Policy shifts denting investor confidence even as state push for more private capital

National Treasury cabinet secretary John Mbadi addressing the 9th East Africa Venture Capital Association (EAVCA) Annual Conference in Nairobi under the theme “East Africa Rising: Balancing Risk and Impact,” where he championed the role of private capital in driving East Africa’s growth.

Unpredictable policy changes in Kenya are dampening investor confidence despite the country’s strong financial markets and regional appeal, industry leaders have warned.

East Africa Venture Capital Association chair David Owino said that while East Africa remains one of the most attractive destinations for private capital in Africa, sudden shifts in regulation threaten to erode investor trust.

Speaking at the ninth annual East Africa Venture Capital Association conference in Nairobi, Owino noted that East Africa’s integrated economies, young population and vibrant services sector position it ahead of other regions on the continent.

To ride on these, he pointed out that the government will have to strengthen its policies to assure investors especially as foreign investors re prioritise their investments.

“All we need now is a policy environment that creates stability and predictability. Capital does not like restrictions. We are okay with regulation, but we want predictability for investments to be sustainable,” Owino said.

However, Owino cautioned that foreign capital inflows, particularly from the US and Europe, are under strain due to shifting global priorities, geopolitical tensions and economic slowdowns abroad.

“We have seen a slowdown in venture capital inflows, but that is largely driven by external dynamics. The African market remains too big and too young to ignore,” he said.

He urged local institutions—including pension funds, asset managers, and savings cooperatives—to channel more of their resources into productive sectors to reduce reliance on foreign funds.

“Why should we wait for money from abroad to catalyse opportunities? We have money here. If some of it is channelled into growth sectors, we will not need to rely so heavily on global flows,” Owino said.

Treasury Cabinet Secretary John Mbadi, who also addressed the forum, backed the call for greater private investment, saying venture capital and private equity are essential for Kenya’s long-term growth.

“This conference is about how private investment can come into this space through capital mobilisation to support the private sector and other initiatives, including public-private partnerships. Injecting capital into the private sector helps grow the economy, and we have seen a lot of progress in this area, especially after establishing the Nairobi International Financial Centre (NIFC),” Mbadi said.

He argued that Kenya’s relatively mature democracy, political stability, and strong financial sector make it a regional leader in attracting investment.

“Kenya is one of the leading democracies in the region and one of the most stable. Our financial sector is strong and deepened, and that is why the country continues to attract private capital,” he said.

Mbadi added that government reforms, including digitisation of public finance systems, are designed to create fiscal stability and reduce leakages, thereby strengthening the investment climate.

“The government cannot do it alone; private capital is essential,” he said.

Owino, however, warned that uncertainty from abrupt policy changes could undermine these efforts.

“If rules keep changing every 12 months, investors will hesitate. Creating a predictable policy framework is the most critical step to unlocking more local and international investment,” he said.