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Same-Day Analysis

Government and Opposition Sign Historic Power-Sharing Pact in Kenya

Published: 29 February 2008
President Mwai Kibaki and his rival, Raila Odinga, finally signed an historic power-sharing agreement yesterday (28 February), aimed at ending the two-month political/civil crisis that erupted in the East African country in the wake of Kibaki's controversial re-election at the end of 2007.

Global Insight Perspective

 

Significance

The formation of a coalition government is effectively recognition that the 27 December 2007 presidential election fell well short of an acceptable standard and, in light of the ensuing civil unrest, it is a belated acceptance that neither the government nor the opposition can realistically govern the country alone.

Implications

While the agreement will go a long way to addressing the post-election political crisis, it should be seen as the first step in addressing the long-standing and deep-seated divisions that exist between the different ethnic communities in the East African country, some of whom bitterly resent being marginalised by successive administrations.

Outlook

The deal to form the new power-sharing administration has rightly been hailed as historic, helping the country to emerge from its worst political crisis in decades, but the international community, which played a leading role in brokering the deal, must maintain pressure on both sides to ensure their continued commitment.

Yesterday's agreement is the culmination of month-long peace talks between President Mwai Kibaki's Party for National Unity (PNU)-led government and the main opposition, the Orange Democratic Movement (ODM), led by Raila Odinga, the man who is widely assumed to have won the presidential ballot, chaired by former UN secretary-general Kofi Annan.

Below are the key points of the agreement, formally known as the National Accord and Reconciliation Act 2008, and signed by Kibaki and Odinga.

  • There will be a prime minister of the government of Kenya, with authority to co-ordinate and supervise the execution of the functions and affairs of the government.
  • The prime minister will be an elected member of the National Assembly and the parliamentary leader of the largest party in the National Assembly, or of a coalition if the largest party does not command a majority.
  • Each member of the coalition will nominate one person from the National Assembly to be appointed as deputy prime minister.
  • The cabinet will consist of the president, the vice-president, the prime minister, the two deputy prime ministers, and other ministers. The removal of any minister of the coalition will be subject to consultation and concurrence in writing by the leaders.
  • The prime minister and deputy prime ministers can only be removed if the National Assembly passes a motion of no confidence with a majority vote.
  • The composition of the coalition government will take into account at all times the principle of portfolio balance and will reflect their relative parliamentary strength.
  • The coalition will be dissolved if the current (tenth) parliament is dissolved, if the parties agree in writing, or if one coalition partner withdraws from the coalition.
  • The National Accord and Reconciliation Act shall be entrenched in the constitution.

Long Road to Peace

The signing of the agreement yesterday (28 February) comes almost two months to the day after the highly disputed presidential election, which pushed the country to the brink of a major civil conflict, leading to the deaths of more than 1,500 Kenyans, as well as the displacement of hundreds of thousands more. It also comes some two weeks after representatives of the two parties reached an interim agreement on the formation of a power-sharing government, as well as a number of other key issues, including reforms to improve the constitution, electoral laws, and other areas of government aimed at addressing the root causes of the crisis (see Kenya: 15 February 2008: Kenyan Rivals Sign Partial Political Deal as Talks Continue to Reach a Comprehensive Agreement).

However, the talks appeared to be heading for failure earlier this week when Annan was forced to call a temporary halt to the proceedings, with the two sides seemingly remaining at odds over the make-up of the proposed coalition government. The main point of disagreement was the question of who holds executive power, with the government reportedly insisting on a formula that would see the President maintaining his current executive powers. The ODM, for its part, insisted that it would only agree to be co-opted in return for executive powers under a newly-created prime minister's post (see Kenya: 27 February 2008: Chief Mediator Suspends Negotiations to End Political Crisis in Kenya, Blames Lack of Progress).

The deadlock was finally broken yesterday, thanks to Annan's perseverance and his renowned diplomatic skills, but also in part to the sustained pressure that was applied on the two parties by the international community, many of whom refused to recognise Kibaki's administration in its present form, calling instead for the formation of a power-sharing administration.

Outlook and Implications

Political Outlook

Yesterday's deal will allow Kibaki—the official, but tainted, winner of the presidential ballot—and Odinga—his bitter rival, who claimed to have won the ballot—to work in the same administration for the second time in five years, with the latter now almost certain to assume the post of an executive premiership. The last time the two men reached an agreement to serve in the same administration was when they joined forces to lead their then electoral vehicle, the National Rainbow Coalition (NARC), to power at the December 2002 general election. However, the agreement ended in acrimony almost as soon as they assumed office over Kibaki's alleged reneging on a pre-election deal—the so-called Memorandum of Understanding (MoU)—in which he agreed to create an executive prime minister post for Odinga in recognition of his key role as kingmaker in putting together a winning coalition. While Odinga has had to wait more than five years to finally assume the role and fulfil what he may see as his destiny, any sense of achievement he may feel will no doubt be tempered by his continued feeling of injustice over the way he was denied 'victory' during the recent presidential ballot.

The power-sharing deal, which has already been hailed by Kenyans and the international community alike, is now in place, but only represents the first step in what is likely to be a long and difficult reconciliation process. As the preamble of the agreement underlines, the highly disputed nature of the election served to expose deep-seated and long-standing divisions within Kenyan society, which have been bubbling under the surface for decades.

The two parties and their respective leaders will now have to embark on the task of rebuilding bridges across divided communities by leading by example and remaining committed to the content and spirit of yesterday's agreement. As part of the deal, both are committed to addressing issues such as land, constitutional and government reforms, and economic disparities among different communities. President Kibaki has disclosed that parliament will now reconvene on Thursday (6 March 2008) to start the legislative process needed to formalise the deal.

Economic Outlook

With rival parties finally swallowing the bitter tonic necessary to heal Kenya's social and economic wounds, the joint effects of raised domestic confidence and the push from the international community, heralded by the United Kingdom, to financially and politically back the deal should serve to reinvigorate the economy. Indeed, the initial effects have seen the Kenyan shilling strengthen against both the U.S. dollar and U.K. pound sterling, with the stock market expected to pick up during trading today. U.K. Prime Minister Gordon Brown has been one of the first to offer financial and political backing to the deal, announcing that the United Kingdom is willing to host a donor conference aimed at supporting the Kenyan government in the healing and redevelopment phase. Much of the international and domestic investment plans had been temporarily placed on hold due to the uncertainty and the initial phase of reassessing/slowly opening up investment lines can begin. However, the political environment is still uncertain and the deal still has to be put into practice. Thus, this element of uncertainty requires the upkeep of a "wait and see" ethos and will dampen an initial rush affecting the more illiquid investments.

The initial signing of the deal puts positive pressure on Global Insight's Sovereign Risk Rating, currently on negative watch, but both sides will need to show an ability to work together and uphold the deal before the revision of this status. The negative pressures are also contingent on the speed at which the tourism industry can recover, and international investment and aid may resume, thus softening the impact on foreign-exchange earnings and supporting the country's import cover. If initial signs that the international community may back the post-crisis development and spending needs bear fruit, some risk to the fiscal balance may be mitigated, but the balance is nevertheless expected to push deeper into the red. The outlook for the year is positive, but the deal remains the first step on a long road fraught with potential hazards and pitfalls, which could yet interfere with both domestic and international conditions.
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