Kibaki was sworn in as the third President of Kenya on 29 December 2002 while sitting in a wheelchair. In his swearing in speech, Kibaki called the times “a critical moment in the history of our country”. The swearing-in was followed by a power-sharing formula between the NARC parties namely NAK and LDP on a 50-50 basis.

The power sharing arrangement, however, would bring about frictions between the two parties with LDP claiming that it had been short-changed in that the Kibaki-led faction had taken the strategic ministries. The death of Vice President Kijana Wamalwa on August 2003 dealt a huge blow to coalition government. Kibaki picked Moody Awori to replace Wamalwa.

To actualize his agenda for the country, the idea of evolving a blueprint and roadmap to guide Kenya’s development agenda after the 2002 General Elections was preceded by the formation of National Economic and Social Council (NESC). This outfit, in turn, was itself an offshoot of the Economic Recovery Strategy for Wealth Creation for 2003 to 2007.  

As a result of Kibaki’s economic blueprint, GDP expanded by 5.8 per cent in 2003 compared to 0.4 per cent when he took over in 2002. The measures he implemented included rehabilitation and expansion of infrastructure – roads, rail, power generation, telecommunications and port services. Kibaki also launched an investigation of the country’s banking system and ordered an inquiry into a complex bank scandal known as the Goldenberg affair, in which the Central Bank paid out money for non-existent export credits.

Kibaki also rolled out a free primary education policy and the Government started providing free drugs for malaria, tuberculosis, and HIV/AIDS. The NARC tensions spilled over to the constitution making process. The points of contention were centered on the creation of an executive prime minister position as well as the presidential powers. The Draft Constitution, given the name Wako draft, was opposed by the LDP wing as it retained the sweeping powers of the presidency.

The LDP wing in collaboration with KANU led a strong campaign in the referendum to adopt or reject the draft constitution. The constitution was rejected by 58% of the voters to the delight of the LDP wing and the former ruling party, KANU, then the opposition.

The results of the referendum made Kibaki initiate a Cabinet reorganization which saw the dismissal of the Raila-allied ministers on 23 November 2005. Kibaki noted that the decision was motivated by the desire to ensure that the government functioned in a cohesive and better manner in order to serve all Kenyans.  He brought in MPs from the opposition in order to form the Government of National Unity.