In recent years, multinational corporations have exited the Kenyan market. Companies such as GlaxoSmithKline, Spire Bank, Betin and Shoprite have ceased operations in Kenya, citing a range of issues from regulatory challenges to high operating costs. These departures have raised concerns about the country’s economic stability and highlighted the need for strategic measures to make Kenya a more attractive destination for foreign investment and prevent further exits.
One of the most important steps Kenya needs to take is to improve the ease of doing business. More can be done to simplify regulations, reduce red tape and improve government services. A more business-friendly environment will encourage existing multinationals to stay and attract new ones. Rwanda’s steady improvement in the World Bank’s ease of doing business rankings is a testament to the positive impact regulatory reforms can have on attracting and retaining foreign investment. By adopting similar reforms, Kenya can create a more conducive environment for business growth.
Public-private partnerships (PPPs) are another important building block in addressing the challenges faced by multinationals in Kenya. These partnerships can be effective in addressing infrastructure gaps that are often cited as a significant barrier to doing business. The Lake Turkana wind power project is a prime example of how successful government-private sector collaboration can lead to the development of critical infrastructure, thereby increasing Kenya’s attractiveness as an investment destination. Expanding PPPs to various sectors, including transport, energy and technology, could provide the necessary infrastructure support that multinationals need to operate efficiently in Kenya.
Kenya needs to revise its tax and fiscal policies to create a more predictable and stable environment for businesses. Multinational corporations often raise concerns about unpredictable tax regimes and the high cost of compliance. By engaging the business community and providing clear, consistent and favorable tax policies, the government can help create an environment that supports long-term investment. Targeted tax incentives for companies investing in strategic sectors or underdeveloped regions could further encourage multinational corporations to maintain and expand their operations in Kenya.
Kenya also needs to focus on building robust local supply chains and promoting value addition. Developing strong local industries can reduce the country’s dependence on imports and make the economy more resilient to external shocks. For example, the agricultural sector, which remains a cornerstone of the Kenyan economy, could benefit greatly from value addition initiatives. By processing agricultural raw products locally, Kenya can increase its export value and create more jobs.
Political stability and sound economic policies are essential to maintaining investor confidence. The government must work towards a stable and predictable political climate. Combating corruption is essential to improving the business environment. Finally, investing in education and training to build a skilled workforce is critical to Kenya’s economic future. As industries develop, the demand for skilled workers increases. Partnerships between government, educational institutions and the private sector can create programs that meet industry needs.
Ms. Onditi is a communications and PR specialist
