Ruto declared Kenyan presidential election victor

The Independent Electoral and Boundaries Commission (IEBC) has declared Deputy President William Ruto as the winner of the presidential election held on 9 August with 50.49% of the vote. At the time of writing, principal rival Raila Odinga of the Azimio coalition had yet to respond publicly; however disputes look increasingly likely. That being said: in large part the process was well regarded by international observers[1], and (b) under Kenyan law, any Supreme Court challenge must be resolved by 6 September.

Looking further ahead, party realignments are imminent with the Jubilee Party. The outgoing president Uhuru Kenyatta backed longtime opposition leader Odinga against his own deputy Ruto. This had effectively splintered the ruling Jubilee Party coalition long before the general elections last week.

Under the baseline scenario, political and economic climate is expected to remain stable, but government effectiveness will depend on the nature of new alliances that will coalesce around Ruto in the incoming national parliament.

Significance – Building Bridges

President-elect Ruto will be sworn in on 30 August unless his victory in last week’s election is challenged at the Supreme Court. In that case, the court has until 6 September to decide the matter. A transition committee has already begun working to complete a smooth handover.

It is evident from this peaceful electoral process that a 2018 Handshake between Kenyatta and Odinga helped to put the country on a path to political stability. And that those gains have been retained, despite a failed bid to amend the constitution under the Building Bridges Initiative (BBI, background here). In March, the Supreme Court affirmed a lower ruling that it was unconstitutional for Kenyatta to initiate planned amendments that would: empower the president to appoint a prime minister with two deputies, choose MPs as cabinet members and name an ombudsman to strengthen the judiciary.

Going forward, President-elect Ruto would have to find new measures to consolidate gains from that Handshake. We expect such measures to include at least nominal efforts to curb corruption. Progress since 2013 has been limited, and recent high-profile incidents have strained ethnic relations[2]. Kenyatta, a Kikuyu, removed his treasury secretary Henry Rotich from cabinet in 2019 over a corruption scandal concerning the construction of two dams in Elgeyo Marakwet county (Kimwarer dam and Arror dam). Rotich and Deputy President Ruto are allies – and both Kalenjin. Therefore, the treasury secretary’s removal deepened a split between the Kalenjin and Kikuyu in the ruling Jubilee Party.

The Elgeyo Marakwet dam projects were part of broad public investments in power and transport infrastructure that have accelerated GDP growth in recent years. But in addition to the above governance scandals, the infrastructural expansion has heavily piled on the debt stock, which is projected to be 67.5% of GDP this year from under 45% in 2013.[3] Ruto’s Kenya Kwanza now wants to shift fiscal policy to cut this ratio while prioritising informal business and smallholder agriculture through his so-called ‘bottom-up economics’. The alliance is targeting a 3% budget deficit by 2026/2027 with yearly spending increases capped at 75% of growth in revenue.

Also on the agenda are aggravated rates of unemployment and inflation rates – unemployment was 6.6% in Q1 2021 and headline inflation was 8.3% last month. Inflation rose above the central bank’s target band in June this year owing to higher fuel and food prices – and despite electricity tariff cuts in December 2021. That said, the president-elect will be stepping into office in a relatively stable economic climate. GDP grew by 5.4% in Q1 this year to surpass pre-Covid levels, and output from manufacturing and services (including tourism) has been particularly strong.

Outlook – Stability

Government effectiveness under the next president will depend on imminent political realignments. Coalitions have shifted after every election cycle in Kenya since 1992, with politicians realigning themselves along ethnic lines. This pattern will continue if and when Ruto takes charge, with new alliances in the national parliament will chiefly coalesce around the next president. We note the strong electoral outing by Ruto’s United Democratic Alliance (UDA, part of Kenya Kwanza) last week in key areas such as the capital Nairobi and in the central Mt. Kenya region (Kikuyu base). The UDA defeated the incumbent Nairobi governor of Kenyatta’s Jubilee Party and also beat Azimio allies in Mt Kenya – including those in the home county of Odinga’s running mate Martha Karua.

Meanwhile, steady GDP growth is expected to continue in the medium term while headwinds persist in form of disruptions in global markets. Revenue outperformance has encouraged the government to raise food and fuel subsidies in response to the external shocks. The equivalent of 0.8% of GDP will be spent to subsidise fuel in 2022/2023, according to an IMF estimate.[4] These costs will present fiscal sustainability risks to a Ruto administration, but proposed reforms would be supported by stable central bank management. In May, the central bank hiked its main lending rate by 50 basis points to 7.5% having held the rate for seven years. It signals a monetary policy redirection going forward in response to the inflationary trend.

Finally, Ruto has promised to establish a corruption inquiry into the outgoing Jubilee government. This move would further strain ethnic relations and is unlikely to result in significant institutional reform or change in the corruption risk outlook. More effective measures would include legislation to clarify the roles of the three main anti-corruption bodies,[5] improve coordination among them and curb political interference from the president.

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[1] Abuso, V. (2022, August 13). Kenya 2022: International observers praise voting, warn on disinformation. The Africa Report.Com.

[2] Transparency International ranks Kenya 128/180 on its Corruption Perception Index – compared to 136 when Kenyatta came to power in 2013.

[3] Kenya economic update (June 2022). World Bank.

[4] Kenya country report no. 22/232 (July 2022). IMF.

[5] The Ethics and Anti-Corruption Commission, Office of the Director of Public Prosecutions and the Directorate of Criminal Investigations.-

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