A new report by the Central Bank of Kenya (CBK) on the economic stability of the country has revealed that more foreign investors are leaving the country.
In its September Kenya Financial Stability Report, CBK detailed the trend of investors leaving the country was witnessed from 2022 all the way to the first half of 2023.
CBK cited investor activity at the Nairobi Securities Exchange (NSE) which indicated that foreigners were selling their shares more in comparison to purchasing shares.
For instance, in March 2023, close to Ksh15 billion shares were sold in comparison with those that were purchased which stood at Ksh5 billion.
However, the number of shares sold in June 2023 dropped to below Ksh5 billion, approximately the same amount of investments made by foreigners.
In 2022, foreign investors sold (outflow) shares valued at Ksh63.2 billion against Ksh38.8 billion purchases (inflow) in 2022, leading to a net outflow of Ksh 24.4 billion.
This trend was attributed to the current tough economic times contributed by the pandemic and government policies.
"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 goods was also noted as a key hindrance to local companies especially those in the manufacturing industry making the sector unattractive for investments.
As a consequence of the exit, depreciation of the shilling was also being witnessed. Currently, the dollar is exchanged at Ksh149. The dollar has also maintained its dominance over the shilling in recent months given the dollar has hit the Ksh145 mark in recent months.
Notably, in the Henley Private Wealth Migration Report 2023, it was predicted that 100 millionaires would leave the country by the end of this year with high taxation being a big factor. This followed the passing of the Finance Act 2023 which introduced new tax measures such as the 15 per cent housing fund.
In the same breath, close to 100 millionaires left the country in 2022 in search of countries with fair taxation policies.
