, denominated in foreign currency, could increase if the shilling comes under strain as US interest rates rise. Kenya has reasonably strong foreign currency reserves, of about six months import cover, but those will only go so far if the shilling comes under speculative attack.
To square the circle of big promises and strained budgets, Mr Kenyatta’s government is seeking to involve the private sector as much as possible. “It’s an attractive business environment right now,” says Carole Kariuki, chief executive of the Kenya Private Sector Alliance.
Even with this approach, the question is whether the government, with limited fiscal room for manoeuvre, can deliver on the promises needed to secure Mr Kenyatta’s legacy.
