Survey: Weak governance and graft hinder Kenya’s FDI appeal
Weak governance and corruption are the major factors affecting Kenya’s ranking as an investment and business destination, a new survey shows.
The study by world business media firm, Forbes, says though Kenya is the third best country for business in Africa after South Africa and Rwanda, it could be a lot better if theft of State funds and lack of accountability are addressed.
It says that Kenya has a growing and entrepreneurial middle class with the gross domestic product (GDP) growing at an average of five per cent.
“This growth has, however, been impaired by weak governance and corruption,” says Forbes Best Country for Business survey.
Kenya is also ranked 93 in the world with Rwanda at 90 and South Africa at 59. Ghana, Egypt and Namibia follow at 94, 95 and 96 in that order out of a total 161 countries.
Central African Republic is the least desirable nation to do business in according to the study.
The country has been losing billions of shillings to theft and corruption without consequences for the offenders, as the executive, legislature and judiciary trade blame over who is the weakest link on war on graft.
Several state officers have been shown the door but cases that should lead to their punishment have stalled in the courts.
Forbes says the economy, however, is well placed to resume its decade-long five to six per cent growth rate. Treasury expects a 6.1 per cent growth next year despite elections.
“While fiscal deficits continue to pose risks in the medium term, other economic indicators, including foreign exchange reserves, interest rates, current account deficits, remittances and FDI (Foreign Direct Investment) are positive,” the survey adds.
Credit and drought-related impediments were temporary. Now in his second term, President Uhuru Kenyatta has pledged to make economic growth and development a centerpiece of his administration, focusing on his “Big Four” initiatives of universal healthcare, food security, affordable housing, and expansion of manufacturing.
The banking sector made large profits in the first half of 2021 with over Sh60 billion coming from government borrowing even as customer deposits continued to rise.
However, the country is facing an election next year which poses uncertainty even as inflation continues to rise on account of high oil prices which could inturn lead to high interest rates.
Oil prices hit their highest level in years yesterday as demand recovers from the Covid-19 pandemic, boosted by more custom from power generators turning away from expensive gas and coal to fuel oil and diesel. That has coincided with key economies rebounding from the pandemic, leading to a significant tightening of the market.
Brent crude oil futures rose 90 cents, or 1.1 per cent, to $85.76 a barrel, after hitting a session high of $86.04, the highest price since October 2018.
US West Texas Intermediate (WTI) crude futures climbed $1.23, or 1.5 per cent, to $83.51 a barrel, after hitting a session high of $83.73, highest since October 2014.