A report by the National Treasury has shown that investors in Kenya's capital market declined in 2023 in comparison to 2022.
In the Quarterly Economic and Budgetary Review report, Treasury indicated that investors were moving to other countries such as the United States with tough monetary policies forcing them to engineer the move.
According to data, investment in stock trades dropped by Ksh500 million in 2023.
In 2022, the market capitalisation was valued at Ksh1.98 billion. However, that dropped significantly to Ksh1.4 billion in 2023.
"Activity in the capital markets slowed down in December 2023 compared to December 2022 due to global monetary policy tightening leading to investors moving capital to relatively safer jurisdictions, especially the United States.
"The Nairobi Securities Exchange (NSE) 20 Share Index declined to 1,509 points in December 2023 compared to 1,676 points in December 2022 while Market capitalisation declined to Ksh1.432 billion from Ksh1.986 billion over the same period," read the notice in part.
Some of the monetary policies which drive investors away include high tax policies, poor economic indicators and exchange rates.
The current administration introduced new tax policies in the Finance Act 2023, which affected the profit margins of many businesses. Additionally, with the current harsh economic times, companies are struggling to stay afloat.
Investors hence lose confidence in the market, forcing them to seek other alternatives.
Notably, in the Henley Private Wealth Migration Report 2023, 100 millionaire investors left the Kenyan market owing to taxation. A similar number also left the market in 2022 over concerns of the General Election.
Meanwhile, the Central Bank of Kenya (CBK) governor Kamau Thugge expressed optimism over investments expected in the country this year owing to increased confidence by investors in the projected economic growth of Kenya.
“We expect a total of USD 3.5 billion in 2023 and USD 4.6 billion in 2024. This would include portfolio inflows, foreign direct investments as well as disbursements from our development partners, multilateral institutions, and regional partners,” he stated during the Monetary Policy Committee (MPC) address on February 7.
