As Kenya reels from protests and uncertainty, even after President Ruto’s announced his administration would be withdrawing the Finance Bill 2024, some foreign companies are considering temporarily pausing their investments in the country.
The Kenyan Wall Street spoke with several firms, one of whom announced a multi-million dollar investment in Kenya during the US State Visit just last month, and a few have signaled that they have placed further action items on hold citing a variety of issues including ongoing protests, political instability, and kidnappings of influencers and human rights activists.
Widespread protests largely led by youth took place across Kenya on June 25, 2024 amidst the National Assembly’s passage of the controversial Finance Bill 2024. An unknown number of protesters have been shot, with an unknown number dead and hundreds injured- and high-profile supporters of the movement have been kidnapped; while most have been released, some remain unaccounted for. President Ruto addressed the nation on the evening of June 25th promising a hardline stance before backtracking a day later and conceding to withdrawing the bill.
By then the National Assembly had authorized the deployment of the Kenya Defense Forces (KDF) within Kenya to assist the police. The controversial move faced immediate legal challenges after the Law Society of Kenya (LSK) filed a court case challenging the move. Ruling party parliamentarians have been backed into a corner on multiple issues, and the legislature, which went on recess on Wednesday, is still reeling from a short-lived takeover of the National Assembly building on Tuesday.
Global investors and firms can be very sensitive, particularly to political and economic risk and questions around national stability. Everyone from billion-dollar multinationals to young startups consider numerous criteria when considering an international expansion: political risk, economic risk, reputational risk, and much more.
“Kenya represents the premier Africa investment destination for companies across the globe, especially those companies with a moderate risk appetite and without much Africa experience. Specifically, Kenya is such an attractive destination because of the outstanding capability of its youth workforce and its digital infrastructure necessary to establish and grow a business here. However, events in recent days, mainly from government and state security services, could put its investment gains in jeopardy and certainly increase Kenya’s perceived country risk,” stated Declan Galvin, the Managing Director of Nairobi-based Exigent Risk Advisory.
An executive with an American multinational working in the tech industry who requested anonymity told The Kenyan Wall Street, “For us, Kenya is the gateway into building operations across Africa. We have now adopted a ‘Wait and See’ approach following the recent unrest in Kenya. Our team still sees strong potential in Kenya but that will be defined over what takes place in the coming days.”
On Wednesday, US Secretary Antony Blinken called President Ruto and thanked him for working to reduce tensions. According to a readout shared in the evening by the Department of State, ““The Secretary welcomed President Ruto’s commitment to Kenyans’ constitutionally-endowed rights, including peaceful assembly and due process for those detained.”
Earlier, the International Monetary Fund (IMF), which has been accused of pushing for unrealistic revenue targets, said in a statement that it is “committed to working together with Kenya to chart a course towards robust, sustainable, and inclusive growth.”
Conference Circuit also Adopts a Wait-and-See Approach
Conferences and summits scheduled to take place in Kenya this week have also placed their plans on hold including the Financial Inclusion Conference and Investor Exposition 2024 and Nyanza International Investment Conference. The ongoing Global Peace Leadership Conference had booked President Ruto for opening remarks but hours before the conference began, organizers announced that the President would not be attending.
Kenya’s conference industry is substantial with numerous events taking place across the country each and every day. The key pillar of conferences and the reason companies sponsor and people attend is the media hype and exposure that comes with events – when events are canceled and postponed, it doesn’t go unheard.
One of the ways global firms are introduced to Kenya is through conferences. With the cancellations and postponement of events, delegates who may have come to Kenya to speak and attend conferences will most likely lose confidence in the country’s stability and reconsider potential investments or engagements.