There’s no doubt politics plays a part in all countries, but when you extend it to emerging markets, it’s even more important, and that has raised concerns from Citibank (NYSE:C) analysts who are looking at a number of countries in East Africa as having the potential to weaken the investment climate there as a number of elections will get under way in the near future, which always contains elements of uncertainty and tension in the region.
Among the numerous elections to be held soon are Kenya, Uganda, DR Congo, Zambia and Tanzania. Other elections which will be held sometime between 2010 and 2012 are Nigeria, Senegal and Mauritius.
Kenya is scheduled to have a referendum on a new constitution, possibly by early summer, and within a couple of years will hold a general election.
“We think volatility will remain and that event-driven trading will be a key component of 2010 activity,” the analysts from Renaissance Capital said.
This means there is nothing that can be counted on, and there will be wild swings in the market because of the unsurety connected to the poltics in East Africa, which are as unpredictable as their economics can be, and just as important at this stage of the development of the countries.
Part of the problem is you simply don’t know what will happen and what economic stances new governments will embrace in the region if they are voted in. So while in many cases there is little if any change, in other cases there can be dramatic changes.
This is the volatility factor mentioned above, and this will probably go on for a couple of years, even though there has been significant growth in a number of the East African countries lately, and most believe the growth will continue.
Other factors for countries like Uganda and Tanzania is they have internal food supply issues they’re trying to deal with, and growth consequently has slowed in response to dealing with that as a priority in the countries mentioned.
