Abacus Wealth Management

Elections and Your Finances

A democracy is arguably the best form of government humanity has come to agree with. To date, a people of every other form of government globally fight towards achieving a democracy. Our nation is gifted with one and it is something we pride ourselves with, even with all the challenges and difficulties it comes with.

One of the beacons of a democracy is the terminal elections that mark transition from government to another. This is the period citizens exercise their powers by choosing their leader through voting. With elections, in more than one way, comes a cost that has to be incurred by the citizens every five (or four) years as the case may be.

Growth in Kenyans GDP since 2003. (Sourced from; Kenya National Bureau of Statistics)

Judging from the graph above, the trend the countries economic growth shows a dropping pattern in election years. In this case, the graph starts in 2003, a year after the 2002 election year. The graph shows the economy grows steadily through the 4 years to 2007 hitting 7%. It them drops sharply in 2008. This has been attributed to post election chaos that Kenya witnessed in 2007/2008. Despite this however, the trend in the graph has showing a slowing economy towards 2012.

Although elections have been pushed to 2013, experts have linked the economic slow down seen in late 2011 through 2012 to the election period. Inflation rates in October 2011 rose to more than 19% from 3% a year earlier. This coupled with resultant effects of high food prices, rising cost of fuel and other cost of living bore down heavily on the consumer.

High Cost of Living

Apart from elections being conducted on tax payer’s money, the direct effects that citizens bear include inflated food prices due to low or hampered food production and  high cost of transport. Some parts of the country that have been experiencing pre and post election skirmishes have their residents take precautionary measures to avert trouble that comes with it. Every 5 years, these residents and their families move to ‘safer’ places and back after reasonable calm has returned.

This is a cost that one has to incur every so often and in most cases it involves moving valuable items, changing schools for children and at worst changing jobs every now and then. Insurance companies have started developing products to carter for this end of market but in most cases, people who live in these areas are low income earners and therefore cannot afford premiums at the rates available on the markets.

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