Independent Electoral and Boundaries Commission (IEBC) Chairman Wafula Chebukati declared William Ruto as the winner of Kenya’s 2022 Presidential election at 6pm local time on 15 August, receiving 50.49% of the vote versus 48.85% for his main challenger Raila Odinga amid turnout of c65%. Ruto’s vote share exceeded 25% in 39 of Kenya’s 47 countries, which alongside his >50% share at the national level is sufficient to avoid a run-off vote and grant him victory in the first round.
The announcement comes after days of unease, with media houses halting their independent tallies on Friday and leaving Kenyans in a state of prolonged uncertainty. However, the uncertainty is not over. Despite transparently posting the official vote tallies for each of Kenya’s 46,229 constituencies on the IEBC website, 4 of the 7 IEBC commissioners disowned the results, with Vice Chairwoman Juliana Cherera announcing that "we cannot take ownership of the result that is going to be announced because of the opaque nature of these results," without giving further details.
Cherera’s statement, which was made ahead of Chebukati’s announcement of the results, sent the IEBC tally centre into chaos with scuffles breaking out and Chebukati saying immediately before his announcement that two IEBC commissioners were being treated for injuries. This will fuel Odinga’s claims of fraud, with his chief election agent Saitabao Kanchory already alleging that the IEBC’s servers were hacked and saying that "the chairman had actually assured Kenyans he would run this process transparently, which he has not."
Odinga (or any Kenyan, for that matter) now has 7 days to challenge the results with the supreme court, which he will likely do given the slim margin (just 233k votes or 1.64% between the candidates and just 60k or 0.49% away from triggering a run-off) and a history of electoral challenges (Odinga has rejected the results of his last three attempted presidential runs in 2007, 2013 and 2017). The Supreme Court would then have 14 days to issue a final (unappealable) judgement. If the results are annulled, a fresh election must be held within 60 days of the ruling (which is what happened in 2017).
Yields on the KENINT 6 ⅞ 06/24/2024s have spiked from 11.66% at cob on Friday to c15.25% at the time of writing, fully reversing last week’s sharp rally. The bulk of the increase has come since the IEBC commissioners disowned the results, pointing to fears of violence if Odinga’s supporters take to the streets to contest the results either independently or at his urging. As we said last week, the risk of violence will remain until Odinga accepts the results, with the circumstances surrounding today’s announcement and early posturing by the Odinga camp pointing to more uncertainty ahead.
We also unpacked the policy implications of the election, with Ruto’s victory likely boding well for Kenyan bonds given his marginally more market-friendly policy agenda and Odinga’s stated desire for debt restructuring. However, until the process plays itself out in court and, if the results are confirmed, Odinga accepts them and urges his supporters to refrain from violence, the nation will remain on tenterhooks and political uncertainty will continue to weigh on Kenya’s bonds.
We will be keenly monitoring the reaction of Odinga and his supporters in the days ahead. If he ultimately accepts the results without resorting to violence then Kenyan bonds should claw back today’s losses, and likely have even more room to run given the favourable market implications of a Ruto presidency (namely the removal of near-term restructuring risks). However, we are likely at least two weeks from that uncertainty being lifted, and bonds could sell off further in the meantime if Odinga takes a provocative tone and/or his supporters resort to violence.
Nonetheless, we maintain our Buy recommendation on Kenya’s eurobonds at US$77.65 (11.93% YTM) at the time of writing for the KENINT 8 05/22/2032s.
Note: Click here for a detailed analysis of the economic and market implications of Kenya’s election based on various outcomes, published last week after the polls but before the results were announced.
Kenya: Elections still close too call (and implications), August 2022
Kenya: IMF review boosts bonds but raises red flags on external accounts, July 2022
Kenyan elections and macro webinar, July 2022 (with Menas Associates)
Kenya: Debt restructuring and debt ceiling comments spark concern, June 2022
Kenya’s sell-off has created a Buy opportunity, May 2022
Kenya budget: Still on track, but margin for error continues to shrink, June 2021
Kenya: First IMF review points to positive reform momentum, May 2021
Kenya constitutional reform builds and burns bridges, May 2021 (Malik)
Kenya: IMF program boosts prospects, February 2021
Kenya: Bad politics versus good valuations as divided parliament restarts, February 2021 (Malik)
Kenya seeks IMF funding and possible debt relief, November 2020
Kenya politics: Chief justice advice to dissolve Parliament adds to our caution, September 2020 (Malik)
Kenya budget: Ambitious targets, but can they deliver?, June 2020