Cashing in on the campaigns

| March 1, 2013 - 13.06UTC
Elections

Elections, as we know only too well, can be costly, disrupting our lives, our transport, and worse. But they also present opportunities – and not only for ambitious politicians. Cosmas Butunyi reveals how shrewd entrepreneurs are reaping rich rewards from the 2013 polls.

It is electioneering season in Kenya. In a country – and we’re certainly not alone in this – where holding political office is considered by some to be a ticket to money and power, candidates are sparing no effort (or expense) in their battle to clinch a seat.

So it shouldn’t come as a surprise that campaigning has spawned a multi-million-shilling industry – and cunning entrepreneurs are cashing in on the scramble for political success. From strategists, speech coaches, image consultants, entertainers and bodyguards, to campaign merchandise manufacturers, truck distributors and advertising agencies, elections are creating big business for many in Kenya.

It’s a well-recognised phenomenon. “Around elections season, businesses spring up,” confirms Dr Emmanuel Manyasa, an economist and lecturer at Kenyatta University’s School of Economics, “while established enterprises expand their scale to meet demand for goods and services from politicians.”

There’s a dizzying array of goods and services available that could just give aspiring candidates the edge over their opponents – and many will plough money into whatever strategy they think will bring in the votes.

For most of us, the potential economic impacts of elections will be felt only after a successful candidate is in power, and if he or she makes good on campaign promises to introduce beneficial policies. Before the polls, the electioneering season generally makes the business community jittery.

“Elections introduce risk to business because of uncertainty over the policies that the new government will introduce, in addition to the possibility of chaos breaking out, leading to destruction,” explains Dr Manyasa.

Entrepreneurs, though, represent an exception to the rule – for them, the potential dark cloud of the polls certainly has a silver lining: a bonanza that starts well before voting day.

Now, shortly before voting begins, candidates are on a spending binge. Billboards are being erected, dinners are hosted, crowd-pulling entertainers are hired for campaign rallies. Swathes of newspaper space is commandeered for advertising; manifestos are created and delivered with ample punchlines. High season has arrived.

From an entrepreneur’s perspective, things are better than ever this year. The array of positions introduced through the devolved system of government has expanded, and the size of the cake to be shared among the electioneering businesses is correspondingly bigger. In addition to president, MPs and councillors, in the 2013 polls Kenyans will also be choosing governors, senators, county representatives and women representatives. That means a fatter payday for entrepreneurs.

In the 2007 general elections, which saw eight aspirants vie in the presidential race and 2,500 candidates gunning for parliamentary seats, some Ksh 56 billion (about US$650 million) was spent on campaigns, according to estimates by the Coalition for Accountable Political Financing. Thanks to the additional positions available and the increased sophistication of the contest, analysts project that the total spend in the 2013 elections in Kenya could even double. By way of comparison, the Center for Responsive Politics, a leading research group, estimates that US$6 billion was spent in the run-up to the 2012 US elections.

Anthony Kibagendi, who is running for MP in Kitutu Chache South constituency for the second time (having contested unsuccessfully in 2007), confirms that his campaign budget has gone up. The biggest chunk of his expenditure for these polls will be spent facilitating volunteers and organisers. But a substantial second-tier spend will be on promotional materials such as calendars, fliers, keyholders and caps, providing a windfall for producers. At the time of writing he has spent about Ksh 5 million of his projected Ksh 10 million budget. Considering the overall number of candidates, it’s clear that there’s potential for entrepreneurs to rake in tidy sums as they oil the campaign machinery.

Paul Achar is a speech coach whose firm, Jade Communications, provides communication skills training. He has already netted a number of deals with various candidates to help them brush up their public speaking in the run-up to the polls.

“We will definitely make some money from these elections. I am consulting at the highest level of national politics,” says Paul. That could be a coded reference to involvement in the presidential campaigns, though – client confidentiality being imperative – no names were revealed.

Another businessperson who agrees that this is indeed a time to “eat campaign money” is Lilian Museka. Her company, Jabima Creations, deals in the branding and printing of T-shirts, caps, scarves, pens and other promotional items.

“We will definitely benefit from the campaign period,” explains Lilian, a trained journalist who, together with a friend, runs her printing and branding firm as a side venture. As yet, she has seen no significant uplift in revenues – but as first- timers in the game, they are developing strategies for making the most of the polls, which could make a big difference in their firm’s cash flow.

The hospitality industry is already riding the wave of a new fad for candidates: hosting ‘fundraising dinners’. These provide a lucrative new revenue stream for hotels in particular.

“We have witnessed increased business, particularly from politicians’ fundraising dinners and accommodation during rallies in western Kenya,” says Robinson Anyal, general manager of Parkview Safari Hotel and Apartments in Kisumu. Business has gone up by “a significant 10%” over the past six months as election fever has taken hold; he projects even higher margins as the campaigns peak and politicians align and realign themselves in coalitions and affiliations.

This increased business is obviously a seasonal windfall lasting only a few months. Though it has opened a new stream of clients for some existing businesses, others are only in it for the short haul.

Madonah Syombua, a self-taught social media strategist, uses her influence on platforms such as Facebook and Twitter to drum up support for candidates who hire her and the team of friends that she has put together. By day, she is involved in youth programmes, but the elections have provided her with the opportunity to tap into her love for social media and make some extra money.

Arnold Barroh, who designs and prints branded merchandise, has had his first taste of campaign funds. His firm, Creative Solutions Kenya, co-founded with a cousin, recently delivered a consignment of T-shirts to a political party secretariat, from whom he has been promised more work. He is confident that business will improve further after parties nominate their candidates for different positions.

Of course, as in any other industry, competition can be cutthroat. “Clients are hard to come by,” says Lilian. “Competition is fierce, and we have to work to convince them – especially on price, since most will go for the cheapest option.”

Paul and Arnold rate referrals from past clients as the most important factors in their businesses – not just during election campaigns. For Madonah, though, it is all about reaching out and making pitches and proposals to candidates.

“Sometimes we are approached by candidates because they know that we are good with the youth, and can appeal for votes,” she says. Once an aspirant is interested in engaging Madonah’s team, terms of reference are agreed for a short, renewable contract – usually agreeing the number of ‘likes’ to be netted within a given period, and the number of ‘shares’ for video.

At the centre of the campaigning industry is the provision of communication goods and services. After all, for each candidate the whole process is about communicating their proposition, resonating with voters and – hopefully – winning votes.

“We are playing a democratic role in helping candidates to articulate what they believe in by building communication capabilities and encouraging issue-based politics in this country,” says Paul, who adds that his work has sprung from being intrigued by the intricacies of human communication.

In the game of politics, where the spoken word is paramount, Paul’s services – including training in public speaking and the art of persuasion, as well as audience analysis and selection of key messages for delivery – are much sought after.

Of course, delivery of the message is the end of a chain of activity. Before that comes the process of crafting messages that will tug at the electorate’s heartstrings, designing a winning strategy, and unleashing propaganda against competitors – all of which take input from many other advisors, consultants and so on.

Some entrepreneurs see the elections as a springboard from which to launch future expansion. Paul, for example, is banking on the calibre of aspirants with whom he is consulting to open doors for even more high-profile work beyond Kenyan borders. “We have a plan for the next two years: that our footprint will be all over the continent, because what we have is amazing and unique,” the speech coach declares.

Arnold, on the other hand, hopes to make enough money to allow him to expand his business beyond his Nairobi base to other Kenyan cities. “We are aiming for workshops for customisation, not factories for mass production,” he says.

The doors that the entrepreneurs are looking to open go beyond the economic space. Madonah views her work as an induction into the world of politics. “I aspire to get involved in politics someday because it is fun, it is crazy,” she says.

It is not just individuals who are dabbling in the business of elections. Institutions of higher learning are also tapping into the opportunities. In January, Strathmore Business School offered its Campaign Management Programme, a short course targeting campaign managers, candidates and election officials, taught by Professor Steve Jarding, a lecturer in Public Policy at Harvard’s Kennedy School of Government.

So it’s clear that businesses at all levels, from individuals and small companies to large educational establishments, recognise electioneering as a highly bankable industry.

It remains to be seen what effect the Election Campaign Financing Bill (2012) – which seeks to regulate and manage campaigns in Kenya – will have on the burgeoning businesses surrounding the process. At the time of going to press, the bill – which has already been cleared by cabinet – is undergoing review before it is brought before Parliament for debate.

In the meantime, it’s business time.

When elections go bad
While the electioneering season can be a godsend for some enterprises, it’s not all good news for the economy as a whole. Increased inflation, heightened political risk, lower value from the labour market with energies diverted to politicking, and relaxed enforcement of laws as the vote-seeking incumbents seek political expediency are just some of the negative effects on business, according to Dr Emmanuel Manyasa, economist and lecturer at Kenyatta University’s School of Economics.

“Overall, elections are bad for the economy because they tend to support ‘cash cows’ and ‘cash traps’ – enterprises that yield profits in the short term but have no long-term future or benefit for the wider economy,” argues Dr Manyasa.

Economists argue that ‘cash cows’ and ‘cash traps’, which tend to succeed during elections, flourish at the expense of ‘star’ and ‘question mark’ enterprises that either earn good profits or offer the potential, with suitable investment, to provide sustainable long-term growth and therefore aid the economy.

There’s also the risk that businesses will make investments on the basis of promises from politicians who either don’t get elected, or who don’t follow through with these commitments.

Another aspect of campaigning is the increased incidence of money changing hands without provision of goods and services, as desperate candidates dish out handouts as inducements to potential voters. Dr Manyasa observes that this can generate inflation and drive up the general cost of doing business in the country.

Combined with uncertainty over what policies might be introduced by a new administration, and the risk of unrest that could lead to the destruction of property, these factors cause jitters among the business community.

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