Economic & market implications of Kenya's cabinet dismissal

Kenya is currently facing a period of political upheaval as President William Ruto recently dismissed the entire cabinet, leaving government operations under the supervision of senior civil servants until a new cabinet is appointed. Ruto has expressed his commitment to forming a broad-based government through consultations, even hinting at including opposition members. However, protests calling for his resignation continue, with critics warning against reinstating the dismissed ministers. To shed light on the implications of these political developments on Kenya's capital markets and macroeconomic performance, CNBC Africa spoke with Philip Mwangale, a Financial Analyst and Law and Governance Specialist at Gibbor Group Africa based in Nairobi, Kenya. Mwangale highlighted the historical context of the current situation, emphasizing the constitutional and legal implications of operating without a cabinet for an unspecified period of time. Despite the uncertainty surrounding the governance vacuum, Mwangale noted that ministries can still function under the oversight of principal secretaries. However, prolonged delays in appointing a new cabinet could pose challenges to government operations and stability. From a financial perspective, Mwangale discussed the impact on the business climate, highlighting the relative stability of the economy despite ongoing protests. He cautioned that prolonged uncertainty could lead to market volatility and a potential collapse of the Kenyan shilling. Addressing the persistent calls for President Ruto's resignation, Mwangale critiqued the government's response to corruption allegations and stressed the importance of meeting public demands for accountability and reforms. While recent actions such as cabinet dismissals and changes in the National Police Service structure may pacify certain groups, Mwangale pointed out that key issues such as electoral reform and governance transparency remain unresolved, indicating continued discontent among some sectors of the population. Overall, the political and economic landscape in Kenya is at a critical juncture, with unresolved tensions and uncertainties clouding the path to stability and progress.