In a few days, Kenyans will officially have a new constitution.
I’m sure many of us have spent a good amount of time in the past weeks learning about our constitution. As a Kenyan, it is my civic duty to recognize the constitutional process and contribute effectively to the discussions.
As a capitalist however, I am inclined to think in terms of how the new constitution will affect my pockets and the pockets of my fellow Kenyans. And indeed, the mere thought makes me happy that some want it now and we are saying YES, and others are saying NO and are willing to wait a little longer.
All agree we need a NEW constitution! and this is why?
I’m sure many of us have spent a good amount of time in the past weeks learning about our constitution. As a Kenyan, it is my civic duty to recognize the constitutional process and contribute effectively to the discussions.
As a capitalist however, I am inclined to think in terms of how the new constitution will affect my pockets and the pockets of my fellow Kenyans. And indeed, the mere thought makes me happy that some want it now and we are saying YES, and others are saying NO and are willing to wait a little longer.
All agree we need a NEW constitution! and this is why?
Kenya's stock market robust
One must understand that the economy, like any other element in a country, is affected by politics.
In any economy, the tell-tale of the economic performance starts with the stock market. Indeed we have a robust stock market that has weathered many political storms. We saw it weather the MoU wrangle of 2003 and the referendum of 2004. Despite all the political turmoil, it still reported a tremendous growth.
In the year 2008 after the electoral violence, the market still went ahead to record an upsurge in its index to reach a climax in July of the same year before being affected by international economic factors.
This notwithstanding, our market is still sensitive to political happenings.
So how does the new constitution affect our market? Well, there is a general notion that the new constitution will come with better framework of governance and stronger state structures. It is the climax of the reform agenda. In other words, both Kenyans and non Kenyans believe that Kenya will be a better place when we get the new constitution.
New constitution to boost investment
This presents a good opportunity for us to purge ourselves of all our political sins and make potential investors, local and foreign, to trust us with their wealth again.
It is in this understanding that I say that if we get the new constitution, more foreign participation will be felt in the stock market. In addition, we will see more Foreign Direct Investment (FDI) and even greater tourist activity.
Ultimately, more money in the stock market is like a natural economic stimulus.
It simply means more money for companies hence more expenditure, hence more business for those of us in business. It also means more dividends for investors as managers will have more money to spend and will need to withhold less profit. Simply put, such an injection would create a ripple effect in the economy making more money than was imagined due to the compounding factors.
What scares me the most however, is the climax to the process; the referendum. I am not a firm believer that the document that will be subjected to a vote out there will be totally agreeable by all parties. One or two individuals would like to get famous opposing it. This will in return attract heated political discussions and excitement.
As usual, this will cause a dip in our indices as the market responds to the political temperatures. The culmination of this doom say would be if after all this, the constitution does not pass. On the other hand, if it passes, then the effects in the market would be like the deep breath before a big leap.
The document vs. long term economic performance
A look at the contents of the new constitution would probably tell us more about what to expect.
Among other things, it proposes dual citizenship for Kenyans working abroad. This means one can take advantage of the tax reliefs available in those countries by applying for citizenship without fear of loosing ones citizenship.
Secondly, it proposes a lean government of 25 ministries, which is a dream come true for many economic thinkers. In addition, a two tier government at national and local levels will be more efficient and cheaper to run.
The absolute separation of the executive and the legislative arms of government will effectively mean more accountability on those who run our ministries, effectively reducing the occurrence of economic crimes.
Ultimately, if you thought that the constitutional process is just another political bickering that you should not get involved in, you may need to reconsider and let those responsible know how much you want the document.
On the other hand, we must be on our guard not to accept anything brought to us by politicians pursuing their interests. Much as the short term and mid term effects will be positive irrespective of the contents of the document, the long term economic performance would be majorly influenced by the contents of the document.
I am a staunch believer in shaking the tree if the mango does not fall. Now we know what mango the new constitution holds, if it does not fall when we want it, it is best we shake the tree.
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