How Kenya’s Election Year Is Affecting The Construction Industry
Every five years, Kenya goes through a market recession that centers on the national elections and the repercussions. With the naming of the candidates and only a few months until the August 2022 elections, the nation has been thrown into a campaign frenzy. As history has shown, we are already experiencing a deep economic recession.
One of the infrastructure investments that has prompted questions about its economic sustainability is the Standard Gauge Railway. Construction sector growth has slowed due to postponed spending by investors and significant business people until a new administration is in place. Before undertaking large projects, most funders are waiting to see the new government policies.
Price level and other economic issues directly impact the building business. Election spending at all-time highs will promote economic activities around election time, putting inflation strain on the economy upward. There will be significant cash flow in the economy as campaign funds are poured into the market. The IEBC continues to spend the extraordinary money set aside in its budget for the 2022 elections. This opportunistic spending will not lift the economy; instead, it will feed the embers of inflation. As a result, building expenses are expected to grow, with capital costs becoming the trend and the possibility of project cancellation as a last resort.
Elections, analysts believe, are high-stakes affairs characterized by a “winner takes all” mindset, particularly in emerging markets like Kenya. According to Kenya’s electoral outcomes, the ruling party would have a majority in both the Senate and the National Assembly, giving it the power to push measures through parliament and award tenders. The government makes infrastructural investments in the construction industry.
As per political analysts, political parties are still dominated by their financiers. As a result, it’s unsurprising that some developers may shift money to political campaigns to win large government contracts in the future if their party wins. In most cases, the contract amounts issued are more than the optimum pricing. The typical citizen bears the burden of this “tenderpreneur” ethos, which creates a never-ending loop of fraud. The IEBC’s new poll finance guidelines for parties and candidates constitute a significant development toward preventing money-driven politicians.