Kenya Sees Increase in Foreign Investor Exodus
According to a new report by the Central Bank of Kenya (CBK) on the country’s economic stability, more foreign investors are leaving Kenya.
In its September Kenya Financial Stability Report, the Central Bank of Kenya (CBK) detailed the trend of investors fleeing the country from 2022 through the first half of 2023.
CBK cited investor activity at the Nairobi Securities Exchange (NSE) as evidence that more expatriates were selling their shares than buying them.
For example, in March 2023, approximately Ksh15 billion worth of shares were sold, compared to Ksh5 billion worth of shares purchased.
However, the number of shares sold in June 2023 fell below Ksh5 billion, or roughly the same sum as foreign investments.
In 2022, foreign investors sold shares worth Ksh63.2 billion and bought shares worth Ksh38.8 billion, resulting in a net outflow of Ksh 24.4 billion.
This trend was attributed to the present difficult economic conditions, which are a result of the pandemic and government policies.
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“Overall, the market remained on net outflow in 2022 and the first half of 2023, highlighting the impact of rising global interest rates as advanced economies tighten monetary policy, domestic business environment and firm-specific challenges,” read the report in part.
“The sell-off at the NSE could also be attributed to the tightening financial conditions in international markets as central banks in advanced economies tightened their monetary policy stance to stem the rising inflation risks.”
On the other hand, competition from imported products was identified as a significant obstacle for local businesses, particularly those in the manufacturing industry, rendering the sector unattractive to investors.
The depreciation of the shilling was also observed as a result of the exit. Currently, one dollar is worth 149 Kenyan shillings. The dollar has reached the Ksh145 threshold in recent months, allowing it to maintain its dominance over the shilling.
Notably, the Henley Private Wealth Migration Report 2023 predicted that 100 millionaires would depart the country by the end of this year due in large part to the high tax burden. This was the result of the passage of the Finance Act of 2023, which introduced new tax measures like the 15% housing fund.
In the same breath, in 2022, close to one hundred millionaires fled the country in quest of nations with equitable taxation policies.
Kenya Sees Increase in Foreign Investor Exodus
