Following the signing of a power-sharing agreement the mood in Kenya's capital is one of relief and hope that life will begin to return to normal. But as Derek Kilner reports from Nairobi, there is an awareness of the many challenges that remain.

After a wave of post-election violence that has killed some 1,500 people and a month spent awaiting the outcome of a mediation effort led by former U.N. Secretary-General Kofi Annan, residents of Nairobi greeted the news of a power-sharing agreement with relief.

"I start feeling as if now it's a new year for me," said Peter Onango who sells pirated DVDs in the city center. "There was a lot of tension, people are dying. Now the way they have agreed I think everything is going to come back to normal."

Joshua Shinje, who works for an insurance firm, also welcomed the news.

" We are very happy because now everything will come back to normal," he said. "People will start working without fear and we commend them for that. For at least agreeing to share power, so that we can see things come back to normal."

As Mr. Annan made clear at the signing ceremony, the agreement between President Mwai Kibaki and opposition leader Raila Odinga to create a new prime minister's office and a power-sharing Cabinet is only a first-step and will require significant work to enact.

At the time of the previous election in 2002, a similar agreement was reached to give Mr. Odinga - a key ally of Mr. Kibaki in that race - the job of prime minister. That agreement was never implemented and contributed to Odinga's split with the government.

This time, the opposition insisted that the agreement be implemented through a constitutional amendment to prevent a similar outcome. But as political analyst Ojwang Agina points out, the current agreement includes no time-frame for instituting its provisions.

"The challenges are very substantial," said Agina. "Firstly, from past experience, it will be a challenge to have Kibaki sign the act which is supposed to be enacted. In the speeches they were talking as soon as possible. That could be misused by the people who are against change to drag this thing indefinitely."

Political science professor Peter Wanyande, of the University of Nairobi, agrees that some effort will be needed to enact the agreement - which requires a two-thirds majority in parliament - but think it is likely to succeed.

"I think a lot of work has to be done to convince the parliamentarians that this is necessary and that this is for the good of the country," said Wanyande. "And therefore that they should put party interests aside. That should not be a very very big problem. I think there are a lot of politicians from both sides who really understand."

Accountant Richard Kenuah expressed optimism that Kenyans will see to it that their leaders follow through.

"When you look at the way things are moving now the rates are going down, the stock market is vibrant again," said Kenuah. "Kenyans working in their own self-interest are going to ensure that this agreement succeeds. I don't think we have time for politicians who are going to want to stall this or to try to adopt hardline positions that are going to derail this agreement. We have to succeed. We have to go forward. Period."

Once the coalition is in place, there remains the challenge of addressing the broader issues that contributed to the recent violence in the country, including land distribution, economic inequalities and additional constitutional reform. Kenyans are under no illusions about the difficulties of these tasks. But Wanyande says the current agreement will "cool the tempers" of politicians and hopefully avoid an immediate return to instability.

Kenya Human Rights Commission Executive Director Muthoni Wanyeki hopes that the respite provided by the agreement will allow the government to craft an effective response to the threat of future violence.

"Given all the reports we have about preparations of militias… hopefully the breathing space this gives us will allow the security sector to respond appropriately and within the boundaries of the law," said Wanyeki. "We've been given breathing space, the question is how to utilize it to ensure that we not just pull back from the brink but move totally away from it."

The current agreement also leaves unanswered the question of what happens if the coalition collapses. The opposition says it would want new elections to be held, but the process for now remains undecided.