Time flies with great content! Renew in to keep enjoying all our premium content.
Prime
Kenya backtracks, drops plan to raise minimum capital for foreigners
The Ruto administration has cited renewable energy, housing, manufacturing, agriculture, and ICT as the sectors with the biggest potential to attract investors.
Kenya has dropped a proposal to raise the minimal capital threshold for foreigners four times in a bid not to lock out firms in sectors that require knowledge more than cash injection, pointing to a gruelling competition to win over multinationals.
The Kenya Investment Authority (KenInvest) said it had dropped its earlier proposal following stakeholder engagements. The State agency, which is tasked with promoting and facilitating investments, had early last year sought to raise the minimum capital injection for foreign firms seeking to set up shops in Kenya to $500,000 (Sh64.6 million) from the current $100,000 (Sh12.9 million) through draft Investment Promotion and Facilitation Bill 2023.
John Mwendwa, CEO at KenInvest, however, said the proposal has since been dropped and changes made to an updated version of the Bill, which has been sent to the Trade ministry of Trade, Investments and Industry for input and escalation to the Cabinet.
“Our proposal is that our doors are open to all investors and limits will apply in so far as we want to put a criteria of getting to know who is serious and who is not. But we think, for example, $100,000 and the equivalent of that in local currency, would be a good measure for investor threshold of what we can facilitate,” Mr Mwendwa said. “We will see how to realign this fairly quickly so that the signal we sent to the investment community as captured in the draft law is clear for all to see.”
Kenya has been seeking to freshen and align the Kenya Investment Promotion Act 2004 since late 2019 when it launched an investment policy.
Earlier in June 2019 Kenya had deported seven Chinese nationals found trading illegally at the Gikomba market, the country’s largest informal market for mitumba (second-hand clothes and footwear).
At the time, the Interior ministry said three of the Chinese did not have valid work permits while the other four were found to be in employment and other “income-generating activities” at the Gikomba Market contrary to the terms under their respective work permit classes.
Two years later in 2021, Kenya deported Turkish national Harun Aydin, an ally of President William Ruto [then deputy president], for suspected involvement in money laundering despite coming in on a work permit as an investor in solar energy.
Proponents of higher thresholds for minimum capital have in the past argued that it would deter shrewd money launderers who “masquerade” as foreign investors from seeking permits to work in Kenya as businesspersons.
KenInvest had in the past proposed a flexible minimum foreign investment threshold depending on the capital requirement of different sectors, citing sectors such as construction, energy, and manufacturing as those that require high cash threshold.
“This [draft Investment Promotion and Facilitation Bill 2025] is a new dawn on how we do investments. We are establishing certain mechanisms for fast-tracking priority investments which is technically a green channel for investments. This is because certain transactions that come may need certain approval which is multi-governmental,” Mr Mwendwa said.
Kenya has in recent years been struggling to attract foreign direct investments (FDIs) with flows trailing neighbours Ethiopia and Uganda.
The latest UN Conference on Trade and Development’s (UNCTAD) World Investment Report 2024 estimates FDI inflows into Kenya amounted to about $1.504 billion (Sh194.4 billion) in 2023 compared with Ethiopia’s $3.26 billion (Sh421.4 billion) and Uganda’s $2.89 billion (Sh373.6 billion).
“Despite significant advances in digital government services in Kenya, notably through the eCitizen platform, new businesses and investors still encounter multiple, disjointed registration processes and authorisations, including for licences and permits needed to operate in regulated sectors and counties,” UNCTAD analysts wrote in the report.
The Ruto administration has cited renewable energy, housing, manufacturing, agriculture, and ICT as the sectors with the biggest potential to attract investors.
