Make or Break: How Politics affects the Construction Industry

There comes a point in time when the elephant in the room cannot be ignored any further. You will dilly dally for a while, but in the end, the Rubicon must be crossed. Like water making its way through cracks, you will be forced to adjust yourself to the object at hand and by choosing not to stay rigid, somehow, you will find your way around or through the object.

As a general rule, I don’t do politics. Because (I like to think) I am smart and I am also too polite to get into emotional arguments with people who have sycophantic tendencies (which disqualifies most Kenyans). So I’ll avoid it like the plague.

But in my quiescence, I’ve come to realize that like pregnancy, politics cannot be willed away. It affects every activity we engage in, and thus becomes those matters that cannot be swept under the rug. It has to be tackled head on, like the awkward talk about the birds and the bees with a kid about to transition into adolescence.

SGR PROJECT

The SGR  is one of the infrastructure projects that has raised eyebrows with regards to its economic viability. 

Every five years, Kenya is subjected to an economic cycle that revolves around the before and aftermath of the general elections. With almost 11 months to the August 2017 general elections, the country is already in campaign mood. If history is anything to go by, the months leading to elections will tend to have a slowdown in economic growth.

Growth in the construction industry will be slowest due to delayed spending decisions as investors and key businessmen postpone key decisions till a new government is in place, and wait to gauge what the future policy will be before launching big projects. A report by the parliament’s budget office released on May 19th is quoted as saying “The election mood currently being experienced as the country is gearing itself for the 2017 elections have dampened the investment mood of the country as most investors are practicing the wait and see approach”.

Donholm Subway

Ongoing excavation works for the new outering road at Donholm.

Other economic factors such as inflation have a direct effect on the construction industry. Record election spending as already being witnessed in the glamorous launch of the jubilee party will boost economic activity around election time while driving the inflationary pressure on the upside.

The lavish three day events culminating in the launch of the Jubilee Party offers a peek into the expensive capital outlay the next elections will gobble up. Then there’s the staggering 45billion shillings to be spent by IEBC for the 2017 polls.

Opportunistic spending such as these will fail to lift the economy and instead stoke the fires of inflation. This in turn points to a rise in construction prices, with cost overruns becoming the norm and an increased likelihood of project abandonment as an extreme measure.

Make or Break: How Politics affects the Construction Industry | bypass | Pinned Directory Kenya

A section of newly completed Southern bypass along Mombasa Road, part of vision 2030 infrastructure project.

Experts say elections, especially in emerging markets such as Kenya, are high stake affairs dominated by a ‘winner takes all’ mentality.

The Ruling party from the electoral outcome in Kenya is bound to have a majority both in the Senate and the National Assembly hence its ability to push through bills in parliament, and muscle in the awarding of tenders. The government invests in the construction industry by initiating infrastructure projects.

According to political scientists, political parties are still owned by their financiers. In an article by the Daily Nation, Prof Karuti Kanyiaga of the institute of Diplomacy at the University of Nairobi, is quoted as saying “The initial thinking was that political parties would evolve into institutionalized bodies, but they are still personal outfits run like private companies”.

It is no surprise hence, that some builders will divert funds to fund political campaigns with the hope of securing massive government tenders in the future once the party wins. The contract amounts awarded in such are normally higher than what would be considered the best price. It becomes a never ending cycle of corruption with the common mwanachi bearing the brunt of this “tenderprenuer” culture.

‘’The new guidelines to control polls financing for candidates and political parties by the IEBC is a welcome move to prevent money driven politics. The Election Campaign Finance Act provides for the regulation, management, expenditure and accountability of campaign funds during election and referendum campaigns. As they say, the proof of the pudding is in the eating, and all eyes are on IEBC to see how this law will be ope-rationalized and enforced.‘’

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