Hostile Government Agencies Turning Away Investors From Kenya As Neighbours Reap Big
Every time a government official attends a business meeting with potential investors, Kenya is painted as the ideal destination for them, with “attractive opportunities, appealing location and low-risk investment environment”.
In fact, the government often peddles a narrative of a business hub for East and Central Africa, marketing a country that should join the developed world by 2030.
In her flagship project dubbed ‘Vision 2030’, Kenya aspires to transform self into a newly industrialised middle-income country providing a high quality of life to all its citizens in a clean and secure environment.
However, the real situation on the ground is different, with several investors now leaving the country and several companies shifting to neighbouring countries due to a difficult economic environment that undermine business.
For instance, one of the most hard-hit sectors is the multi-billion betting industry, where several giants who contributed billions in terms of revenue are at the verge of leaving the country. Several sports clubs have lost sponsorships from betting companies as a result of a tax regime on a whim that is so extreme and lacking in consideration it can only be assumed it was designed to terminally cripple the industry.
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According to the East African Herald, industry contributed Ksh10billion to public revenues, providing much needed social services where nearly 40 percent of the country still live on less than $1-a-day. If the companies make their threats true, several young people who were employed by the companies either directly or indirectly will lose their source of income, since the government has no mechanism to give them jobs elsewhere.
Just like the alcohol industry, betting will always divide citizens of any country down the moral lane, and the choice of either betting or not depends on an individual but not regulation by the government. In fact, using punitive measures will only lead to cropping up of black market gambling, which is more dangerous that the open market one.
Mid-July this year, Interior Cabinet Secretary Fred Matiang’i signed deportation orders against 17 foreigners who were directors of gambling firms in the country. The director/investors were sent away without being informed what their mistake was, and even without considering their economic value in the country.
This could look like the government has weaponised the fight against tax evasion to bundle out of the country ‘unwanted’ investors.
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The actions of the Kenyan government have also raised the attention of neighbouring countries who have been quick to capitalise upon Kenya’s falling attractiveness. Ethiopia are set to launch their first online betting company, AbyssiniaBet, in coming weeks and continue to promote themselves as an investment destination safe from political interference.
According to Sammy Zeleke, an Ethiopean investment analyst based in Addis, “The Ethiopian government recognise clearly the problems being faced in Kenya now with public officials abusing the legal system to steal from investors and destroy businesses through self-interest. International investors tell us regularly how hard they are finding it to operate in Kenya now and the uncertainty of the environment. Ethiopia is now offering an alternative, where there is an independent legal system free from any government interference and an investment climate that welcomes international investors, rather than deporting them for no reason.”
The biggest casualty of Kenya’s decision to harass investors will be the National Football League, which could see many youths turn back to crime or drugs since the government offers little or no supports to the sports industry.
Several manufacturing firms are said to have shifted to neighbouring Ethiopia, citing high cost of electricity as one factor hindering business in Kenya.
Among those severely hit by the rates are glass manufacturers, with one of them set to shift to Addis Ababa by November this year. This will leave only one glass manufacturer in the country, which might not survive.
Apart from the cost, several multinational companies cite harassment by government agencies that are supposed to create a conducive environment for businesses.
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