Kenyan Elections and Mugabe's Fall: Regional Instability in East Africa
Primary Writers: Demyan Plakhov, Nathan Leili
Researchers: Cynthia Li, Trevor James Zaple
Team Leader: Marko Gombac
The bloodless military coup of Robert Mugabe in Zimbabwe and political violence during Kenya’s recent elections are two events that have caused regional economic and political dynamics to shift in the new year. The November deposition of Robert Mugabe after a 37 year rule has raised the question of how a more open Zimbabwe will impact the region. Speaker of the National Assembly Jacob Mudenda has called for an increased focus on opening access to Zimbabwe’s natural resources and mining industry, rather than relying on external financing, as Mugabe did for much of his rule. Mudenda has called on the government to revamp the Zimbabwe Mining Development Corporation, which is presiding over 14 inoperative mines, like Kamativi, which has several minerals including lithium. Early and rapid progress is being made following the political turnover, with $150 million already secured as of January 9th to bring three gold mines back into operation.
In Kenya, the political atmosphere has turned violent following continued dispute over elections held in 2017. Current Kenyan President Uhuru Kenyatta of the Jubilee Party won the original election, as well as the re-run election in October, which was stained by protest, boycott, and violence. However, Kenyatta’s opponent, Raila Odinga of the Orange Democratic Movement believes he is the legitimate President of Kenya, as he claims to have won the original election back in August 2017. This power struggle could lead to further conflict, riots, and protests from the Kenyan people. Tanzania is also implicated in Kenya’s political crisis due to opposition leader Raila Odinga’s close ties to Tanzanian President John Magufuli. It is alleged that Tanzania rigged the polls in Kenya in an attempt to elect Odinga as President.
The political and economic condition of Tanzania has remained relatively stable considering the situation in Kenya. While President Magufuli may support Odina behind closed doors, he has been more cautious publicly, ensuring stable relations with Kenyatta, the Kenyan President. Economic relations between the two nations became somewhat strained after a dispute over livestock. However, it is important to note that the dispute hasn’t had a significant impact on Tanzania’s overall economic health, as exports to Kenya are still strong. Moreover, there hasn’t been a significant impact on the Tanzanian mining industry.
Investors in Tanzania should take note of the current political situations in both Zimbabwe and Kenya, and adjust their strategies accordingly. The current President of Zimbabwe, Emmerson Mnangagwa, has stated his intentions of improving the economic situation in Zimbabwe by reducing corruption and stabilizing the area, which he hopes will in turn encourage foreign investment. That being said, there is much work to be done before those intentions turn into actions. It should be noted that an election is scheduled in Zimbabwe for late 2018, so Mnangagwa’s hopes of stabilizing the country could simply be campaign rhetoric as he competes in the polls, even though the first elections in many transitional democracies have, since the fall of the Berlin wall, been proven to be anything but stable. The multitude of choice in a country that previously had none opens the doors for polarizing politics and sectarianism. Even if the elections are held successfully, the weight of governance and reforming an incredibly corrupt bureaucracy, which in 2016 cost Zimbabwe $1 billion, will at the very least prevent a rapid economic miracle, and in the worst case a reversion to authoritarian rule. Investors are advised to keep an eye on Zimbabwe, as their political and economic situation will certainly have an effect on the regional mining environment.
The political turmoil in Kenya due to conflict between President Kenyatta and Mr. Odinga is a more direct cause for concern. Growing disputes between the two and their respective supporters could renew civil unrest and destabilize the area. Navigating the uncertain political and economic environment will be a challenge for investors due to ties with the current Tanzania administration. One possible strategy is to refrain from investing in companies that have a close connection with the Kenyatta government in Kenya, instead investing in more domestically focused Tanzanian entities, as President Magufuli seems to be in a favourable position to exploit a seemingly close relationship with Mr. Odinga, yet he maintains a diplomatic working relationship with President Kenyatta.
