Friday, March 8, 2024 - A report by the Parliamentary Budget Office (PBO) on the Budget Options for 2024/2025 and the Medium Term has revealed a worrying trend of foreign investors leaving the country.
According to the report, Kenya risks losing these investors
due to the reduced profits from the Nairobi Securities Exchange (NSE).
"The erosion of investor confidence and reduced capital
formation stemming from the struggling stock market collectively contribute to
a challenging economic landscape for businesses across sectors," read part
of the report.
In 2023, the NSE experienced a decline of 27.5 per cent,
also over 6,000 foreign investors left the NSE in nine months.
This decline is a result of some investors pursuing higher
returns and therefore moving to developed economies.
Additionally, another reason for the decline in foreign
investors is the increasing interest rate in Kenya and other developing
countries.
Interest rates were increased by the Central Bank of Kenya
from 7 per cent to 12.5 per cent which will also influence investor decisions.
Also, another reason is the review of tax measures and a
shortfall in revenue collection. These measures affect consumer behaviour and
investor confidence in the country.
Cumulatively, these factors influence the business
environment which results in long-term economic stability and growth
projections.
According to the report, another reason is Kenya's debt and
the surging borrowing costs which make long-term bond more
expensive. This has discouraged foreign investors.
In the report, Kenya was urged to adopt more measures to
regain investor confidence which will subsequently boost the economic growth of
the country.
The Kenyan DAILY POST
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