Kenya’s Withdrawal from ICC Spells Economic Doom

By Lilian Tabu

Kenya’s bid to convince the International Criminal Court (ICC) to defer the cases linked to the 2007-2008 post-election violence was boosted after the AU endorsed the request, pending the determination by the UN Security Council. It is seen as a strategy by Kenya to use AU as a platform to make ICC accept the deferral, failure to which the continental body will threaten to have a mass pull out by African states. China has indicated that it is ready to support Kenya’s efforts. Russia and the United States have also expressed support for a local tribunal which meets international standards. The only thing left is to gain the support of Britain and France, the two nations that have been in the forefront in fighting impunity in Kenya. With this done, the possibility of Kenya successfully pulling out of the ICC is close to a reality.

But before the proponents of this move start to celebrate, they should pay keen attention to the consequences of this move, which has implications beyond the legal and social spheres and in particular on the economic sphere.

One of the most fundamental principles for market economies to function is that of “property rights”. Markets operate only when property rights exist and therefore respected. When this is not in place one can only imagine the types of disputes on ownership that can arise. Where ownership validation cannot be in place, then institutions of commerce -enterprises- develop anxiety which then feeds into the system undermining any forms of sustainable enterprise but promote acts of looting, piracy, racketeering, corruption and cronyism. It is because of this very reason that under no circumstances should the state or parliament undermine frameworks that uphold that very important canon of property rights.

 Property rights refer to economic freedom, and measure the degree to which a country’s laws protect private property rights, and the degree to which its government enforces those laws. In the global Property Rights Index Kenya and many other African nations are rated 30 per cent when the index declines, the investor confidence will decline, this means that potential investors will shy away from investing in Kenya since the risk factors will be higher. Investor confidence is usually pegged on a country's stability. The index also assesses the likelihood that private property will be expropriated and analyzes the independence of the judiciary, the existence of corruption within the judiciary, and the ability of individuals and businesses to enforce contracts.

The Global Property Guide considers protection of property rights as a significant factor affecting the desirability of a residential real estate investment. 

The Second consequence is the emasculation of the executive over other arms of government and independent offices, resulting in deliberate weakening of the process of oversight over excesses. The executive in making the decision on how to spend public resources in a manner not sanctioned by the legislature is exercising authority for which the mandate has not been granted. This is similar to diverting state resources without authority of the people’s representatives. Expenditure of public funds must be outlined in a budget and receive the approval of parliament. In particular since the named aggressive behaviour was by agents of the state to foster an election outcome that favoured the executive in office at that point in time, it points to a state under the full capture of the executive, which has shown in many countries around the world not to be in the best interest of the economy hence why appointments of the executive have to undergo a vetting process outside the executive such as parliament or a special committee.

 The third impact is more likely to occur should the country proceed to withdraw from the Rome Statute because this signals a threat to the interests of those related to our international partners. The world has become more integrated than it was at the end of the Cold War. Whereas the dependence on donors may not be as high as it is for other nations, international capital will be under threat and opportunities for Kenyans abroad may diminish over time should the country be isolated as a pariah state. The country’s credit rating faces a likelihood of downgrading and capital inflows more likely to be muted. This is likely to affect domestic credit, that is interest rates and exchange rates especially should inflows diminish. The government has been planning to issue a sovereign bond in an effort to diversify debt from domestic sources, a lower credit rating related to perceived higher political risk could make such a bond difficult or the cost (interest rate) could be very prohibitive.

The attractiveness of Kenya as an investment capital shall diminish and the tourism industry can expect to experience a slowdown in 2012 subjecting the economy to a shock.

 Kenya depends on its international partners to manage both internal and external shocks to the economy a case in point being the aid required to take care of the millions who might starve due to the looming drought. Funding for the Internally Displaced Persons arising out of the post election violence has been dependent in part on the international community, tourism may no longer be a viable sector once it’s patterned by cycles and performance dips closely related to elections in the economy. The relations with these partners should not be undermined by a desire by the legislature to engage in horse trading on a matter that harms the very economy they depend upon to pay their wages and create employment for their voters.

Finally is the impact the activities of the executive and the legislature have on undermining the status of the country as a viable state within the boundaries that presently exist. With the promulgation of the constitution, there are reasons to believe that the exercise of nation building must be in earnest. Having had a centralized form of Government for many years and very limited experience with devolved government, ethnic fragmentation to ethnic states and various forms of disruptions have to be guarded against. Any form of regional championing or community interest that takes precedence over national interest undermines the viability of the entire state.