Kenya’s drawn out election coupled with the political impasse is impacting negatively on the economy, threatening to have a spillover effect on the neighbours with whom it trades heavily.

Latest market and economic data, with a few exceptions, such as tourism and horticulture paint a picture of an economy in suspense as the two political poles maintain hardline positions, whose negativity is already showing in the macro and micro sides of the region’s largest economy.

The data from the Central Bank of Kenya’s Credit Survey released last month paints a gloomy picture as commercial banks lament how raised political risks have led to a tightening of credit and are jeopardising almost all economic sectors.

Already, the banking sector’s loan book growth shrunk by 0.84 per cent in June from March’s two per cent, while the ratio of gross non-performing loans to gross loans increased from 9.5 per cent in March to 9.91 per cent in June, attributable to the challenging business environment.

“This decrease in gross loans was mainly attributable to a reduction in loans granted to support the transport and communication, trade, agriculture, real estate, mining and quarrying sectors. Commercial banks expect an increase in the levels of non-performing loans (NPLs) in the third quarter of 2017 with 42 per cent of this expected rise in NPLs is attributed to the industry’s perceiving increased political risk ahead of the upcoming presidential election,” the banking regulator said.

To the economy, this is bad news given the fact that economic growth figures for the third quarter that ended last month are yet to be released.