Personal finance

How politics and law are linked


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Summary

  • This is a special year for Kenya due to the upcoming elections in August.
  • The polls will bring changes as new leaders arrive. These changes can be for better or for worse, but we certainly hope they are for the best.
  • A change in the external political regime will probably also lead to a change in the legal environment.

This is a special year for Kenya due to the upcoming elections in August. The polls will bring changes as new leaders arrive. These changes can be for better or for worse, but we certainly hope they are for the best.

A change in the external political regime will probably also lead to a change in the legal environment.

Law and politics are intertwined as rulers play an important role in determining the legal environment of a country. For example, parliamentarians make laws. The elections will lead to a change in the parliamentary composition, thus affecting the legislative environment. The change in polity will also affect the counties as new governors and senators will come to the counties. Some governors have completed their ten-year term and are therefore not eligible for re-election. County laws and policies will therefore change after the election.

It is also the beginning of the year and many companies are writing their plans and strategies for the new year. This is an opportune time to consider changes in the political and legal environment when writing your plans.

Here are some of the election-related issues to consider:

What opportunities are created for your businesses? What are some of the challenges created for your business? Once you consider them, it would be prudent to plan them.

I give the example of law firms. Polls create an opportunity for lawyers to practice electoral law through elections and constitutional petitions. Many lawyers are taking advantage of this season to equip themselves and position themselves for increased litigation after the elections.

In some cases, elections may carry the threat of heightened political tensions. Although it does not happen, it is classified as a threat due to the likelihood of tensions.

So how will your business respond to this threat? Some companies may experience a drop in demand for their products following the election.

One way to assess threats is to look at past elections and how they affected the macro business environment. Some businesses were caught off guard and some were even forced to close. Some of those who closed never recovered. All of these risks can be managed with proper planning and the implementation of mitigation measures.

I would advise you to consider the services of an expert if necessary to assess the impact of political risk on your business and how to mitigate this risk.

The legal environment will change after the elections. I therefore advise companies to be aware of these changes and to be well prepared for them.

When drafting the contract, you may want to consider using a force majeure clause to manage any unforeseen political tension that would negatively impact the parties’ ability to manage their responsibilities. If you are currently entering into certain types of contracts, for example in the field of construction, it is important to discuss the responsibilities of the parties in the event of increased political risk.

International contracts, especially investor-State contracts, usually include the change of law clause. This means that even in the event of a change of political regime, the State remains bound by its obligations.

After the election, not only will there be changes in the law, but there will also be policy changes, especially at the county level. The policy determines the types of laws that follow. Therefore, it is good to familiarize yourself with this.

Many companies take a wait-and-see approach to elections.

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