REFUTE

Kenya dismisses IMF's investor ranking

The exchequer said FDI's have been growing 32.4 per cent since 2013

In Summary
  • Last week, the international lender said Kenya’s business environment is the second worst in the world after Colombia.
  • In 2020, Kenya was ranked fourth in Africa with a score of 72.3 in the World's Ease of Doing Business. 
Treasury CS Ukur Yatani ahead of the 2022-23 budget reading at the National Assembly on Thursday, April 7
Treasury CS Ukur Yatani ahead of the 2022-23 budget reading at the National Assembly on Thursday, April 7
Image: FREDRICK OMONDI

Kenya has dismissed an International Monetary Fund report that places it among the world's worst investment destinations.

National Treasury Cabinet secretary Ukur Yatnai said the country remains an attractive destination for investors seeking to establish regional and pan-African operations. 

The report said Kenya’s business environment is the second worst in the world after Colombia.

The global lender attributed the country’s business uncertainty to the rising political temperatures ahead of the August 9 polls. 

IMF’s World Uncertainty Index (WUI) noted that the economic and political uncertainty in the country has risen sharply by 84 per cent to 0.628 points from 0.34 to the second quarter of 2021.

According to the report, most investors fear an outbreak of war after the elections.

But in his rebuttal, Yatani said the government has put in place sound policies that have seen Foreign Direct Investments (FDI) grow annually by 32.4 per cent. 

He said cumulative FDIs grew to Sh75.1 trillion in 2017 from Sh56.7 trillion in 2013. 

"The government's business regulatory reforms and infrastructure investments over the years have improved Kenya's competitiveness and ease of doing business,''  Yatani said. 

In 2020, Kenya was ranked fourth in Africa with a score of 72.3 in the World's Ease of Doing Business. 

The country's investment attractiveness, just like in the global arena was however cut short by Covid-19.

Latest 20202 United Nations Conference on Trade and Development (UNCTAD) World Investment Report shows Kenya attracted FDIs worth $448 million (Sh52.9 billion) last year from $717 million (Sh84.6 billion) in 2020.

The 37.52 per cent dip in foreign investment deals went against a recovery witnessed in major countries in Eastern Africa where average FDIs jumped 35 per cent to $8.2 billion (Sh959.4 billion).

This was the second annual drop considering that FDI's to East Africa's economic powerhouse shrunk by $381 million (Sh41.14 billion) in 2020, hurt by Covid-19 restrictions and fresh rules demanding foreign firms in some industries gradually cede more stake to locals.

According to UNCTAD, Kenya received FDIs worth $717 million (Sh84.6.billion) in 2020, a 34.7 per cent drop compared to $1.1 billion (Sh118.58 billion) a year earlier.

Yatani said the government is implementing a number of policies to ensure stability despite volatilities in the global micro-economics. 

For instance, the Central Bank of Kenya (CBK) raised the base lending rate by 75 basis points in May in an effort to clamp down on rising inflation that rose to 7.9 per cent last month. 

Last week, the government released Sh16.7 billion fuel subsidy to cushion consumers from rising costs. This saw pump prices retained at Sh159.1 per litre of super petrol.

Without the subsidy, a litre of super petrol could have risen to Sh209.